$350M Kickback Fine Can’t Derail Future of Dialysis Provider
By DaVita HealthCare has paid $350 million to settle kickback allegations, but has continued on with a large acquisition while garnering national praise.
- Despite paying $350 million to the Justice Department to settle allegations of a decade-long patient referral kickback scheme, DaVita HealthCare Partners is slated to go ahead with its acquisition of Colorado Springs Health Partners (CSHP), and has even snagged a highly-coveted recognition from the Reputation Institute and Harvard Business Review. Despite being well aware of the kickback case and a number of other lawsuits brought against the company in the past few years, the physician owners of CSHP unanimously decided to continue the acquisition process.
“We explored that as part of our due diligence process, and any concerns were addressed as part of that,” Lynne Jones, director of business development and marketing for CSHP, said to The Gazette.
“Obviously, nothing that we found put us in the position where we would have considered changing the deal or not moving forward. They are a big company that is under a lot of scrutiny.”
The settlement follows allegations that DaVita targeted physician groups with a high number of renal disease patients, offering them favorable acquisition or interest packages in exchange for becoming a preferred referral partner. DaVita is also alleged to have roped physicians into entering non-compete agreements with the company’s clinics that effectively barred providers from sending patients to other dialysis centers.
“Health care providers should generate business by offering their patients superior quality services or more convenient options, not by entering into contractual agreements designed to induce physicians to provide referrals,” said Deputy Assistant Attorney General for the Justice Department’s Civil Division Jonathan F. Olin, upon announcing the settlement.
“This case involved a sophisticated scheme to compensate doctors illegally for referring patients to DaVita’s dialysis centers,” added US Attorney John Walsh. “Federal law protects patients by making buying and selling patient referrals illegal, so as to ensure that the interest of the patient is the exclusive factor in the referral decision. When a company pays doctors and/or their practice groups for patient referrals, the company’s focus is not on the patient, but on the profit to be extracted from providing services to the patient.”
But CSHP was not put off by the details of the case, and is eager to join the large DaVita footprint that will now expand into a seventh state. “We have long focused on a physician-driven, patient-centric approach to delivering the right care, in the right place, at the right time,” stated Deborah Chandler, executive vice president and CEO of CSHP. “CSHP is excited to join forces with HealthCare Partners given their nationally renowned leadership in providing coordinated care that is physician-led, value and outcomes focused, and cost effective.” Chandler will keep her job under the new arrangement, and DaVita has stated that it does not expect to make significant changes to the way CSHP operates.
Despite its legal woes, DaVita scores highly on quality measures in the CMS Quality Incentive Program, the Reputation Institute says. The organization ranks CEO Kent Thiry 37th on its list of the top 100 best-performing CEOs and has praised DaVita’s attention to innovation, governance, and leadership.
