I think if DVA reduce their debt, though their roe will be reduced, the stock will become much less volatile.
1+
Also, it may be reasonable to expect that DVA will come to work in an environment where they will be bounded by an "authorized" capital structure.
Going forward, using leverage to maximize returns may become more difficult because of the ease of regulatory measurement.
IMO, the main competitive moat in the more stringent environment (I think this has been well explained by Mr.B using different words, earlier in this thread), will continue to be the capacity to be ahead of regulators by explaining the overall net gains brought to the system by running a large and efficient operation. What could be considered gaming of the system when returns are shared in order to make a "reasonable" profit can be reconciled using an intelligent dialogue with the agencies showing that gains from efficiencies are reasonably passed on to the immediate customers (dialysis patients) and customers at large (population) while maintaining satisfactory outcomes. There is room for relatively "aggressive" strategies on the operating side because, if costs happen to be lower than planned when negotiating reasonable returns, DVA can focus on efficiency gains for justification and not be looked upon as a firm cutting costs to the point of causing a negative impact on clinical outcomes.
This is a tough game to play but Kent Thiry and his team have been unusually good at this in the last few years overall and it is reasonable to expect more of the same going forward although regulatory volatility is to be expected.