The many extracts on these pages are from copyright material. They are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made. Any comments made are based on the belief that there is some substance at least to so many allegations.

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A large number of US dialysis businesses have consolidated, many acquired by Fresenius and Gambro. DeVita is the main local US survivor. It is under investigation itself, Renal Care Group is still being investigated for fraud but has been acquired by DaVita. Competition issues from this recent spate of acquisitions has forced the sell off of a large number of clinics. These have been snapped up by two newly formed companies, Renal Advantage and National Renal Institutes

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US Only Dialysis Companies




While there have been many dialysis businesses in the USA most have merged with others. Many, like Vivra, had worrying track records.  Two deserve some separate attention.  DaVita because of its NME heritage, because it has survived and because its practices have given rise to concern.  Although Renal Care Group has been acquired by Fresenius, it is the subject of an unresolved Qui Tam law suit.

The purchases by DaVita and Fresenius raised competition issues and they were forced to sell off dialysis clinics.  Entrepreneurs snapped them up forming new companies.

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(Previously Total Renal Care)


DaVita is another of the big companies rooted in the culture and activities of the infamous National Medical Enterprises (NME) and its founder, allegedly bipolar Richard Eamer.  NME became the repeat offender Tenet Healthcare.

The company "Total Renal Care", owned by Tenet/NME, was spun off as a separate company and then got into some sort of financial difficulty.  I do not know whether, like Tenet/NME, this also involved allegations of fraud or the misuse of patients for profit.  The exact reason why its name was changed to DaVita is unclear from the information I have.

May 1997 The Tenet/NME connection
In addition to overseeing the company's treasury function, Andersons (Tenet/NME executive) played a key role in the development of four former company subsidiaries or affiliates -- National Funding Corporation, Health Care Property Investors Inc., Westminster Health Care and Total Renal Care and served on a number of these companies' boards of directors. In addition, he served on the Hillhaven Corporation board following Tenet's spin off of its long-term care business in 1990.
Maris Andersons Retires from Tenet
Modern healthcare May 28, 1997

Nov 1997 Grows in Puerto Rico
Hospital Auxilio Mutuo in Puerto Rico in August sold its thriving renal-care business to Total Renal Care.
 Leading the pack (of buyers) was Total Renal Care, which runs the third-largest kidney dialysis business in the U.S., including 20 dialysis centers in southern Florida.

Jun 1998 Another merger

1. Gambro Healthcare acquired Vivra
2. Total Renal Care merged with Renal Treatment Centers
Size does matter; healthcare industry mergers and acquisitions Hospitals & Health Networks  June 20, 1998

1999 Another link to Tenet/NME
Before becoming Tenet's CEO, Barbakow worked as the managing director of DLJ.49. DLJ's current managing director, David Dennis, was hired right out of business school by Barbakow.
In one case, Barbakow sold Tenet's Total Renal Care, a kidney-dialysis firm, to DLJ's own merchant banking group. Fortune magazine described the deal: "L.A.-based managing director David Dennis helped client Tenet Healthcare sell its kidney-dialysis subsidiary, Total Renal Care, to DLJ's own merchant banking group. On a $10 million investment, Total Renal Care ending up returning close to $ 200 million to DLJ's merchant bankers over the next year. "
Risky Business: The Tenet Story   Document prepared BY US NURSING UNION 1999

Mar 2001 Name changed to DaVita
However, when Total Renal Care wanted to change its name, it purposely chose a name that did mean something. DaVita translates from Italian into English as "he/she gives life. It represents what we do every day,'' said LeAnne Zumwalt, a spokeswoman for the Torrance, Calif.-based dialysis-services provider. DaVita owns 440 outpatient centers and manages 48 others.

DaVita's new name was prompted by financial troubles, although not on the scale of Vencor/Kindred. Total Renal Care broke some of its loan covenants and completely turned over its management team before the decision was made in June 2000 to rename the company DaVita, Zumwalt said.
Do you know this company?: Troubled firms try new names, but proof of change will come from behavior Modern healthcare March 19, 2001

Mar 2001 Vivra's CEO now head of DaVita. Vivra was involved in fraud when purchased by Gambro.
Vivra's CEO before it was purchased by Gambro was Kent Thiry, who now heads DaVita, the third largest dialysis provider with more than 486 dialysis facilities and 41,000 patients. DaVita was previously known as Total Renal Care. Thiry became the CEO of Total Renal Care on October 18, 1999. Total Renal Care was renamed DaVita in October 2000.
Gary Peterson's Renal web
www site March 21.2001

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Fraudulent and unethical practices pervade every sector of the US marketplace and allegations of fraudulent conduct at DaVita date back to 2000.  Like others DaVita brought in previous prosecutors and investigators to help it navigate the legal jungle while still squeezing profit from care.

Mar 2001 Fraud investigation underway
DaVita is currently cooperating with the United States Attorney's Office for the Eastern District of Pennsylvania as it looks into DaVita's billing and other operating procedures and DaVita's financial relationships with physicians.
Gary Peterson's Renal web
www site March 21.2001

Nov 2002 Hiring ex-government lawyers

Prior to her experience at PWC, Lori was an Assistant United States Attorney for six years, prosecuting healthcare fraud involving MediCare, Medi-Cal and the CHAMPUS programs.
DaVita Announces Appointment of Lori S. Richardson Pelliccioni, Chief Compliance Officer PR Newswire November 13, 2002

Oct 2004 Another investigation
Officials for Tennessee-based Renal Care Group and California-based DaVita on Tuesday announced separately that they have received similar subpoenas from the Department of Justice for documents related to kidney dialysis operations and laboratory services, the Los Angeles Times reports.
Renal Care, DaVita, Fresenius and other dialysis companies have received Medicare reimbursements of 34% to 37% more for vitamin D than they paid, according to the HHS OIG report.
DOJ Subpoenas Four Companies Over Vitamin D Therapy American Health Line October 28, 2004

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Legal vs ethical

The business practices being investigated and given credence by statements from their own doctors are typical of the profit focused unethical practices seen in the health care market place.  By manipulating the ready availability of drugs to doctors the company is alleged to have induced doctors to use those from which the company generated the most profit. This comes from the most expensive drug. They would see no reason not to do something like this. 

The critical question is how many if any of these unethical practices are actually illegal. I could find no reports indicating that the fraud investigation had been prosecuted beyond 2005.  It is likely that the practices could not be successfully prosecuted as they were not illegal. It is also possible but less likely that these things did not occur.

Dec 2004 What was done?
The OIG report shows that on average, the largest dialysis providers received $1.83 more from Medicare than they paid for Zemplar. They received 51 cents more from Medicare for Calcijex, a far less expensive drug.

At DaVita, 70 percent of dialysis patients receive some form of vitamin D therapy. Until several months ago, Zemplar was the only vitamin D drug included on DaVita’s formulary - a list of readily available drugs.

Doctors wishing to prescribe Calcijex and Hectrol had to make a special request.

In an Oct. 27 conference call, DaVita Chief Executive Kent Thiry told analysts that Zemplar, Calcijex and a third drug called Hectoral were all available to independent doctors who practice and send their patients to DaVita clinics.
In practice, though, kidney doctors interviewed by the Business Journal said they had far less choice, since the drug is intravenously administered at the end of each dialysis session. This discourages the doctor from using drugs that are not on the clinic's formulary, even though doctors can get them if they are determined.

"You usually go by what the dialysis unit has available. You use that medication," said Dr. Mike Mirahmadi, a Beverly Hills nephrologist.
"If I want to use a vitamin D other than Zemplar I have to go through additional hoops to justify its use. DaVita won't say we can't use or won't buy it, but it's not an equal choice," he (Dr. William Goodman, a leading authority on vitamin D therapy who is a researcher at UCLA’s David Geffen School of Medicine) said.

"A big provider like DaVita or Fresenius will select one vitamin D compound and purchase it in bulk and that is the vitamin D compound that will be available for use. The medications they give during treatment are critically important to their bottom line."

The current probe is only the latest in a series of investigations that have plagued the dialysis industry. A civil investigation that dates back to 2001 and covers a wide range of DaVita's operating procedures remains open.
Treatment Probe Clouds Outlook As DaVita Gains
Los Angeles Business Journal December 13, 2004

Mar 2005 Investigation goes back a long way
DaVita disclosed on Sunday that it received a federal subpoena from the U.S. Attorney's Office in St. Louis, requesting "a wide range of documents" relating to operations dating back to late 1996. DaVita said there is substantial overlap between the probe and another continuing one focused on the company by the U.S. Attorney's Office in Philadelphia.
DaVita Discloses New Investigation, Receipt of Subpoena The Wall Street Journal March 8, 2005

Mar 2005 Investigation of financial arrangements doctors and others
Prosecutors are demanding documents related to relationships with pharmaceutical companies, to financial relationships with physicians and to other subjects, DaVita said.
U.S. alleges fraud by clinic here Lawsuit is part of federal probe of kidney dialysis industry St. Louis Post-Dispatch March 9, 2005

Mar 2005 Whistleblowers behind this investigation
The qui tam provisions in the FCA are central to increasing the reporting of fraud - - - - - - - Evidence of this is the recent suit filed by the US District Attorney for the Eastern District of Missouri is questioning physician payments and pharmaceutical services provided to patients by Davita a kidney dialysis provider.  
Missouri Should Adopt State Version of Federal False Claims Act The Missouri Budget Project March 16, 2005

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Buying Gambro

In spite of this investigation, and the investigation of Gambro, DaVita purchased Gambro Healthcare's US dialysis business in 2005.

Dec 2004 Buys Gambro in spite of criminal probe
DaVita Inc., fresh off an announced $3.4 billion purchase of Gambro AB's U.S. dialysis clinics last week, remains mired in a federal criminal probe that has the potential of ensnaring the El Segundo-based company.

Treatment Probe Clouds Outlook As DaVita Gains Los Angeles Business Journal December 13, 2004

Mar 2005 Marj]ket not worried by this.
Credit rating agency Standard & Poor's agreed, saying in a press release last week that Davita's ratings and outlook wouldn't be affected by the subpoena.
"Any unfavorable outcomes would likely to be in the distant future, when the company's financial profile might be stronger than it is currently," S&P added.
 DOJ Won't Derail DaVita $1.35 Bln 2-Part Junk Bond Deal Dow Jones Capital Markets Report March 15, 2005

Oct 2005 Completes purchase Gambro
DaVita Inc. (NYSE: DVA ) announced that it closed its acquisition of Gambro Healthcare U.S. today. The closing follows the Federal Trade Commission completing its review of the acquisition earlier this week and issuing a consent order allowing for the closing of the acquisition. As part of the transaction, DaVita also entered into a previously announced supply agreement with Gambro Renal Products to provide a significant majority of its hemodialysis product supply and equipment requirements for the next ten years.
DaVita Closes Gambro Healthcare Acquisition HSMN NewsFeed News Release:  October 5, 2005

DaVita's web site is at

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Renal Care Group

Renal Care group was one of the early dialysis companies in the USA. It grew by acquisitions.

Sept 2007 Looking back at Renal Care's story
Brukardt, who joined Renal Care in 1996 as COO, took the company's reins in the spring of 2003 following the death of company founder Sam Brooks.

By investing in acquisitions - including the $345 million purchase of Nashville neighbor National Nephrology Associates - Brukardt grew the company into one of the nation's largest dialysis center chains, with 425 outpatient facilities and 2005 revenue of almost $1.6 billion.
Ex-Renal Care CEO Brukardt leaves position at Fresenius Nashville Business Journal September 15, 2006

Renal Care Group is another Dialysis company with a worrying history.  It reached some sort of settlement in the 1990s but I do not have details. It was caught up in fraud investigations during 2004/5 and is the subject of a Qui Tam law suit joined by the government in 2007.

Dec 2000 Refers to a settlement with government
Firms entering government settlements during the Clinton Administration include kidney dialysis companies Renal Care Group Inc.

Hospitals to get less scrutiny under Bush-analysts Reuters December 15, 2000

Aug 2005 Among those being investigated
Dialysis provider Renal Care Group, Nashville, announced that it has become the latest in a group of dialysis providers to receive a subpoena from the U.S. attorney's office in St. Louis. The subpoena seeks records relating to pharmaceutical and other services.
Renal Care latest to be subpoenaed in dialysis probe 
Modern Healthcare 10 Aug 2005

Aug 2005 Once again its about relationships with doctors
The U.S. attorney's office in St. Louis, which won a record health care fraud settlement late last year, has subpoenaed Renal Care Group Inc. for information about the kidney-dialysis company's patient services, its relationships with drug companies and doctors and medical-director compensation.
U.S. attorney subpoenas dialysis company Post-Dispatch Aug. 10 2005

July 2007 Once again its a whistle blower Qui Tam initiated investigation.
The United States filed a civil complaint against Renal Care Group, Renal Care Group Supply Co. and Fresenius Medical Care Holdings Inc. alleging that the firms fraudulently billed the Medicare program for supplies and equipment provided to End Stage Renal Disease patients, U.S. Attorney Catherine Hanaway said Tuesday.

The lawsuit was filed as a qui tam lawsuits, which are filed by private individuals on behalf of the government. These type lawsuits are normally sealed and are often associated with whistleblower accusations.
Due to the false claims presented to the United States by defendants, the United States has suffered damages and is seeking multiple damages under the False Claims Act, to be determined at trial, plus a civil penalty of $5,500 to $11,000 for each fraudulent claim presented for payment.
Renal Care Group faces suit for false Medicare billing St. Louis Business Journal July 17, 2007

July 2007 Qui Tam action
The renal supply claims were fraudulent, according the suit, because dialysis facilities can't provide dialysis supplies to ESRD patients unless the supply companies are completely independent from the facilities--and on top of that, the ESRD patient has to choose to get their supplies from the independent supply company.

Renal Care hit with Medicare whistleblower suit July 19, 2007

By this time Renal Care Group had been acquired by Fresenius.

Aug 2005 Fresenius buys Renal Care Group
In May 2005, it was announced that Renal Care would be acquired by the German company Fresenius in a $3.5 billion deal [3].

Brukardt notes in his comments: "When we structured our transaction with Fresenius Medical Care, the possibility of such a subpoena was expressly contemplated by the provisions of the merger agreement. As a result, we believe the receipt of this subpoena should not affect Fresenius Medical Care's pending acquisition of Renal Care Group, which [is still expected] to close by the end of 2005."
Renal Care Group receives subpoena from US attorney
Medscape Medical News Aug 11, 2005

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New companies

To meet the requirements of competition regulators after their large acquisitions Fresenius and DaVita were forced to sell off large numbers of dialysis centres.  These were snapped up by entrepreneurs, who formed new companies.

Sep 2006 Renal Advantage and National Renal Institutes buy up..
The two big deals have created opportunities for two new local players to pick up assets spun off due to antitrust concerns. Renal Advantage, run by former Gambro executive Michael Klein, took on more than 70 dialysis centers after the DaVita-Gambro deal. Similarly, National Renal Institutes, which is run by former National Nephrology chief Jerome Tannenbaum, bought about 100 centers following Fresenius' purchase of Renal Care.
Ex-Renal Care CEO Brukardt leaves position at Fresenius Nashville Business Journal September 15, 2006

Oct 2006 More information
Group Inc., has formed a new business with fellow ex-Renal executives David Maloney and Courtney Vanderveer.
Specialty Care Services Group was incorporated on July 12, according to information filed with the Tennessee Secretary of State.
Renal Advantage, a company run by former Gambro executive Michael Klein, got its jump-start with the $320 million acquisition of more than 70 dialysis centers after industry heavyweight DaVita merged with Gambro Healthcare's U.S. renal operations. The company is backed by investor Welsh Carson Anderson & Stowe.

Jerome Tannenbaum, former chief of National Nephrology Associates, launched National Renal Institutes in Nashville as a subsidiary to his holding company, DSI Holding Co., inking a $450 million agreement to buy 100 clinics divested in the Renal/Fresenius deal.
Former Renal Care executive emerges with new company. Details remain scant, but management team for Brukardt company in place Nashville Business Journal October 20, 2006

Renal Advantage's web site is

National Renal Institutes does not seem to have a web site.

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This page created August 2008 by Michael Wynne