DaVita revenue increases despite high patient mortality from COVID-19
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An increase in Medicare payments for dialysis treatments and revenue from inpatient hospital services helped DaVita Inc. boost income for the fourth quarter of 2020, despite a high mortality rate among patients on dialysis with COVID-19.
Fourth-quarter diluted earnings of $1.67 per share from continuing operations were impacted by the challenges of responding to the COVID-19 pandemic, with a net impact on operating income of approximately $60 million, according to a company press release.
“We estimate that our patient census at the end of 2020 was approximately 7,000 less than what it would have been otherwise absent COVID,” Javier Rodriguez, CEO of DaVita Inc., said during an earnings call. “As we look to the future, some leading indicators, such as fewer new COVID cases, fewer hospitalizations and the recent vaccination efforts, give us hope.”
Rodriguez said DaVita has joined other providers in efforts to convince the CDC to allow their dialysis clinics to administer the COVID-19 vaccine to patients and staff. “[We have] been engaging with the federal government, with state agencies and the CDC, to identify ways for our caregivers and patients to gain access to the vaccine,” Rodriguez said. “We are uniquely positioned to administer vaccine safely and efficiently in our clinics given our infrastructure, our clinical expertise delivering flu vaccines this year and our ability to monitor patients’ health each week.”
Kidney patient organizations have sent a letter to President Joe Biden asking he move patients on dialysis and their families to a higher priority level for the vaccine.
“In states like Minnesota and several large counties across California, where we have been able to secure direct allocation, vaccination rates are as high as 70%, both because we have access, but also because general accepted rates are higher when patients see other patients receiving the vaccine,” Rodriguez said. “Across much of the rest of the country, the logistical signing up and the access at separate vaccine site has been challenging for many patients. Therefore, our ultimate goal remains to obtain direct allocation from the federal government.”
DaVita said losses in the fourth quarter included a decline in revenue for calcimimetics, which is now part of the Medicare bundled payment for dialysis care. Patient care costs were also higher primarily due to increases in COVID-19-related costs, including compensation expense, medical supplies and teammate reimbursement and benefit program expenses, the company said.
DaVita provided 7,574,217 dialysis treatments in the fourth quarter, an average of 95,876 treatments per day. The company said it represents a per day decline of 0.9% compared with the fourth quarter of 2019. Normalized non-acquired treatment growth in the fourth quarter of 2020 compared with the fourth quarter of 2019 was -0.3%.
The company provided dialysis services to a total of approximately 240,400 patients at 3,137 outpatient dialysis centers, of which 2,816 centers were located in the United States and 321 centers were located in 10 countries outside of the United States.
The company also closed seven centers and opened 14 new dialysis centers in the United States and acquired 30 dialysis centers outside of the United States.
“Despite the challenges of COVID, we significantly outperformed our original financial guidance for 2020,” Rodriguez said. “We knew it would be a tough year to deliver profit growth given the headwinds from calcimimetics revenue decline and the cost of fighting the ballot initiative in California.
“Despite this uncertainty, we grew our adjusted operating income by double digits, absent the impact of calcimimetics, ballot cost and net COVID impacts.”