Author Topic: DVA DaVita HealthCare Partners  (Read 216260 times)

cubsfan

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Re: DVA DaVita HealthCare Partners
« Reply #250 on: September 26, 2017, 07:33:33 AM »
I'm not sure anyone wants to try and sell you on DVA. What you call hard core rationalization, I see as conviction.
If DVA makes you uncomfortable, stay away for sure - there is plenty of uncertainty. Almost everything you have
raised has been discussed in detail. The low price compensates for the uncertainty in my opinion.

I don't see how this is a commodity service/business. There is a standard of care that is very important here.
Maybe narrow moat at best, as Fresenius is a high quality provider.

If politicians/gov change the rules on reimbursements to the negative there will be pain for sure. Just don't think
it will happen.


sleepydragon

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Re: DVA DaVita HealthCare Partners
« Reply #251 on: September 26, 2017, 07:49:31 AM »
I read some online stories by nurses who do dialysis. It's not that easy. New nurses make mistakes and some incidents are fatal. They need to well trained and guided by senior nurse. The work is very intense compared to working in the hospital, resulting shortage of workers. Also, nurses need special educations and pass tests, etc.. Anyway, my point is this is not a commodity business.

Maybe the issue here is DVA 's margin is capped. Its clients will never allow it to make excessive profits, nor will they want DVA lose incentives to open new centers. So DVA is like a regulated utility. But even with limited margin upside, current valuation is heavily discounted.

JRM

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Re: DVA DaVita HealthCare Partners
« Reply #252 on: September 26, 2017, 08:03:55 AM »
I'm not sure anyone wants to try and sell you on DVA. What you call hard core rationalization, I see as conviction.
If DVA makes you uncomfortable, stay away for sure - there is plenty of uncertainty. Almost everything you have
raised has been discussed in detail. The low price compensates for the uncertainty in my opinion.

I don't see how this is a commodity service/business. There is a standard of care that is very important here.
Maybe narrow moat at best, as Fresenius is a high quality provider.

If politicians/gov change the rules on reimbursements to the negative there will be pain for sure. Just don't think
it will happen.

Fair enough.  I've read through the entire thread.  Many of these issues were raised a while back.  As far as DaVita and/or Fresenius being high quality providers, why is it that costs are higher in the U.S. and patient outcomes are worse than other countries?

The service is very important, almost essential since not everyone can get a transplant.  However, that does not mean it is not a commodity service.  Antibiotics are essential as well.

Just seems like a tough way to make money to me. 

JRM

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Re: DVA DaVita HealthCare Partners
« Reply #253 on: September 26, 2017, 08:07:57 AM »
I read some online stories by nurses who do dialysis. It's not that easy. New nurses make mistakes and some incidents are fatal. They need to well trained and guided by senior nurse. The work is very intense compared to working in the hospital, resulting shortage of workers. Also, nurses need special educations and pass tests, etc.. Anyway, my point is this is not a commodity business.

Maybe the issue here is DVA 's margin is capped. Its clients will never allow it to make excessive profits, nor will they want DVA lose incentives to open new centers. So DVA is like a regulated utility. But even with limited margin upside, current valuation is heavily discounted.

I understand what you're saying.  But are these training/testing requirements that allow for a high barrier to entry (and high returns), or is it the duopoly created by Fresenius and DaVita using loopholes and exploiting private insurance?

I'm still trying to fully understand the moat and what would cause it to be lost.

sleepydragon

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Re: DVA DaVita HealthCare Partners
« Reply #254 on: September 26, 2017, 08:14:29 AM »
So CMS has already ruled that DVA cant proactively sign up patients to enroll in AKF. That resulted in only a small number of reduction in AKF patients
The battle ground now is if CMS will rule if AKF is outright illegal. If AKF is completed baned, yes that will hurt DVA badly. But will CMS ban AKF? Any thoughts?

sleepydragon

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Re: DVA DaVita HealthCare Partners
« Reply #255 on: September 26, 2017, 08:19:41 AM »
I read some online stories by nurses who do dialysis. It's not that easy. New nurses make mistakes and some incidents are fatal. They need to well trained and guided by senior nurse. The work is very intense compared to working in the hospital, resulting shortage of workers. Also, nurses need special educations and pass tests, etc.. Anyway, my point is this is not a commodity business.

Maybe the issue here is DVA 's margin is capped. Its clients will never allow it to make excessive profits, nor will they want DVA lose incentives to open new centers. So DVA is like a regulated utility. But even with limited margin upside, current valuation is heavily discounted.

I understand what you're saying.  But are these training/testing requirements that allow for a high barrier to entry (and high returns), or is it the duopoly created by Fresenius and DaVita using loopholes and exploiting private insurance?

I'm still trying to fully understand the moat and what would cause it to be lost.

Well, i think if even if u have a lot of money, you wont be able to start many dialysis centers that doesnt result in severe problems. The nurses are in demand, take times to train, and knowhow is important to run the center effienciently and nobody die.  Good luck trying to start one in CVS.

JRM

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Re: DVA DaVita HealthCare Partners
« Reply #256 on: September 26, 2017, 08:30:39 AM »
My wife works at a home infusion pharmacy.  It is a similar but different service provided by dialysis companies.  They have nurses that install PIC lines in patients and deliver IV drugs with pumps.  With the exception of hemophilia patients, the margins aren't amazing.  Even the hemophilia patients are not always worth the trouble anymore because of the competition to get these patients.

They have about a 60/40 mix of mediare/medicaid to private insurance mix; and they typically don't lose money on either.  I guess I see the dialysis business working this way with all things being equal. I am probably biased.

rb

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Re: DVA DaVita HealthCare Partners
« Reply #257 on: September 26, 2017, 09:04:57 AM »
I read some online stories by nurses who do dialysis. It's not that easy. New nurses make mistakes and some incidents are fatal. They need to well trained and guided by senior nurse. The work is very intense compared to working in the hospital, resulting shortage of workers. Also, nurses need special educations and pass tests, etc.. Anyway, my point is this is not a commodity business.

Maybe the issue here is DVA 's margin is capped. Its clients will never allow it to make excessive profits, nor will they want DVA lose incentives to open new centers. So DVA is like a regulated utility. But even with limited margin upside, current valuation is heavily discounted.
DaVita IS a commodity business. The reasons you've listed don't invalidate that. It doesn't matter how hard the work is. Let me give an example. Oil is a commodity business and Coke is not. But making oil is hard. I can't just go out there and produce oil. The work is very intense and you need lots of very expensive equipment and highly trained people. I can however make Coke. The process is easy and doesn't require much in terms of capital. These things don't change the commodity/not commodity aspect.

In the case of dialysis the equipment is commercially available, there are lots of nurses already trained and you can create/train more nurses. Yes it would take some time, but there are no barriers to making nurses. There is nothing proprietary here.

One thing that dialysis centres have is a sort of first mover advantage. It's hard to travel for dialysis so patients choose the centre closest to their home. On top of that there's not enough people with ESRD. So if you open another centre in an area that has an existing one I suspect that capacity utilization would drop so much as to make both centres unprofitable. That's typical of a commodity business and not really a moat.

rogermunibond

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Re: DVA DaVita HealthCare Partners
« Reply #258 on: September 26, 2017, 09:25:54 AM »
For the home infusion example it kind of depends whether the home care company is part of a health system or standalone.  There are ways that nonprofit hospitals can pad the hospital bottom line with buying infusion pharma products at discount and charging the insurer.  Likely wouldn't see the margin at the home care side but on the hospital books.

Don't think anything like that exists for DVA, but Fresenius manufactures GranuFlo and NaturaLyte which are used in dialysis.  They also have acquired generics and biosimilars biz.

JRM

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Re: DVA DaVita HealthCare Partners
« Reply #259 on: September 26, 2017, 09:32:02 AM »
For the home infusion example it kind of depends whether the home care company is part of a health system or standalone.  There are ways that nonprofit hospitals can pad the hospital bottom line with buying infusion pharma products at discount and charging the insurer.  Likely wouldn't see the margin at the home care side but on the hospital books.

Don't think anything like that exists for DVA, but Fresenius manufactures GranuFlo and NaturaLyte which are used in dialysis.  They also have acquired generics and biosimilars biz.

The idea for home infusion is similar to the dialysis business.  It is lower cost to the insurer to receive the infusions at home and it is more comfortable for the patient (usually).  The goal with both is to keep the patient out of the hospital as much as possible.