Author Topic: DVA DaVita HealthCare Partners  (Read 94055 times)

CorpRaider

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Re: DVA DaVita HealthCare Partners
« Reply #20 on: March 03, 2014, 12:08:42 PM »
He talked about it, as you might imagine, he likes it.  haha.  Gave an interesting mental model for analyzing healthcare investments generally though (at least I thought it was interesting).  I think that has been posted elsewhere on here already and is on cnbc.com as well. 
Finally...another finance blog! 

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loganc

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Re: DVA DaVita HealthCare Partners
« Reply #21 on: March 05, 2014, 10:34:55 PM »
I have no superior insight within the HCP business, but i have a few takeaways from the information that DVA has provided. I am not a native English speaker but I will try to express myself clearly.

First, management argues that there is no reason there cannot be a preferred nationwide "health care partner". I believe this as well, just like you can have a preferred nationwide restaurant chain it should be possible through diligent work and very high focus on patient care to create a preferred health care partner. Although a low probability event and/or a long time frame, the potential upside here is huge.

Secondly, management has conveyed that the cash on cash returns they are getting from the HCP acquisition currently is around 7% (if my memory serves me right). Although this is within the lower span of what management expected when they made the acquisition (in which they also issued shares), this is certainly lower than the borrowing costs of DVA. HCP is in no way a business with prospects of long-term deterioration, so this yield should go up over time. This can also be a place for further growth by acquisition, which should be good news considering the long-term results the DVA management team has had allocating capital.

If you want to be conservative for valuation purposes, I believe you can just subtract the cash flow attributed to the HCP business side while also subtracting the purchasing price of HCP.

I appreciate your comments and I have used the latter thread of logic to justify my current allocation (i.e. assume someone is going to win in the managed care business and that DVA can sell the HCP business at cost).  However, this line of thinking is sort of crude and doesn't inspire the level of conviction that is necessary for me to add to my DVA holding. 

Not to be a jerk, but your discussion of HCP is more or less the line that management is spinning about the HCP business.  To my mind, I can see the potential opportunity in the HCP business and the opportunity with Medicare Advantage is obviously huge.  The fundamental problem is that I can not, at this point, handicap the success or failure of HCP in growing the business.  Clearly, the management team at DVA is very strong and I know they are working very hard at growing the HCP business, but I have yet to really be able to put the pieces together in my mind to get real conviction around this business.   

In conclusion, I have little to add to this thread.  I am working through all of the data I can locate in terms of the HCP business (i.e. the merger prospectus) and hopefully I will be able to provide some helpful insight into this business at some point.

thefatbaboon

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Re: DVA DaVita HealthCare Partners
« Reply #22 on: May 28, 2014, 02:10:40 PM »
 I've been looking at this for a while and have gotten comfortable that i understand the dialysis business but I'm still really struggling with HCP.  I'm pretty ignorant about that whole area.  Has anyone made any progress here?

Fat Pitch

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Re: DVA DaVita HealthCare Partners
« Reply #23 on: May 28, 2014, 06:41:47 PM »
DaVita is trying to pivot into other patient care services via HCP. The core business is dialysis centers, but they want to add more services that a typical hospital provides, but do it at a lower cost. I think it's a great strategy since the person in the dialysis chair is going to be at the clinic for several hours few times a week so why not provide other services so they don't have to go anywhere else?

I think the real vision is to redefine the high cost hospital business model. By showing insurance companies and the government that DaVita can provide superior services at lower prices they hope insurance will bundle the services they provide and encourage more people to select them as their primary care destination. This is a great business with tremendous scale. They benefit society by passing on the savings to the customer. Of course there's the liability aspect of the business so you have to get comfortable with that.

My mental model is the northern pike. These centers are cropping up everywhere and they are low cost... don't need that many good things to go in your favor to do okay here.
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thefatbaboon

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Re: DVA DaVita HealthCare Partners
« Reply #24 on: July 20, 2014, 08:46:01 AM »
Well HCP seems to be in a certain amount of disarray.  They only just hired Samitt last year to lead HCP.  Both Margolis and Thiry talked him up pretty big at the December investor day.


HealthCare Partners Announces Leadership Transition
DENVER, July 18, 2014 /PRNewswire-USNewswire/ -- DaVita HealthCare Partners Inc. (NYSE: DVA), a leading provider of kidney care and health care services, today announced that HealthCare Partners (HCP) president and CEO Dr. Craig Samitt is stepping down from HCP effective August 1st. 
Kent Thiry, co-chairman and CEO of DaVita HealthCare Partners, will take over the role of CEO of HCP, working in tandem with the Office of Chief Medical Officer.
"I want to thank Craig for his contributions during his time here. He is a strong CEO and we wish him the best in his future endeavors," said Thiry.
"I will miss working with the talented physicians, staff and management that created and will sustain the HealthCare Partners legacy," said Samitt. "The company is well positioned to continue to transform population health in the United States."
DaVita and DaVita HealthCare Partners are trademarks or registered trademarks of DaVita HealthCare Partners Inc.

loganc

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Re: DVA DaVita HealthCare Partners
« Reply #25 on: July 22, 2014, 10:50:58 PM »
Well HCP seems to be in a certain amount of disarray.  They only just hired Samitt last year to lead HCP.  Both Margolis and Thiry talked him up pretty big at the December investor day.

I don't have much to add here, but I concur that one can only infer disarray at HCP.  It will be interesting to see the HCP results in the next few quarters.  DVA seems pretty cheap to me in the current market environment and the kidney care segment is a juggernaut of a business.   

rogermunibond

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Re: DVA DaVita HealthCare Partners
« Reply #26 on: August 14, 2014, 07:06:06 AM »
Interesting point about trying to extend the 30 month commerical payer coverage period before Medicare takes over.


********************

DaVita CMO Dr. Allen Nissenson on renal care and Medicare ACOs
 
By Modern Healthcare

Posted: August 9, 2014 - 12:01 am ET

Dr. Allen Nissenson has been chief medical officer for Denver-based DaVita Kidney Care, a division of DaVita HealthCare Partners, since 2008. DaVita Kidney Care has more than 2,000 outpatient dialysis centers in 46 states and is one of the largest dialysis providers in the U.S. Nissenson formerly served as associate dean and director of the dialysis program at the David Geffen School of Medicine at UCLA, and as president of the Renal Physicians Association. Before that, he served as a Robert Wood Johnson health policy fellow of the Institute of Medicine, working with the late Sen. Paul Wellstone. Modern Healthcare editor Merrill Goozner recently spoke with Nissenson. This is an edited transcript.

Modern Healthcare: How are dialysis patients faring today?

Dr. Allen Nissenson: If you look at the outcomes for all U.S. patients over the past decade, they've improved significantly. The patients are still really sick but survival is better. They're in the hospital less and they're generally healthier.

MH:How have Medicare payment changes for end-stage renal disease, specifically going to a bundled payment system, affected DaVita?

Nissenson: The problem is, Medicare payment is not equal to the cost of the treatment, so for the 85% of patients we treat who depend on Medicare, we lose money on every treatment. That only works because the 10% of patients who have private insurance subsidize all of the others.

MH: In 2012, DaVita acquired Los Angeles-based HealthCare Partners. Yet the deal hasn't paid off in the short run. What's happening?

Nissenson: The reason we acquired HCP is that their vision of healthcare for the broader American population is exactly our vision for kidney patients. We've got to figure out a way to take the current fragmented system and coordinate it. In the short term, HCP is not thriving to the extent we'd like it to.

HealthCare Partners was a physician-led, physician-focused organization. Naturally there's some tension there. So we're in the process of figuring out how do we take the best of HealthCare Partners and the best of DaVita, with its business discipline and organizational skills, and bring these two together.

MH: How do you see working with chronic kidney disease patients served by HCP?

Nissenson: It's critical to move upstream and start looking at chronic kidney disease (CKD) patients before they reach end-stage disease. HealthCare Partners has thousands of CKD patients. We have a program called Kidney Smart, which is a CKD educational program directed at primary-care doctors and patients, that we are introducing in Southern California in HCP. The upstream work is really going to pay off in the long run.

MH: The Medicare Innovation Center is coming out with pilots to coordinate care for end-stage renal disease patients, called ESRD Seamless Care Organizations. How do you plan to participate in ESCO pilots?

Nissenson: We're hoping to do anywhere from two to five of them. We haven't heard yet if we've been selected to do that many, but we're confident we'll do some. We really believe in the accountable care organization approach. We would have liked to do this much more broadly. But there are some issues around the way the financing is done and other important issues in terms of the regulations. We're enthused but kind of sad that the full potential probably won't be realized.

MH: Before CKD patients wind up in dialysis, they usually are covered by private insurance. But once they are on dialysis, they're covered by Medicare. What can be done to coordinate care across these two payers?

Nissenson: There's no question this is a problem. When you go on dialysis, your private insurance remains the primary payer for 30 months. Because of the inadequacy of the Medicare payment, that gives us 30 months working with the commercial payer so it can help us cover the cost of the Medicare patients. The whole renal care community has been trying to get the CMS to extend that period, so that commercial insurance will be the primary payer for a longer period. In the past, private insurers were against it because they said they'd be stuck with these really sick patients for longer. What they found is, if they collaborate on care coordination, their total costs of care actually go down. So now even the private insurers aren't against it. We're working very hard to get Medicare to extend this, which we think would help everybody.

elevensecsrt4

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Re: DVA DaVita HealthCare Partners
« Reply #27 on: September 06, 2014, 03:09:50 PM »
I have just recently started studying dva and the business.  I have a close friend who has been going to dva for 4 years now.  I'm puzzled as I have been told by him that everyone who has esrd (on dialysis) is eligible for government payment ( Medicare). So who chooses private insurance ($ out of their own pocket) over Medicare?  So far I'm impressed with this business.

yadayada

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Re: DVA DaVita HealthCare Partners
« Reply #28 on: September 06, 2014, 04:01:54 PM »
I would keep an eye on George Church and Intrexon. You could buy a small position of Intrexon here to hedge your bet. I think he played an important role in getting the costs down for genome sequencing and is high regarded in field of synthetic biology.

In general scientific break throughs are moving much faster now then 20-30 years ago.

loganc

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Re: DVA DaVita HealthCare Partners
« Reply #29 on: September 06, 2014, 06:11:42 PM »
I would keep an eye on George Church and Intrexon. You could buy a small position of Intrexon here to hedge your bet. I think he played an important role in getting the costs down for genome sequencing and is high regarded in field of synthetic biology.

In general scientific break throughs are moving much faster now then 20-30 years ago.

I don't know anything about the Intrexon technology, but have you considered the regulatory hurdles in this potential hedge?  In my experience, the generation of new technology or "scientific breakthroughs" isn't necessarily the rate limiting step - it is getting regulatory clearance to commercialize new technology.