Acquisition Particulars

DaVita dialysis services is now reaping the benefits of its acquisition of a rival firm, DSI Renal.

In the third quarter of 2011, DaVita reported a higher profit because of new revenue streams from its acquisition. According to Associated Press (AP), for the quarter that ended September 30, DaVita earned $135.3 million, an improvement over the $119.4 million for the same time period last year. The company’s revenue increased 9.5 percent to $1.8 billion for the period.

At the close of the quarter, the company had 1777 outpatient dialysis centers serving roughly 138,000 patients. The company acquired 113 new centers with its purchase of DSI Renal and divested 28 centers to complete the acquisition.

The company reiterated its expected 2011 income guidance of between $1.1 billion and $1.2 billion.

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On the downside of business, however, the company noted that it expected to get subpoenaed by federal investigators looking into payments made to the company for dialysis services in New York State’s Medicaid program. This would add to subpoenas in recent years from U.S. Justice Department staff in Missouri and Colorado and Health and Human Services officials in Texas. The New York investigation will examine payments for infusion drugs for dialysis that are covered by the state’s Medicaid system, used by the poor and uninsured.

In a smaller bit of acquisition news, there is currently debate in Vermont, which is also playing out around the country, as established dialysis clinics in smaller markets sell off to larger companies that could run them more efficiently. In Vermont, the sale of five dialysis clinics to Fresenius may bring in an estimated $26 million to the state’s largest hospital.

Fletcher Allen Health Care operates the clinics at a loss. Officials there say that the sale of the clinics to Fresenius Medical Care will let the Fletcher Allen hospital continue to offer a necessary service for patients in a more cost-effective way, according to Vermont Digger, a journalism web site.

Representatives of the Vermont Federation of Nurses and Health Professionals are critical of the proposed selloff. They say that the sale could worsen quality of care for patients and decrease wages for hospital workers who may staff those clinics.

Fresenius is applying for approval from the state to purchase the clinics. Vermont Digger reported that the state nurses’ union is concerned about public input in the state approval process, because an act passed in the most recent legislative session eliminated the Public Oversight Commission.

In 2010, Fletcher Allen publicly announced it would sell five clinics to Bio-Medical Applications of New Hampshire, Inc., which is a subsidiary of Fresenius Medical Care North America.