DaVita HealthCare Partners disclosed it's the subject of an HHS investigation involving patient transportation. The disclosure came on the same day it announced a 2% decrease in net income for the fourth quarter of 2014 as its multispecialty medical group division continued to lag in performance to its core kidney-care business.
The Denver-based company revealed in a Securities and Exchange Commission filing that it received six subpoenas from HHS' Inspector General's office requesting documents from six dialysis centers in Southern California.
The company was told that the investigation centers on the medical necessity of providing transportation to patients, according to the filing. However, DaVita said it does not provide transportation or bill insurers for the cost of transporting dialysis patients.
DaVita closed on its acquisition of HealthCare Partners in 2012, adding a network of physician practices that focuses on providing capitated care for patients.
Both of the company's divisions saw increased volume in the fourth quarter compared to the prior-year period. DaVita saw a 6.2% increase in dialysis treatments per day, or 5.2% when excluding newly acquired dialysis centers. HealthCare Partners increased its membership 9.4%, and now delivers capitated care to 2.5 million people.
The fourth-quarter results were in line with projections, CEO Kent Thiry said on an earnings call.
In total, the company reported $208 million in net income on $3.3 billion in revenue for the fourth quarter compared with the prior-year period's $212.3 million in net income on $3.1 million in revenue. Its operating margin declined to 13.6% for the quarter, down from the comparable period's 15.8%.
However, the kidney care division improved its operating margin to 17.1%, up from 16.6% in the fourth quarter of 2013. The operating margin at HealthCare Partners declined to 3.7% from the comparable period's 5.3%.
More than 73% of the company's revenue comes from kidney care.
Both DaVita divisions are facing payment pressures from insurers, Thiry said. HealthCare Partners is heavily dependent on Medicare Advantage rates and DaVita is facing reimbursement cuts from both Medicare and commercial payers.
However, the company reaffirmed that its 2015 operating income expectations for kidney care remain in the range of $1.525 billion to $1.625 billion. For HealthCare Partners, the company reaffirmed operating income in the range of $225 million to $275 million for 2015.
Follow Beth Kutscher on Twitter: @MHbkutscher
