The Strangest Show On Earth

Denver-based health-care mogul Kent Thiry runs DaVita, his multibillion-dollar kidney dialysis company, unlike anything the buttoned-down corporate world has ever seen. Are his carnival-like theatrics a stroke of genius, or are they designed to distract people from the hard truths about his business?

September 2012

Each year, roughly 400,000 Americans undergo dialysis treatment for end-stage renal disease (ESRD), known more commonly as kidney failure. The condition is usually caused by health problems related to obesity, such as hypertension and diabetes. Properly functioning kidneys are essentially filters that regulate electrolytes and eliminate toxins from the blood. Kidney failure creates a life-threatening accumulation of toxins and electrolyte imbalances that require a manual “flushing out” or neutralization of these toxins—the process known as dialysis. Although home dialysis has become increasingly common in recent years, more than 90 percent of dialysis patients still receive clinic-based treatments. Three times a week, for four hours per session, patients are connected by nurses and technicians to a dialysis machine via tubes running to their chest or arm. The machine’s dialyzer filters a patient’s blood, cleans it, and returns it to his or her body. It’s a delicate process. If bloodlines become contaminated, if air gets into the line, or if a filter isn’t properly cleaned, infections such as tuberculosis, hepatitis, or HIV can occur. Lines can become dislodged (albeit rarely), causing patients to “bleed out.” Some patients, who frequently have other health problems beyond kidney disease, suffer sudden strokes or heart attacks.

More often, though, the fate of dialysis patients serves as a reminder that the term “end-stage renal disease” is dire: Every year, about 80,000 of America’s 400,000 dialysis patients—at least 20 percent—will die. Since DaVita’s 2011 Nationwide meeting, more than 21,000 of its patients have met this fate. The figure, while grim, is actually a sign of progress; in the last year DaVita has extended a higher proportion than ever of its patients’ lives. In fact, DaVita’s clinical outcomes—which include death rates and infections—have improved every year since Thiry was hired more than a decade ago, a fact he and the teammates frequently invoke.

Although DaVita’s—and America’s—dialysis numbers are slowly improving, some patient advocates say it’s not happening fast enough. Outcomes in other industrialized countries, they point out, are notably better than in the United States. In Australia and Europe, the dialysis mortality rate hovers around 15 percent; in Japan, it’s less than 10 percent. Critics of American dialysis say spotty regulation of clinics and shorter treatment sessions, fueled by the taxpayer-funded, for-profit, and poorly regulated Medicare program, are largely to blame for subpar U.S. clinical results.

By almost any measure, DaVita is a model participant in the dialysis system. With annual revenue of about $6.8 billion, it’s the number two company in the sector, behind Germany-based Fresenius Medical Care. DaVita has grown its number of clinics worldwide by more than a third in the past five years and in 2011 enjoyed more than $800 million in cash reserves. All those zeroes explain why, last February, investment icon Warren Buffett reported adding nearly $200 million to his DaVita holdings. To some analysts, the purchase coronated DaVita as a “forever stock,” one so promising that investors buy and hold it in perpetuity, reaping dividends along the way. As of early August, Buffett’s total stake in DaVita was about 6 percent, worth almost $550 million, and the company’s stock price was approaching an all-time high of nearly $100 per share.

DaVita shareholders have the singular dedication of one man to thank for their returns. Although he might deflect such expansive praise, Kent Thiry’s unfailing vision for his “Village” has carried it from life support to market leadership to a point where he can say, without irony, that it is DaVita’s intention to become “the greatest health-care community the world has ever seen.” His gushy theatrics aren’t reserved for annual conferences; whether he’s at work or at home, Thiry is switched on from sunup until bedtime, an inscrutably upbeat carnival barker whose default expression is delight. He’s also the rare boss who regularly rewards people outside his cozy inner circle, particularly clinical technicians and their facility administrators (FAs). Most dialysis techs are modestly educated and paid hourly; burnout and turnover are common. By letting these people know how much he—Kent Thiry, personally—appreciates their contributions, Thiry has earned respect from his employees that borders on adulation. “He realized that the dialysis industry really relies on these technicians,” says Thiry’s wife, Denise O’Leary, a retired venture capitalist who has held board seats at US Airways, Medtronic Inc., and Calpine Corporation, among others. The decision to connect with them, she says, was unprecedented. “It was like saying, if you’re running Chevron, of all the things you have to worry about, it’s the guy at the gas pump.”

Thiry encourages employees to send him emails about their concerns and either responds to them personally or sees that someone else does. Each floor of DaVita’s built-to-spec headquarters next to the Millennium Bridge at 16th and Wewatta streets—“Casa del Mundo” in company-speak—has a “reflection room,” a technology-free space where teammates can grab some quiet time. Employees work out at a first-rate gym, they voted on which office chairs to order, and they dine not on the ground floor, but in a penthouse “marketplace cafe” with mountain views that trump the scenery from the executive suites one floor down. “I’ve never seen an executive at his level so involved in the planning process,” says Owen Leslie of Acquilano Leslie, Inc., the project’s interior architect. “It’s not micromanaging; he just wants everything to be right for his teammates.”

Back in 2008, when Thiry was considering moving company headquarters to Colorado, the mayor of DaVita Village met with then-mayor of Denver, John Hickenlooper. As the governor recounted at a February gathering of health-care executives, Thiry asked less about tax incentives and more about how life in Denver would nurture the grandchildren of the hundreds of people he’d be moving to, or hiring in, the region. “That’s the kind of question most CEOs don’t ask,” Hickenlooper said. After DaVita arrived here in 2010, Thiry quickly became a fixture in local power and philanthropy circles. He lunches with the governor at the Cherry Cricket, mountain bikes with ex-state Senator Chris Romer, and hangs out with muckety-mucks like former Denver city attorney Cole Finegan. Along with his wife, Thiry has sponsored or chaired numerous Colorado charity events.

All the while, company programs such as the DaVita Village Network have raised close to $2 million to help teammates with money and food in times of need. Two other programs have provided scholarships worth more than $1 million to the children of hundreds of employees. DaVita’s “green” initiatives, charity bike rides, and walkathons keep the enthusiasm bubbling. “KT genuinely sees himself as the mayor of a community,” says Traci Fenton, founder and CEO of WorldBlu, which compiles an annual list of the world’s most democratic companies. “He seems to understand how you need to get the voice of the people involved. The organization’s emotional intelligence is very high.”

Standing in front of a contest-winning Wall of Fame at DaVita headquarters, Thiry elaborates. “We believe that a huge percentage of human beings want to be part of a real team—a team that cares about each other, that’s serious about accomplishing something, and wants to do good along the way.” He says he’d apply the same philosophy if he were overseeing 41,000 employees at 1,800 Taco Bells. After two decades in the dialysis business, Thiry knows his teammates’ jobs—essentially keeping people on life support for wages they could earn slinging Gorditas—can be intense and depressing, and his naturally sunny managerial tactics palpably boost morale. When asked why he doesn’t just pay his hourly technicians a higher wage, Thiry says, “No company can buck the market. If you overpay, you force other people to match. Our philosophy is to pay competitive market rates and be way better in every other way.” His teammates seem to have accepted this rationale; of the dozens I spoke to, not one uttered a discouraging word about Thiry or expressed skepticism about the culture he’s created. And why would they? Thiry has, after all, spent more than a decade hailing the nobility of their work, and by extension, of their souls. “At my first Nationwide, after the third Core Value Award, I thought, ‘Now I really get it,’ ” says Azen, the people services director. “I believe in human connection, and we have figured out how to connect with people uniquely. This is the best place I’ve worked. I feel privileged.”

Thiry’s semiretired “Chief Wisdom Officer Emeritus” and senior vice president Doug Vlchek—a deacon in the Catholic Church known to everyone, even Thiry’s kids, as Yoda—puts it this way: “People like us that get into this area of health care and stay, we have something different. We have different DNA, different blood. We are into doing something with our lives. We could go somewhere else, work a little less hard and make a little more money, but we’re here because we want to take care of human beings.”

Beyond the walls of Casa del Mundo and DaVita’s 1,800-plus clinics, however, detractors abound. As DaVita’s profits swell, so too do the numbers of whistleblowers, plaintiffs, attorneys, former patients, and dialysis-industry observers who allege that the cheery DaVita ethos obscures something much more sinister. They rage at the company’s allegedly unethical and reckless behavior, seethe over its aggressive efforts to dominate a game that’s already rigged in its favor, and roll their eyes at Thiry’s showy antics. “My problem with DaVita is they lack integrity,” says Peter Laird, an M.D. in Lancaster, California, and a longtime dialysis patient and activist whose blog, “HemoDoc,” addresses dialysis industry issues. “They say, ‘All for one, and one for all.’ But they’re not talking about patients.” In Laird’s view—one echoed by virtually every DaVita critic I spoke to—too many DaVita nurses, techs, and administrators gobble up the hugs and high fives from their leader while neglecting their patients or jadedly herding them through the health-care system. All may be well for the citizens of DaVita Village, the critics say. The problem, they contend, is that the company’s patients comprise what Laird and others before him have called “the Village of the Damned.”