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Colorado Springs medical practice could be on the block after DaVita absorbs huge losses

November 9, 2017 Updated: November 11, 2017 at 7:04 am
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photo - (Photo courtesy of DaVita Medical Group/Facebook)
(Photo courtesy of DaVita Medical Group/Facebook) 

Denver-based kidney care giant DaVita Inc. is looking at selling all or some of the medical practices it has acquired during the past few years, including two in Colorado Springs, after disappointing financial results triggered huge third-quarter losses.

DaVita Medical Group reported a $5 million operating loss Tuesday despite eliminating 350 non-clinical positions during the quarter that should save the medical practice $40 million next year. The company lost $214.5 million, or $1.14 a share, during the July-to-September period after writing off $601 million, or nearly 25 percent, of the overall value of the medical group, which operates practices in California, Colorado, Florida, Nevada, New Mexico and Washington serving more than 700,000 patients.

Despite the third-quarter loss, DaVita still made profits totaling $360.2 million, or $1.86 a share, on revenue totaling $11.5 billion during the first nine months of the year. The earnings were down 50 percent from the same period a year ago, while revenue was up 4.3 percent.

Joel Ackerman, DaVita chief financial officer, blamed the medical group's losses on $30 million in higher-than-expected medical costs resulting from increased utilization and sicker patients and delayed Medicare payments from the federal government.

DaVita CEO Kent Thiry called the medical group's losses "extremely disappointing," but said the company's management "still believe in the value and potential of these assets and teams." Nonetheless he told stock analysts Tuesday during a conference call that DaVita is "intensely focused" on reducing the losses and the company is "pursing strategic alternatives for underperforming assets across our businesses and across markets."

DaVita is looking at "different options in every single market as well as the aggregate," Thiry said during the call. Rather than selling the entire medical group, that could include selling physician groups in one state or geographic area to local investors, he said.

A DaVita spokesman declined to comment beyond what Thiry and Ackerman said on the conference call and didn't respond to an email question about whether any employees of DaVita Medical Group or its Mountain View Medical Group were included in the layoffs.

DaVita bought Colorado Springs Health Partners in 2015 and renamed it DaVita Medical Group in July. The company acquired Mountain View Medical Group in February, giving DaVita practices with 210 doctors, physician assistant, nurse practitioners and nurses and about 700 other employees in 20 locations serving nearly 200,000 patients, making it the largest local medical practice. The two practices operate under separate management.

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