DaVita eyes new markets with $4.4 billion HealthCare deal

DENVER, Mon May 21, 2012 – DaVita Inc., the biggest U.S. operator of dialysis clinics, has agreed to buy privately-held HealthCare Partners for about $4.42 billion in cash and stock to expand into new markets to help offset potential revenue pressures in its main business.

HealthCare Partners, based in Torrance, California, runs medical groups and physician networks in Southern California, Central Florida, and Southern Nevada. Its revenues in 2011 were about $2.4 billion.

The company provides its services to more than 667,000 patients and has total care dollars under management of about $3.3 billion, DaVita said.

The deal follows changes to the way healthcare companies are reimbursed by U.S. state-run health insurer Medicare which could put pressure on revenues across the industry.

Medicare changed its reimbursement model last year to encourage clinic operators to reduce costs and use drugs more sparingly. It no longer pays for individual services and drugs but instead makes a lump-sum payment per dialysis session, as long as patients are kept in good health.

Analysts have said this favors large players such as DaVita and its biggest rival FMC, the U.S. arm of Germany’s Fresenius Medical Care, because they are better placed to cut costs, but it also creates revenue pressures.

DaVita Chief Executive Kent Thiry said DaVita was currently focused on integrated care for specialized kidney care services. “HealthCare Partners executes on that same mission across a full and deep array of healthcare services in three geographic markets.”