A proposed 11.9% Medicare payment cut for dialysis providers would have a “draconian impact” on the earnings of some of the largest players in the industry, according to a report from Moody's Investors Service.
But because DaVita acquired multispecialty medical group HealthCare Partners in 2012, the blow is buffered for the combined company, DaVita HealthCare Partners, which is the largest U.S.-based dialysis provider, Moody's said.
The report examined the impact of three possible scenarios that regulators are proposing: a full 11.9% cut implemented on Jan. 1, the same cut phased in over three years, and a 9% cut phased in over two years.
Under the most extreme scenario, Moody's said, companies such as American Renal Holdings, DaVita HealthCare Partners and U.S. Renal Care would see a deep hit to their earnings before interest, taxes, depreciation and amortization.
For DaVita, a company that reported $2.3 billion in EBITDA in 2012, the impact next year would be $397 million, Moody's projected.