cubsfan Posted December 19, 2017 Share Posted December 19, 2017 I just talked to a friend who used to cover healthcare and used to follow DVA for many years. It seems to me the thesis can be summarized as following: 1. Insurance companies don't really care much about the payments to dialysis companies. It's not much compared to other stuffs they have to pay. And they know their payment is capped, which is more important to them. 2. Govt has be very careful and will fight an uphill war to lower payment. Because they are not dealing with a single drug company. They are dealing with all these mom and pop shops and low income people who depend on it. A lot of administrative burden for them to do that :)Plus, the profit is not excessive. 3. They are a duopoly. They have a lot of power in controlling their input costs such as paying for the drugs needed. 4. The current payment scheme is written into law for a long time. It's unlikely going to change. That's good input. The rate has to be attractive enough for the DVA and others to keep expanding. You sure don't want the gov running this type of business. Just look at the VA Hospitals. Link to comment Share on other sites More sharing options...
Spekulatius Posted December 20, 2017 Share Posted December 20, 2017 I just talked to a friend who used to cover healthcare and used to follow DVA for many years. It seems to me the thesis can be summarized as following: 1. Insurance companies don't really care much about the payments to dialysis companies. It's not much compared to other stuffs they have to pay. And they know their payment is capped, which is more important to them. 2. Govt has be very careful and will fight an uphill war to lower payment. Because they are not dealing with a single drug company. They are dealing with all these mom and pop shops and low income people who depend on it. A lot of administrative burden for them to do that :)Plus, the profit is not excessive. 3. They are a duopoly. They have a lot of power in controlling their input costs such as paying for the drugs needed. 4. The current payment scheme is written into law for a long time. It's unlikely going to change. That's good input. The rate has to be attractive enough for the DVA and others to keep expanding. You sure don't want the gov running this type of business. Just look at the VA Hospitals. I am fairly certain that the costs would increase and potentially double, if the government would run this business. Link to comment Share on other sites More sharing options...
RichardGibbons Posted December 20, 2017 Share Posted December 20, 2017 I am fairly certain that the costs would increase and potentially double, if the government would run this business. Just out of curiosity, what about DaVita makes you think its costs would double? Healthcare expenses across the world vs. the USA shows conclusively that one thing the government does much more inexpensively than private business is medicine, so I'm curious why you think DaVita's doesn't fit that model. Link to comment Share on other sites More sharing options...
cubsfan Posted December 20, 2017 Share Posted December 20, 2017 DaVita is all about efficiency and high quality of care and lower cost. Seems the complete opposite of the federal government. It would be hard for me to imagine a government run dialysis business caring one lick about throughput. Plus this dialysis business is very people intensive with highly skilled personnel. Link to comment Share on other sites More sharing options...
RichardGibbons Posted December 21, 2017 Share Posted December 21, 2017 Makes sense. Thanks, Cubs. Link to comment Share on other sites More sharing options...
Spekulatius Posted December 23, 2017 Share Posted December 23, 2017 I am fairly certain that the costs would increase and potentially double, if the government would run this business. Just out of curiosity, what about DaVita makes you think its costs would double? Healthcare expenses across the world vs. the USA shows conclusively that one thing the government does much more inexpensively than private business is medicine, so I'm curious why you think DaVita's doesn't fit that model. The dialysis business is unlike the drug business and has much lower margins, high capex relative to the revenue. The employees are not particularly well paid (maybe $30-35 for nurse, and $10-20 for techs). Its based on achieving high throughput and productivity. The government would not be able to hire the necessary employees at such relatively low wages and overhead cost and productivity would be way lower. Also, the government sponsored single payer healthcare does not mean that the providers are government agencies. In Europe, most providers are not government agencies, but the rules and the framework are determined by the government . That’s a big difference. I would bet that the cost for dialysis Europe is not much different than the cost in the US (for Medicare). Link to comment Share on other sites More sharing options...
karthikpm Posted December 23, 2017 Share Posted December 23, 2017 Here is a nice comparison of costs. Little dated. I think the big difference in the US is the number of patients on dialysis and candidacy for dialysis. Patient selection in the US is lax compared to the Eurozone. https://www.asn-online.org/policy/webdocs/asndagreimbursementdialysis.pdf Link to comment Share on other sites More sharing options...
Txvestor Posted December 23, 2017 Share Posted December 23, 2017 This precisely exemplifies when people repeatedly talk about “health care costs” in the US and “poorer outcomes”. There’s little to no focus on such factors in the analysis. Many of these factors would be pertinent to you if you are the patient and the American public is sure not willing to compromise very much on this, and the politicians have sold them on their “Healthcare as a right”. There are many such examples in the system. Link to comment Share on other sites More sharing options...
Cigarbutt Posted December 23, 2017 Share Posted December 23, 2017 Disclosure: Have been looking at DVA for some time. Still a lot of work to do. In terms of this specific sub-question: @RichardGibbons, Concerning the notion of getting your bang for the buck, most would agree that this has to be addressed on a case by case basis. And the discussion may rapidly degenerate. I would submit that higher costs do not automatically result in better care (and sometimes even may be correlated with poorer health outcomes). Focus on DVA. The article submitted by karthikpm is one of the best out there. But comparison is frought with difficulties as 1-there are blended, direct and indirect costs, 2-the patient populations are different and 3-there are purchase power parity adjustments. Also most studies discussing the topic (cost) often have a focus on the relative (cost) advantage of PD vs HD and not on international pairing (apples to oranges). Here are two more for those interested: https://f1000research.com/articles/2-273/v1 see table 1 https://academic.oup.com/ndt/article/28/10/2553/1807345 The best answer about cross-country cost comparisons is I don't know. For the private/public question which is related, my impression however would go along what Spekulatius describes. Dialysis treatment can be relatively standardized (evaluation/selection, treatment itself and routine follow-up) and is relatively less affected by factors that drive costs much higher in the healthcare system elsewhere. The over-riding principle for DVA is that its operations can be schematically compared to a utility 1-that requires a high investment in real assets, 2-whose "reasonable" return is directly or indirectly negotiated with a third party (government) and 3-which can benefit from efficiency gains and scale (incentive to do the right thing AND make money). I submit that this is an area where a private player can make a difference (higher quality of care and lower costs), with shareholders pocketing at least part of the difference. With expected pressure to contain or reduce costs, the moat that DVA seems to have may become more and more valuable. Plan to contribute more if I come up with something useful. Link to comment Share on other sites More sharing options...
ValueMaven Posted December 25, 2017 Share Posted December 25, 2017 Awesome insight...Thanks! One really does wonder why Berkshire hasn't acquired DaVita at this point...Thiry would fit very well into Berkshires culture Sincerely, ValueMaven Link to comment Share on other sites More sharing options...
cubsfan Posted December 25, 2017 Share Posted December 25, 2017 Awesome insight...Thanks! One really does wonder why Berkshire hasn't acquired DaVita at this point...Thiry would fit very well into Berkshires culture Sincerely, ValueMaven Berkshire would only consider acquiring DVA if that is what Davita wanted - and it appears DVA does not want to be acquired at this point. Berkshire does not do hostile takeovers. https://www.bizjournals.com/denver/news/2013/05/07/warren-buffetts-berkshire-hathaway.html Under the pact, Berkshire agreed not to pursue "any business combination, merger, tender offer, exchange offer or similar transaction” involving DaVita. It also agreed not to try to place a director on DaVita’s board or to sell off large blocks of stock at one time to one buyer without DaVita’s approval. The agreement was signed by Ted Weschler, who as a Berkshire investment manager has been buying DaVita shares, and DaVita President Javier Rodriguez. Link to comment Share on other sites More sharing options...
ValueMaven Posted December 29, 2017 Share Posted December 29, 2017 I agree - but that was almost 5 years ago... a lot has changed since then!! DVA would fit very nicely inside BRKs ownership portfolio Link to comment Share on other sites More sharing options...
ValueMaven Posted January 4, 2018 Share Posted January 4, 2018 you have to wonder how aggressive mgmt is at these levels with the monster buyback...just given the stock is up 35% in a matter of 2 months Link to comment Share on other sites More sharing options...
MrB Posted January 4, 2018 Share Posted January 4, 2018 Today: DaVita (NYSE:DVA) upgraded to Buy by BofA/Merrill Lynch. ??? Link to comment Share on other sites More sharing options...
sleepydragon Posted January 4, 2018 Share Posted January 4, 2018 Wolfe research also listed DVA as on their researchers' "Top 2018 idea" Link to comment Share on other sites More sharing options...
ValueMaven Posted January 4, 2018 Share Posted January 4, 2018 does anyone have these reports, or a recap they can post? sincerely, valuemaven Link to comment Share on other sites More sharing options...
DooDiligence Posted January 5, 2018 Share Posted January 5, 2018 (Baxter + DVA) - (Anesthetics & Bio-surgical Supplies) = Fresenius? Rumormongering is just another town in Holland Link to comment Share on other sites More sharing options...
MrB Posted January 5, 2018 Share Posted January 5, 2018 (Baxter + DVA) - (Anesthetics & Bio-surgical Supplies) = Fresenius? Rumormongering is just another town in Holland Rumorongering Link to comment Share on other sites More sharing options...
MrB Posted January 5, 2018 Share Posted January 5, 2018 DAVITA INC DVA.N: BERNSTEIN RAISES TARGET PRICE TO $84 FROM $59.50 - Reuters News Link to comment Share on other sites More sharing options...
DooDiligence Posted January 5, 2018 Share Posted January 5, 2018 (Baxter + DVA) - (Anesthetics & Bio-surgical Supplies) = Fresenius? Rumormongering is just another town in Holland Rumorongering True but is it any more moronic than sell siders snapping their fingers & upping a value by 30% or more? Apologies if you're Dutch (I love everything about you guys but you have REALLY long street names.) Link to comment Share on other sites More sharing options...
ValueMaven Posted January 10, 2018 Share Posted January 10, 2018 One of the great capital return stories in the market today...the name continues to work...huge buyback, reduction of leverage, improving business trends, and lower tax rate. Sincerely, VM Link to comment Share on other sites More sharing options...
ValueMaven Posted January 11, 2018 Share Posted January 11, 2018 company presented at JPM healthcare conference yesterday afternoon and I think the Q&A went better then expected...stock turned in the afternoon. Check out the Q&A were they talk about aggressively giving capital back to the shareholders, and the recent DMG deal...so of those comments were really interesting. sincerely, valuemaven Link to comment Share on other sites More sharing options...
MrB Posted January 11, 2018 Share Posted January 11, 2018 company presented at JPM healthcare conference yesterday afternoon and I think the Q&A went better then expected...stock turned in the afternoon. Check out the Q&A were they talk about aggressively giving capital back to the shareholders, and the recent DMG deal...so of those comments were really interesting. sincerely, valuemaven Thanks for the heads up! https://jpmorgan.metameetings.net/events/healthcare18/sessions/13925-davita-inc/webcast Link to comment Share on other sites More sharing options...
MrB Posted January 11, 2018 Share Posted January 11, 2018 Getting regular updates now - moving along nicely on both Acts. Dialysis PATIENTS Demonstration Act https://www.congress.gov/bill/115th-congress/house-bill/4143/cosponsors?pageSort=lastToFirst&loclr=cga-bill Access to Marketplace Insurance Act https://www.congress.gov/bill/115th-congress/house-bill/3976/cosponsors?pageSort=lastToFirst&loclr=cga-bill Link to comment Share on other sites More sharing options...
sleepydragon Posted January 11, 2018 Share Posted January 11, 2018 company presented at JPM healthcare conference yesterday afternoon and I think the Q&A went better then expected...stock turned in the afternoon. Check out the Q&A were they talk about aggressively giving capital back to the shareholders, and the recent DMG deal...so of those comments were really interesting. sincerely, valuemaven ML just upgraded target price to 92 Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now