DaVita HealthCare Partners Inc. Comments on the Final CMS ESRD Rates and Provides Initial 2014 Operating Income Guidance
25 November 2013 - 9:00PM
Business Wire
DaVita HealthCare Partners Inc. (NYSE: DVA) today commented on
the final Centers for Medicare and Medicaid Services (CMS) Medicare
ESRD rule for 2014 and announced initial 2014 operating income
guidance.
Final CMS Rule
LeAnne Zumwalt, Group Vice President said, “On the dialysis
rule, the bad news is that CMS appears to have accepted the premise
that the language in the American Taxpayer Relief Act of 2012
required it to make a partial rebasing of the bundle. This could
unfairly result in cuts of nearly $30 per treatment over a three to
four year period by looking only at pharmaceutical economics. This
means that Medicare dialysis rates will be flat in 2014 and 2015 in
an environment of increasing expenses.
“The good news is that Medicare rates will not be decreased next
year, when most thought rates would be down. In addition, we get to
work with Congress and CMS on trying to mitigate future cuts, and
CMS has a number of appropriate reimbursement levers to pull to
offset cuts a few years out if it chooses to do so, since Medicare
reimbursement already fails to cover the full cost of caring for
Medicare patients.”
Guidance
Given the issuance of the final CMS rule, the company is now in
a position to provide initial 2014 guidance and expects 2014
enterprise operating income to be in a range of $1.675 to $1.850
billion.
The company expects 2014 operating income for our dialysis
services and related ancillary business to be in the range of
$1.425 to $1.540 billion. The primary reasons for a likely
year-on-year decline in operating income are Medicare patient
expense increases, commercial rate and mix pressures, and health
care exchange dynamics.
The company expects 2014 operating income for HealthCare
Partners (HCP) to be in the range of $250 to $310 million. The
primary reason for a substantial expected year-on-year decline in
HCP operating income in 2014 is the previously announced Medicare
Advantage rate cuts, which the company will have limited ability to
offset.
These projections and the underlying assumptions involve
significant risks and uncertainties, including those described
below and actual results may vary significantly from these current
projections.
Capital Markets Day
The company will discuss its outlook in more detail at its
upcoming Capital Markets Day in New York City on Monday, December
9, 2013, at 9:30 a.m. Eastern Time.
This meeting is being broadcast live by conference call and
webcast. You can access the webcast at the DaVita HealthCare
Partners investor relations web page. You can join this call
on:
Monday, December 9, 2013Starting at 9:30 a.m.
ESTDial in number: 800-399-4406Webcast:
www.davita.com/investors
The event will be held at the New York Palace Hotel, 455 Madison
Avenue, New York, NY 10022. If you plan to attend, please register
with us by emailing your name and company affiliation to
Kelly.Perez@davita.com.
If you are joining the presentation by conference call, please
refer to the “DaVita HealthCare Partners Capital Markets Call” and
provide the operator with your name and company affiliation.
Investors who are unable to listen live will be able to access the
presentation and an audio replay via our web site at
www.davita.com/investors. There will be no telephone
replay.
About DaVita HealthCare Partners
DaVita HealthCare Partners, a Fortune 500® company, is the
parent company of DaVita and HealthCare Partners. DaVita is a
leading provider of kidney care in the United States, delivering
dialysis services to patients with chronic kidney failure and end
stage renal disease. As of September 30, 2013, DaVita operated or
provided administrative services at 2,042 outpatient dialysis
centers in the United States serving approximately 166,000
patients, and at 66 centers in ten countries outside of the United
States. HealthCare Partners manages and operates medical groups and
affiliated physician networks in California, Nevada, Florida,
Arizona and New Mexico in its pursuit to deliver excellent-quality
health care in a dignified and compassionate manner. As of
September 30, 2013, HealthCare Partners provided integrated care
management for approximately 760,000 managed care patients. For
more information, please visit DaVitaHealthCarePartners.com.
DaVita, HealthCare Partners and DaVita HealthCare Partners are
trademarks or registered trademarks of DaVita HealthCare Partners
Inc.
Forward Looking Statements
This release contains forward-looking statements within the
meaning of the federal securities laws, including statements
related to our guidance and expectations for our 2014 consolidated
and dialysis services and related ancillary businesses operating
income and HCP’s 2014 operating income. Factors that could impact
future results include the uncertainties associated with the risk
factors set forth in our SEC filings, including our annual report
on Form 10-K for the year ended December 31, 2012, our quarterly
report on Form 10-Q for the quarter ended September 30, 2013 and
subsequent quarterly reports to be filed on Form 10-Q, or our
current reports on Form 8-K. The forward-looking statements should
be considered in light of these risks and uncertainties.
These risks and uncertainties include, but are not limited to,
and are qualified in their entirety by reference to the full text
of those risk factors in our SEC filings relating to:
- the concentration of profits generated
by higher-paying commercial payor plans for which there is
continued downward pressure on average realized payment rates, and
a reduction in the number of patients under such plans, which may
result in the loss of revenues or patients,
- further reduction in government payment
rates under the Medicare End Stage Renal Disease program or other
government-based programs,
- the impact of health care reform
legislation that was enacted in the United States in March
2010,
- the impact of the Center for Medicare
and Medicaid Services (CMS) 2014 Medicare Advantage benchmark
structure,
- the impact of the American Taxpayer
Relief Act,
- the impact of the sequestration that
went into effect on April 1, 2013,
- the impact of disruptions in federal
government operations and funding,
- changes in pharmaceutical or anemia
management practice patterns, payment policies, or pharmaceutical
pricing,
- legal compliance risks, including our
continued compliance with complex government regulations and
current or potential investigations by various government entities
and related government or private-party proceedings, including
risks relating to the resolution of the 2010 and 2011 U.S. Attorney
Physician Relationship Investigations,
- our ability to maintain contracts with
physician medical directors, changing affiliation models for
physicians, and the emergence of new models of care introduced by
the government or private sector, that may erode our patient base
and reimbursement rates,
- our ability to complete any
acquisitions, mergers or dispositions that we might be considering
or announce, or to integrate and successfully operate any business
we may acquire or have acquired, including HCP, or to expand our
operations and services to markets outside the United States,
- risks arising from the use of
accounting estimates, judgments and interpretations in our
financial statements,
- the risk that the cost of providing
services under HCP’s agreements may exceed our compensation,
- the risk that further reductions in
reimbursement rates, including Medicare Advantage rates, and future
regulations may negatively impact HCP’s business, revenue and
profitability,
- the risk that HCP may not be able to
successfully establish a presence in new geographic regions or
successfully address competitive threats that could reduce its
profitability,
- the risk that a disruption in HCP’s
healthcare provider networks could have an adverse effect on HCP’s
business operations and profitability,
- the risk that reductions in the quality
ratings of health maintenance organization plan customers of HCP
could have an adverse effect on HCP’s business, or
- the risk that health plans that acquire
health maintenance organizations may not be willing to contract
with HCP or may be willing to contract only on less favorable
terms.
We base our forward-looking statements on information currently
available to us at the time of this release, and we undertake no
obligation to update or revise any forward-looking statements,
whether as a result of changes in underlying factors, new
information, future events or otherwise.
Investor Contact:DaVita HealthCare Partners Inc.Jim
Gustafson310-536-2585Jim.gustafson@davita.com
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