Davita is in a very sensitive and difficult business but in many ways it is also a simple one. The company's success is predicated on an ever increasing supply of patients, primarily diabetics, to initiate dialysis each year. The other secret to success is keeping ESRD patients alive as long as possible. COVID-19 took a lot of lives of people on dialysis and reduced initiations of treatment, probably due to high mortality among diabetics. Pre-COVID, the large dialysis providers were competing for a net growth of 15k net new patients each year. During 2021, annual incidence was reduced to about 3k per year. Assuming weekly dialysis initiations (~2.5k) and mortality (~1.5k) return to pre-COVID levels, it will be late 3Q before prevalence returns to normal. Unfortunately mortality persists and 1Q 2021 patient prevalence promises to look more like 2Q 2021 than 4Q 2021.
Of course, the confounding factors of improved payor mix courtesy of the temporary ACA subsidies and a payment boost from Medicare, mean 1Q 2022 may turn out just fine. But the future is a bleak one.
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Emily Evans
Managing Director – Health Policy
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