Q3 2010 Earnings Call
November 04, 2010 5:00 pm ET
LeAnne Zumwalt - VP of IR
Richard Whitney - Chief Financial Officer
Luis Borgen - Chief Financial Officer and Senior Vice President
Jim Gustafson - Vice President of Investor Relations
Kent Thiry - Chairman and Chief Executive Officer
Andreas Dirnagl - Stephens Inc.
Gary Lieberman - Wells Fargo Securities, LLC
Justin Lake - UBS Investment Bank
Kevin Ellich - RBC Capital Markets Corporation
Darren Lehrich - Deutsche Bank AG
Jeff Hoernemann - Feltl and Company, Inc.
Mark Arnold - Piper Jaffray Companies
Gary Taylor - Citigroup Inc
Kevin Fischbeck - BofA Merrill Lynch
Previous Statements by DVA
» DaVita Q2 2010 Earnings Call Transcript
» DaVita, Inc.Q1 2010 Earnings Call Transcript
» DaVita Inc. Q4 2009 Earnings Call Transcript
Thank you, David, and welcome, everyone, to our third quarter conference call. We appreciate your continued interest in our company. I'm Jim Gustafson, Vice President, Investor Relations. And with me today are Kent Thiry, our CEO; Luis Borgen, our CFO; as well as LeAnne Zumwalt and Rich Whitney.
I'd like to start with our forward-looking disclosure statements. During this call, we may make forward-looking statements within the meaning of federal securities laws. All of these statements are subject to known and unknown risks and uncertainties that could cause the actual results to differ materially from those described in the forward-looking statements. For further details concerning these risks and uncertainties, please refer to our SEC filings, including our most recent quarterly report on Form 10-Q and annual report on Form 10-K. Our forward-looking statements are based on information currently available to us, and we do not intend and undertake no duty to update these statements for any reason.
Additionally, we'd like to remind you that during this call, we may discuss some non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most comparable financial GAAP financial measures is included in our Form 8-K submitted to the SEC and available on our website.
I will now turn the call over to Kent Thiry, our Chief Executive Officer.
Good afternoon or evening, depending on where you are. Thanks for joining our call. We had a solid quarter in line with our previous expectations. I'll try to quickly cover four topics: number one, clinical outcomes; number two, bundling; number three, international dialysis; and number four, our outlook.
First, I'll review our clinical outcomes first because we are first and foremost a caregiver company at this point, serving nearly 124,000 patients. With respect to adequacy, which is essentially how well we are doing at removing toxins from our patients' blood, this quarter, 96% of our hemodialysis patients had a Kt/V greater than 1.2. That's a 90-day data. Second, with respect to vascular access, 67 of our patients have fistulas, the preferred form of vascular access, also a 90-day data. And third, with respect to anemia management, physicians have managed 69% of our patients to hemoglobin levels between 10 [g/dL] and 12 [g/dL] over the last three months.
For these and virtually all other clinical measures, our patient outcome has compared very favorably to all national averages. And our quality of critical care not only results in healthier patients, but also drives reductions in hospitalizations and surgical procedures and therefore, generates significant savings for the U.S. healthcare system.
Subject number two is bundling. We have notified CMS that we will opt into the bundled reimbursement system beginning January 1, 2011. Our data says that most providers have made a similar decision as far as opting in. While short-term economics would have argued for transitioning not 100% of our centers, opting in was the best long-term choice.
I will make two other points on bundling-related issues. We are intensely working on several work streams to offset the payment cuts. And as to the second cut, that being the transition adjustment, the kidney community has been working with CMS and members of Congress asking that CMS revise their estimate based on the actual data of how people are deciding on the opt-in versus transition choice. Our request is consistent with Congressional intent in the original legislation and is unambiguously the right policy decision.
The good news is several members of Congress are absolutely persuaded that a fix is the right and fair thing to do. The bad news is that the combination of a lame-duck session and the first half of 2011 legislative season, which could be incredibly volatile, could make for a very difficult period in which to get a fix attached to anything been done. Without a correction, without a fix, the government will be seriously underfunding the dialysis community, further stressing providers who are already losing money on Medicare.
The third subject is international dialysis. We are pursuing launching dialysis operations in several countries outside the U.S. We believe the long-term upside opportunity dramatically outweighs the downside risk, and that international markets can be a long-term growth driver for our shareholders, long term defined as the second half of this decade and beyond.
Some of the primary factors that led us to this conclusion include that the market is large, appears to have reasonable margins, is growing more rapidly than the U.S. market and there is significant share remaining outstanding. In addition, privatization and government outsourcing trends are gaining some momentum globally with governments looking for scaled healthcare solutions.
We realized that building an international business with attractive and sustainable returns will be challenging, will take time and will expose us to new risks. In addition, of course, it will require a sustained financial investment, which will be dilutive to earnings over the next several years as we start up in order to acquire new operations. And Luis will provide some numerical guidance regarding 2011 on this subject in a few minutes.