Kidney Dialysis Company Expands Into The Hospital Business

Originally published on November 10, 2014 5:08 pm

Critics of America's health care system say it's really a "sick care" system. Doctors and hospitals only get paid for treating people when they're sick.

But that's starting to change. Health insurance companies and big government payers like Medicare are starting to reward doctors and hospitals for keeping people healthy.

So, many health care companies are trying to position themselves as organizations that help people stay well.

One of the latest is DaVita HealthCare Partners, a provider of kidney dialysis services. The company operates 2,152 dialysis centers in the U.S. and 87 in its fast-growing international buisiness.

DaVita is making a move into primary care, and it just announced a joint venture with a hospital company in Colorado and Kansas.

DaVita CEO Kent Thiry says it's like changing the company from being an electrician into a general contractor. "And in so doing," he says, "[We] have a much more comprehensive impact on how the house gets designed, how it gets built, how it gets maintained for the betterment of those who live in the house. That's the simplest way to characterize the change."

DaVita's partner in the new venture is Centura Health, the biggest hospital company in Colorado. Like DaVita, it is also expanding aggressively into primary care and services beyond hospital-based procedures.

Centura CEO Gary Campbell says that in order for his company to keep people healthy, it needs the ability to crunch lots of health data. The idea is to use computer systems to keep track of peoples' health, and flag health problems before they happen. He says DaVita HealthCare Partners is really good at that.

"Our physicians have gone scouring around the country, and believe that Health Care Partners really has the premier analytics."

So, if DaVita wants to grow substantially beyond the current 168,000 dialysis patients it serves now, it needs to expand beyond just kidney care, says Mark Stephens with Prima Health Analytics. In 2012, the company started buying big doctors practices in several states. It's hoping that its experience caring for very sick dialysis patients will help it manage family practices, and now, make hospitals more efficient.

Stephens also says DaVita might also be trying to create a model for Medicare to follow. That agency currently picks up the tab for about 85 percent of all Americans getting dialysis. He says Medicare has been offering dialysis companies opportunities to assume responsibility for those patients' health care beyond dialysis, but that the companies haven't found the deals attractive so far.

If DaVita's new joint venture is successful, and it lowers the cost of care for both dialysis patients and those who aren't as sick, the company may be able to win lots of new business from Medicare and private insurance companies.

This story is part of reporting partnership with NPR and Kaiser Health News.

Copyright 2014 Montana Public Radio. To see more, visit http://www.mtpr.org.

Transcript

AUDIE CORNISH, HOST:

Critics of the U.S. health care system say, it's really a sick care system. Doctors and hospitals mainly get paid for treating people when they're sick, not for helping them to - not for helping to keep them healthy in the first place. With new incentives for preventative care, the thought is that health care companies might change their approach, and health care bills would be reduced. And they'll win more customers in return. Bottom line - this shift can mean big business. Montana Public Radio's Eric Whitney reports one major dialysis company is trying to take advantage of that shift.

ERIC WHITNEY, BYLINE: DaVita HealthCare Partners is one of the biggest kidney dialysis companies in the world. It has 2,100 dialysis centers in the U.S. and is rapidly expanding overseas. Lately, it's been buying up big doctor's practices in several states and has just announced a joint venture with a hospital company in a Colorado and Kansas. DaVita CEO Kent Thiry says it's like he's changing his company from being an electrician into a general contractor.

KENT THIRY: And in so doing, have a much more comprehensive impact on how the house gets designed, how it gets built, how it gets maintained, for the betterment of those who live in the house. That's, I think, the simplest way to characterize the change.

WHITNEY: DaVita's partner in the new joint venture is Centura Health - the biggest hospital company in Colorado. They also operate lots of clinics and doctor's offices. Centura CEO Gary Campbell says that in order for his company to keep people healthy, they need data analytics - computer systems that keep track of people's health and predict health problems before they happen. He says, DaVita HealthCare Partners is really good at that.

GARY CAMPBELL: Our physicians have gone scouring around the country and believe that HealthCare Partners really has the premier analytics that will advance our capabilities even further.

WHITNEY: Health insurance companies and big government payers, like Medicare, are starting to pay doctors and hospitals better to keep people healthy. So, says health economics analyst Mark Stephens, it's potentially a good move for DaVita to keep expanding.

MARK STEPHENS: Dialysis is a very small piece of the total health care pie.

WHITNEY: That's true, but dialysis patients are very sick. And Stephen says, DaVita is hoping to use its expertise managing this challenging group of patients to make hospitals more efficient.

STEPHENS: It's an opportunity to increase revenues and, you know, maintain the profitability or improve their profitability.

WHITNEY: That'll only happen if DaVita's new business model really does lower overall health care costs in the next few years. If it does, the joint venture will be able to offer lower prices to insurance companies. For NPR News, I'm Eric Whitney. Transcript provided by NPR, Copyright NPR.