On a humid Tennessee morning this past April, the vast ballroom of Nashville’s Gaylord Opryland Resort & Convention Center is pulsing with anticipation. A football field long, the hall accommodates some 3,000 giddy men and women who await the arrival of Kent Thiry, the gregarious, unrestrained, 56-year-old health-care magnate who happens to be their boss. Thiry is the CEO and chairman of the board of Denver-based DaVita, the second-largest kidney dialysis company in the world and one of Colorado’s latest additions to the Fortune 500. Each year, DaVita produces this event—it’s formally called “Nationwide”—to honor its brightest stars.
Thiry, who’s known by employees as the “mayor of DaVita Village,” or, more often, as “KT,” always arrives with a surprise. At Nationwide meetings in Washington, D.C., he zip-lined down from the ceiling in 2010 and ambled in on horseback in 2011. At a 2001 outdoor gathering in Orlando, he landed a roaring speedboat on the beach. He pulled his first-ever grand entrance—rappelling down a turned-off artificial waterfall in Phoenix—at the inaugural Nationwide in 2000, at the very moment his company was flirting with insolvency. Thiry knew the attendees would greet his debut with skepticism, but today—given that DaVita generates about $6.8 billion annually—his bravado is remembered fondly. It’s also rewarded lavishly: Thiry made at least $17.5 million before bonuses in 2011, and he’s taken home more than $125 million over the past five years, making him one of the wealthiest executives in Colorado.
Thiry’s turnaround of DaVita, along with his unconventional approach to leadership, have granted him a savior’s devotion from his 41,000 employees, known in company parlance as “teammates” or “citizens.” Though many of DaVita’s low-level employees make a modest hourly wage, the company’s nurses, technicians, and administrators, scattered throughout more than 1,800 dialysis clinics in the United States (with an expanding roster of international centers), are beneficiaries of morale-boosting financial, wellness, and scholarship programs that have landed DaVita atop numerous best-companies-to-work-for lists. At the Nashville conference, teammates swoon with gratitude and company pride. Back home at their clinics, devotees demonstrate commitment to DaVita by contributing to “Walls of Fame”—collages of photos and artwork dedicated to the organization’s patients and caregivers—and enjoying DaVita’s myriad perks and initiatives. “KT uses this phrase—and I really believe it—that ‘a village produces most what it honors most,’?” says Shelly Azen, a Pennsylvania-based group director of people services (that’s DaVita-speak for human resources). “Every single person is expected to make a difference, and the more you honor the Core Values, the more you see them happen.”
Azen, like every “teammate” I meet, radiates an almost evangelical loyalty to the company. Neither she nor anyone else I encounter acknowledges what can be seen as DaVita’s darker side: the years-long onslaught of lawsuits that accuse the company of everything from patient neglect and unfair business practices to Medicare fraud; federal investigations into its income statements; and the overarching fact that DaVita’s profits derive primarily from a taxpayer-funded health-care system that, according to critics, is driven by inefficiencies, conflicts of interest, and overbilling. These public-relations inconveniences will receive scant attention at this year’s Nationwide. The event, as any dedicated employee knows, is a time to celebrate, a time to embrace the “DaVita Way.”
At 8 a.m. sharp, a video brings the throngs in the ballroom to their feet as KT appears on several massive screens. He’s astride a Harley-Davidson, draped in a silky getup inspired by the Three Musketeers, his blond, boyish coif flitting in the breeze as he “travels” from Colorado to Nashville in front of an animated blue screen. Ever the ham, he stands on the seat, props his bare feet on the handlebars—his swashbuckling boots reside under a glass case in his Denver office—and waves to his fellow citizens while motoring past a comically unrealistic backdrop of Middle America. The video concludes with KT “riding” into Nashville. Then, in real life, he enters the ballroom on his Harley. As he cruises the aisles, klieg lights sweep the venue and cameras—some handheld, some on giant booms—dip and swirl to capture the delight of the attendees, who clap rhythmically to KT’s theme song, Bob Seger’s “Old Time Rock and Roll.” Thiry motors through the main aisle and onto the stage, kills the engine, dismounts, does a trademark somersault, and starts with a well-rehearsed call and response.
“Yo, DaVitAAAAA!” Thiry booms.
“YO, DAVITAAAAA!” the crowd echoes.
Thiry: “What is this company?”
Thiry: “Whose is it?”
Thiry: “What can it be?”
Thiry: “All for one!”
Crowd: “ONE FOR ALL!”
Thiry: “Damn straight!”
He congratulates the attendees for posting DaVita’s best clinical outcomes for the 12th consecutive year. (Thiry: “No brag!” Crowd: “JUST FACTS!”) Then, on the video screens, he posts a report card—his own. He’s proud to announce his first-ever rankings of “solid” or above in each of DaVita’s Core Values: service excellence, integrity, team, continuous improvement, accountability, fulfillment, and fun. Over the next two days, Thiry and his lieutenants will preach about the importance of “intentionality.” They’ll assure teammates that their very career choices make them unique and admirable. And they’ll discuss how Thiry’s ambitions for his company extend far beyond dialysis and into everyday health care. Heartfelt speeches, tributes, and award presentations will be accompanied by songs such as “Wind Beneath My Wings,” “Chariots of Fire,” and “What a Wonderful World.” When he isn’t turning somersaults or cracking jokes or doling out hugs and high fives, Thiry will well up with tears of pride and empathy, and he’ll reach, along with his emotive employees, for the tissue boxes placed on each end of every table in the ballroom. When KT is finished, these 3,000 front-liners won’t just be energized about their work; they’ll trumpet the DaVita Way to whomever they encounter. As Thiry loves to tell his troops: “We do dialysis, but we’re not about dialysis—we’re about life!”
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.”
In 1973, at Homestead High School outside Milwaukee, Kent Thiry staged his first theatrical act of empathy. As he tells it now, coaches at the school had an established rule dictating that male athletes couldn’t wear long hair. Thiry—himself a clean-cut kid—grew so appalled that he lobbied school board members to revoke the rule because of its “irrational, arbitrary definition of commitment.” Although he thought he’d secured enough support to reverse the ban, he overstepped. Before the school board meeting where the rule was to be discussed, 17-year-old Thiry jumped onto the school’s PA system—one of his tasks as student body president was to make the daily announcements—and urged everyone to show up and support the longhairs. The move repelled his administration allies and earned him an ass-chewing from the principal. The rule stood. Though it wasn’t exactly the March on Washington, the young idealist’s ill-fated crusade left an impression. “It was a flop in every way,” he says. “But I got to fight for something that I thought was right, which is a pretty good way to spend a life.”
When he wasn’t rallying students, Thiry, the second of six kids, honed his civic mindedness at home with his Midwestern family. (“On DaVita,” a reworded version of the University of Wisconsin fight song, “On Wisconsin,” is belted out heartily at many company events.) “People voted, people didn’t litter, and everyone gave to local activities,” he says. “Everyone got a job, behaved responsibly, paid their taxes. That was just the norm. If someone got sick or fell on hard times, you helped them out.”
Chief among Thiry’s inspirations was his father, who spent more than 25 years as a consultant for Arthur Andersen. “He said, ‘Study hard, do the best you can, and don’t make excuses. Don’t fall into a trap where you don’t have enough discipline; you own your effort and performance relative to your abilities.’?” Acting on his father’s advice, Thiry led blood drives, excelled academically, and played football and basketball despite his modest size. (Thiry’s glass-encased Musketeer boots might get the athletically built exec up to 5 feet 10 inches.) “What Kent lacked in natural ability, he made up for in practice ethics,” says Thiry’s younger brother Craig. “It was what our parents taught us, but I don’t think any of us have carried it as far as Kent has.”
Thiry majored in political science at Stanford and was a member of the school’s Phi Beta Kappa chapter. He graduated with honors in 1978, and a few years later landed at Harvard Business School. There he met Denise O’Leary, who still marvels at the way Thiry approached his Harvard courses. “He always made it seem like he’d read the case study on his way to class,” his wife recalls. “He’d stumble in with his notes barely together, the professor would call on him to open the discussion, and he’d give a killer opening. It never ceased to amaze me. He was an intense student, but he pulled a few rabbits out of his hat.” (Despite their similar backgrounds, the couple have never worked together. “No,” O’Leary says. “I’d kill him.”)
In 1983, shortly after graduating from Harvard as a Baker Scholar, the school’s second-highest designation, Thiry joined the Boston-based management consulting firm Bain & Company, where one of his recruiters was Mitt Romney. (About the presidential candidate, the pan-political Thiry—he’s long donated time and money to both sides of the aisle—will only divulge, “[Romney] was exceptionally smart and a superb problem-solver.”)
After eight years with Bain, Thiry joined Vivra, a midsize, Northern California–based kidney dialysis company. He eventually became CEO and began to hone his principles of intentionality—Thiry’s idea that almost anything people do should unfold with purpose, thoughtfulness, and efficiency. The practice would come to govern all aspects of his life. His exhausting work and travel schedule motivated him to track everything—literally. He set goals for “driveway time”—the number of evenings spent with his family. He would record the metrics daily, tweaking as necessary. He describes it now the way an accountant might outline a revenue sheet. “If I had a goal of spending 2.2 nights away from home every week and I was at 2.3, I’d cut a trip short, or not stay for a business dinner, or have someone else cover for me until I got it back down to 2.2,” he says. (He does the same thing with his workouts.) “It’s easy to lose track of things that are important, so a bad week becomes a bad month becomes a bad year. I marvel at people who bring such thoughtfulness to a problem at work and don’t bring the same thoughtfulness, brainstorming, problem-solving, re-engineering, and analytical attitude toward their personal lives.”
This philosophy is most evident in Thiry’s legendary “Question Nights,” which he dreamed up as his two children were nearing their teens. About once a week, the whole family would gather to discuss topics most people would reserve for term papers or the therapist’s couch: what law they might change, and why; how their friends might criticize their biggest fault; or what kind of sibling, child, or parent they’d been in the past week, and how they might improve. Any guests who happened to be there were not exempt from participating. “People want to talk about their problems,” Thiry says. “And this was about liberating people to be the humans that they’ve always wanted to be.”
Although the family was initially dubious, they grew to appreciate these odd meetings. “It became a way for Kent and I to discuss our failures as well as what we were proud of,” O’Leary says. “It let the kids see that even successful people like Mommy and Daddy make mistakes. That’s how you learn and grow, and you don’t have to be ashamed of it.” Their daughter, Christina Thiry, now 22, told me that her parents’ frank, deliberate, and open style earned her respect once she realized they too held themselves accountable for their actions. She credits Question Nights and similar family rituals with influencing her decision to choose an education-focused major at Stanford, from which she graduated in June. “I realized that whenever we had those discussions, I’d always talk about education, so clearly that mattered to me,” she says.
Throughout the ’90s, Thiry built Vivra into a nearly $600 million company before overseeing its sale. By this time he was ready to take a break, enjoy more driveway time at home in San Mateo, California, teach, write business articles, and travel. Before he could settle into his hiatus, he got a call from a larger but financially troubled dialysis company called Total Renal Care (TRC), inviting him to take the reins. Although he declined at first, TRC persisted. Around this time, says Thiry, he caught a showing of The Man in the Iron Mask, a critically panned film adaptation of the Three Musketeers legend starring Leonardo DiCaprio. “The Three Musketeers were famous for their dedication to their mission and to each other,” Thiry says. “They were the Marines of their time.” By the end of the film, he was dewy-eyed with inspiration, so thoroughly moved that he soon made a transformative life decision. Before he called TRC to accept its offer, he reached out to three former dialysis colleagues (including Yoda) and asked them simply, “Will you ride again?”
One of Thiry’s first acts as the new CEO was to gauge his new teammates’ interest in changing TRC’s name. By democratic vote at the inaugural Nationwide meeting in Phoenix, attendees chose to call their reborn company DaVita. Roughly translated from Italian, it means, “for life.”
Not long before Thiry would rally behind the high school hippies, Congress was creating a program that, by helping unhealthy Americans, would someday fatten many an entrepreneurial wallet, including Thiry’s. In 1972, Congress debated briefly and amicably over a Medicare system tweak that provided full dialysis coverage to anyone—not just the disabled or the elderly, for whom Medicare had been created seven years earlier. The framers expected the new program to serve about 11,000 people and cost $135 million annually (about $741 million in today’s dollars). They undershot: By the mid-1970s, private, for-profit dialysis companies emerged, proliferating at a pace that reflected Medicare’s dialysis guarantee and Americans’ increasingly poor health habits, particularly their obesity rates. This serendipitous blend has only gotten sweeter for dialysis companies: In 1997, all but three states reported obesity rates below 20 percent; by 2009, the only state that could make that claim was Colorado, which has since crept up to 21 percent. American domestic obesity rates are now higher than 35 percent, and they continue to soar.
Today, 40 years after Congress’ well-meaning but poorly calculated decision, more than 400,000 people receive dialysis in the United States at a cost of almost $80,000 per patient, per year. Medicare’s—and thus taxpayers’—annual tab runs about $20 billion. (Private insurers cover the rest.) American dialysis companies have spent four decades traveling a road paved with gold, and DaVita, which controls roughly one-third of the market—with about 100,000 of its patients covered by Medicare—has been accused of surreptitiously jackhammering extra nuggets for itself.
Take, for example, the company’s use of the drug Epogen. Better known as “Epo,” it’s used to counter anemia, a common side effect among ESRD patients that reduces red blood cells and increases the need for transfusions. Epogen was brought to market in 1989 by the pharmaceutical company Amgen. When used on dialysis patients, Epo is covered by Medicare; it earns Amgen around $2 billion per year and is the single-largest dialysis drug expenditure in the Medicare system.
Even though high doses of Epo can cause strokes, blood clots, and heart attacks, it’s still a highly effective and, in most cases, necessary tool in the treatment of ESRD. The trouble, critics of DaVita say, is that the company has quietly over-ordered the drug at bulk-rate prices, or flat-out overprescribed it, and then sent Medicare the bill. In 2002, a former Amgen employee sued DaVita, claiming that DaVita technicians were instructed by their bosses to dole out as much Epo as possible. The suit accused DaVita clinic administrators of allowing Amgen sales reps to examine patients’ charts—which would be a violation of federal privacy laws—and contended that DaVita frequently administered Epo in doses that “were more than medically necessary.” This past July, DaVita paid $55 million to settle the case; the terms of the deal allowed the company and its doctors to deny any wrongdoing. Another similar whistleblower suit, filed in 2007, is still pending, and it’s unlikely to be the last time someone accuses a dialysis company of such violations. “Dialysis is perhaps the biggest single component of Medicare,” says Michael Caddell, a Houston-based attorney who was lead counsel for the plaintiff in the settled lawsuit. “It’s an almost impossible industry for the government to manage, regulate, and control.”
Allegations of overbilling the government for drugs aren’t DaVita’s only purported infraction. Large dialysis companies routinely “buy up” groups of nephrologists, the M.D.s who diagnose and treat kidney disease. These doctors then refer patients needing dialysis to the companies with which they’re on contract. (DaVita also has begun creating “one-stop shops,” clinics that house DaVita-branded pharmacies and provide emergency services. Skeptics note that in-house emergency procedures might not get reported as they would when a patient is sent to a non-DaVita ER, thereby allowing DaVita to post favorable, but potentially misleading, clinical outcomes.) The Stark Law, passed in 1992 and revised in 1993, makes it illegal for doctors to refer patients to other health-care providers in which they have a financial stake. However, Congress has granted DaVita, its main competitor, Fresenius, and other dialysis providers key exemptions from Stark Law restrictions, on the grounds that, according to DaVita officials, “the provision of dialysis and related drugs present a low risk for potential abuse.” Such exemptions have enabled these business arrangements to continue almost unfettered.
Moreover, ESRD Networks, the dialysis industry’s primary nongovernmental quality-control organization, is comprised largely of dialysis company executives. At the federal level, Medicare’s governing body, the U.S. Centers for Medicare and Medicaid Services (CMS), has often employed senior-level officials with long-standing ties to the dialysis industry. For example, former CMS head Thomas Scully was on DaVita’s board when President George W. Bush appointed him to the post in 2001. DaVita admits to its—and its competitors’—influence in Washington but sees its power as a force for good. “I spend a lot of time with the dialysis community and the government working on our strategies, aligning our goals and objectives,” says LeAnne Zumwalt, a DaVita group vice president and one of the company’s liaisons in Washington. Because Medicare is the primary customer for all dialysis providers, Zumwalt says that companies don’t have to vie for market share; instead, they work in each others’ interests. “It is very amicable. You become close friends. Our industry is perceived [on Capitol Hill] as successful. We have the doctors, nurses, providers, and manufacturers aligned for what we want.”
Critics say this strategic placement of industry insiders has seemed to allow DaVita to elude law enforcement. Among the skeptics is the Justice Department itself. Since 2001, U.S. Attorney’s offices in Colorado, Missouri, and Texas have launched investigations into DaVita’s billing practices or its financial relationships with physicians. To date, none of the scrutiny has resulted in new lawsuits or prosecutions, and the investigations remain open and pending; DaVita officials won’t comment on any of them.
When it isn’t navigating its way through federal inquiries or whistleblower suits, DaVita encounters speed bumps at the clinical level, too. Dialysis patient advocates, many of them current or former nurses who have worked in the industry, cite dozens of examples in which for-profit dialysis companies routinely cut corners on treatment procedures, resulting in mistakes that have sickened—and sometimes killed—their patients. The more than half-dozen activists and patients I spoke with agreed that the most egregious violator, by far, is DaVita. Independent of one another, they have accused the company of undertraining its technicians, who in turn perform clinical procedures at substandard levels and sometimes let clinics become unsanitary. (The one clinic I visited, in Aurora, was spotless; it also was so new that it was mostly empty of patients and employees and didn’t yet have a Wall of Fame.) And, as the Denver Post reported in 2011, DaVita continues to reuse dialysis filters—dialyzers—on its patients more than most providers, a practice that’s safe as long as the filters are sterilized between treatments and not mistakenly shared with other patients. Although DaVita has openly defended the practice—its chief medical officer wrote an op-ed in response to the Post article—according to one ex-DaVita technician who requested anonymity, “If these techs have only worked at DaVita, that’s how they’ve been trained, and they don’t know any better.” (In a case that illustrates how horribly wrong dialysis can go, a nurse at a DaVita clinic in Lufkin, Texas, killed five patients in 2008 by injecting bleach into their bloodlines. Though her attorneys tried to blame the deaths on honest mistakes caused by DaVita’s shoddy clinical practices, last spring the nurse was convicted of first-degree murder and sentenced to life in prison.)
The same Kent Thiry who encourages his teammates to email him with concerns, critics say, isn’t so responsive to his patients. Some patients have accused techs of theft, sexual harassment, and, perhaps most often, of intimidating anyone who raises objections about quality of service. They say DaVita habitually ignores complaints, drags its feet, and twists the grievance process into a bureaucratic knot. The company is especially notorious among naysayers for refusing to treat patients who grouse too much, “dismissing” them to another clinic—usually not a DaVita center—regardless of the inconvenience it may cause. (This is especially harmful in rural areas, where the next clinic of any kind might be hours away.)
Some former patients have even accused DaVita of blackballing them to other non-DaVita dialysis clinics, which, if true, would be another federal privacy violation. “DaVita is number one in dumping patients,” says Arlene Mullin, an advocate in Battleground, Washington, who shared dozens of emails with me detailing alleged abuses of the patients she represents. She contends that DaVita clinics operate with virtually no accountability or oversight. “I’ve gotten notarized statements from patients so I can advocate for them, and neither ESRD Networks nor DaVita has recognized any of them. [ESRD Networks and the government] have no authority over these clinics. None.” Mullin claims that DaVita’s insider connections to CMS and ESRD Networks allow clinics to get tipped off about what should be surprise inspections. (She says this also happens at non-DaVita clinics.) The patient advocates I spoke with uniformly believe that ESRD Networks and CMS respond to grievances by stonewalling, burying them in bureaucracy, or ignoring them altogether. “Of all the patients I’ve helped to file complaints, in 100 percent of the cases, ESRD Networks has sided with the dialysis companies,” Mullin says. “Medicare has allowed this industry to oversee itself.”
Bill Peckham, a longtime dialysis patient turned activist blogger, goes a step further, saying the “all for one” DaVita Village concept simply doesn’t include patients. He likens the company to a village that mines coal. “We patients don’t have the voice of a citizenry; we’re just the coal.”
In June, I met with Thiry in one of DaVita’s reflection rooms. I’d already seen him a half-dozen times at speaking engagements inside and outside the company. At these events, he was always onstage or surrounded by his many handlers, and this was our sole extended one-on-one encounter. On the day of our sitdown, DaVita had not yet announced its $55 million whistleblower settlement, or the fact that news of this agreement would soon trigger multiple investigations into DaVita’s financial statements by law firms representing the company’s shareholders.*
We discuss Thiry’s Village, his youth and early career, his family, and his future, which he expects will have a strong public-service component. This, he says, will not include a run for public office, despite his long-standing connections to some of the political world’s loftiest stars.
As we speak, his sparkling, sky-blue eyes convey their now-familiar enthusiastic anticipation, the welcoming sense that he’s about to be presented with a problem he can’t wait to solve. When I ask about the relentless legal and ethical inquiries DaVita has faced, the CEO, for the first time, betrays his default up-with-people persona. His face flushes slightly and his voice tightens. Regarding the decade-long barrage of DOJ-led investigations, he explains that in the American health-care system, regulations are often clarified retroactively. “The government sometimes says, ‘It’s not black and white; it’s a gray area, and we think you went too far over the middle three years ago,’?” he says. “We aren’t perfect every single day, but we take our commandments, as we call them, very seriously.”
About the nurse in Texas who violated Thou Shalt Not Kill, Thiry is somber but almost resigned. He admits the inherent risk of such offenses, and that he can’t see a way to eliminate them. “If a nurse wants to harm patients and is seriously thoughtful about it,” he says, “whether you’re a hospital, a surgery center, or a dialysis clinic—it’s impossible to make that impossible.”
In the meditative silence of the reflection room, Thiry tells me, with characteristic pride, that DaVita’s clinical quality is “way better” than the typical not-for-profit dialysis company. The clinical numbers bear this out, he says, as do the smiling faces on all of those Walls of Fame. (Although the for-profit/nonprofit argument is debatable, even the doctor-activist Peter Laird admits he’s received some excellent care in his limited personal experience with DaVita clinics.) Thiry insists, without going into detail, that his company’s business model has saved money for taxpayers for years and has been noted “by a whole bunch of members of Congress” as a role model for American health care. About his persistent critics, Thiry’s response echoes many on his side of the national health-care debate. “It comes with the territory,” he says. “We don’t know of any health-care company in America that hasn’t had to go through investigations and audits of this sort, and very few have our 13-year track record. For some people it’s just unacceptable that this model is profit-based. They’ll always attack us. They’re not evil people. It’s just that their ideology doesn’t allow for a virtuous for-profit company.”
DaVita’s promise to become “the greatest health-care community the world has ever seen” purposely omits the word “dialysis,” another decision the company arrived at democratically. Last May, DaVita spent $4.42 billion to purchase HealthCare Partners, one of the largest networks of physicians in the United States, with more than 8,300 doctors handling almost 670,000 patients. In other words, regardless of whether you have kidney problems, the odds are increasing that your health-care needs may one day be assessed and administered by a company Kent Thiry runs.
Few people are in a better position to make this a reality. He’s got the momentum and the money, and he could hardly be more connected. President Obama’s health-care czar and deputy chief of staff, Nancy-Ann DeParle, made more than $2 million in compensation and stock sales as a DaVita board member from 2002 to 2008; and Thiry and Mitt Romney go back almost 30 years.
Then, of course, there are the “citizens.” As Thiry extends DaVita’s ambitions beyond dialysis, his village of 41,000 (and counting) is growing into an army. And that glittering new building at 16th and Wewatta isn’t so much a headquarters as it is a fortress; one that, so far, has been almost impenetrable. Unless Thiry and his devotees are derailed by more federal investigations, whistleblower suits, or what may prove to be false profit reports, the DaVita Way might one day become a philosophy that everyone working in or receiving health care must heed—regardless of whether they believe it’s “one for all” or “all for one.”
*Although the original version of this story reported that the United States Securities and Exchange Commission had launched an investigation of Davita’s financial statements, the SEC has not announced such an inquiry. We regret the error.
At a downtown Denver hotel, Yoda primes a new batch of DaVita teammates. It’s late May, and they’re here for one of the company’s two-day “Academy” orientation gatherings, held every few months around the country. About 350 newbies listen intently as the grandfatherly Yoda, in a white baseball jersey with “JEDI” in red and black across his chest, espouses the DaVita Way. “We dedicate our heads, hearts, and hands to pursue the mission, live the values, and build a healthy village,” he says. “You won’t find many senior executives at Fortune 500 companies telling you that we need to love each other, but that’s part of what we’re about.”
He explains the concept of “crossing the bridge,” DaVita’s term for embracing the company’s vision. It’s both figurative and literal: A 10-foot-long wooden bridge sits in the DaVita lobby and onstage at company events. The act of traversing it unfolds with sacramental solemnity. (Thiry makes a point of walking over it every day he’s in Denver.) Most of these folks won’t cross the bridge today; they’re excited to join this new, different, special company, but it’s too soon for them to undergo something so momentous. Instead, Yoda instructs the audience to ponder the company ethos. “I want you to look down at the table in front of you and think about how you give life,” he says, with the priestly conviction he delivers to his non-DaVita congregation. “Tell yourself out loud, ‘I give life.’?”
The crowd murmurs a response.
Yoda: “If you really believe it, say it to the person next to you: ‘I give life.’?”
The crowd does as instructed, but Yoda wants more. “Yell out what you do for a living! ‘I GIVE LIFE!’?”
The rookies pipe up: “I GIVE LIFE!”
Moments later, the iconic, thumping piano notes of Bob Seger’s “Old Time Rock and Roll” crank unexpectedly from the loudspeaker. No one knows what to make of it until they see the mayor of DaVita Village, here to thrill the crowd with a surprise cameo. Thiry runs from the back of the room through the audience, high-fiving the delighted newcomers as they applaud and cheer. As the music fades, he gives his new acolytes the first of many lessons; this one is about the star that dots the “I” in the company logo. Whenever it’s shown on-screen at these events, the star leaps through the “V” and lands triumphantly atop the “I.” “The dancing star represents YOU and the good you’re doing each and every day,” says Thiry, imploring them, as always, to continue spreading his word, to sway this world of detractors and nonbelievers more warmly toward the DaVita Way. “I want you to tell people about our dancing star!”