DaVita, the Denver-based Fortune 500 health care company that owns 2,200 dialysis centers and employs more than 65,000 nationwide, marked the first anniversary of its $385 million acquisition of The Everett Clinic in March.
But there have been some details that hadn’t been sewn up, specifically a recent $33 million binding arbitration settlement with 31 former physicians of the practice.
The physicians, who also were former shareholders in The Everett Clinic prior to its sale to DaVita, had objected to the amounts offered to compensate them as part of the sale. DaVita, according to a report by The Herald Business Journal’s Jim Davis, had offered the clinic’s former doctors either $175,000 or $350,000, depending on the number of shares they previously owned.
But in offering the compensation, DaVita told the doctors that its acquisition of The Everett Clinic was a merger and not a sale and they were not owed any compensation and should take what was being offered.
That led to lawyers being called, an agreement to seek binding arbitration and the recent court order finalized last month by a King County Superior Court Judge. The arbitration order, according to a spokeswoman for the physicians, found that the clinic’s acquisition was a sale and that the physicians were owed compensation for their past investments.
There were concerns following the announcement that DaVita would acquire The Everett Clinic, the medical institution with a history of more than 90 years in Everett and Snohomish County. DaVita had recent blemishes on its record.
The U.S. Department of Justice, in separate cases in 2014 and 2015, fined DaVita $800 million to resolve allegations that it used kickbacks to physicians to refer patients to its dialysis centers and that it encouraged nurses to purposely waste medications used in dialysis to increase its billings to the federal government. Both fines resurfaced in the news this week as HBO’s John Oliver, on his “Last Week Tonight” show, focused on criticisms of DaVita’s and other dialysis providers’ treatment of kidney patients.
Prior to the sale, DaVita officials came to Everett to talk with physicians, other employees and community members and also met with The Herald Editorial Board, promising DaVita’s commitment to “delivery of an exceptional level of quality of care” as The Everett Clinic’s new owners. DaVita officials said the settlements with the Justice Department were embarrassing and had caused them to reconsider how they were doing business.
Other pledges were made locally. Patients and the community were told The Everett Clinic name would remain, as would its nine-member board of physicians and care providers, its commitment to the United Way and other community groups and the charitable work of its foundation. Everett Clinic officials said the sale was necessary to ensure its continued operation; DaVita had the capital that would allow the clinic to expand in the region and serve more patients.
A year in, it appears those promises are being kept, and DaVita has provided the capital to make investments and help The Everett Clinic thrive.
The Everett Clinic opened an outpatient surgery center in Edmonds in January, and in March announced the purchase of a family practice in Kirkland and plans to open clinics in Bothell and Woodinville. The clinic also is developing plans for property it owns in Lynnwood. With the additions, The Everett Clinic has added about 12,000 patients since the sale was announced and now serves about 330,000 in the region.
The tussle with former physicians at The Everett Clinic was unfortunate because it failed to give full recognition to the investment that doctors, past and present, had made and the value created in a medical facility that has provided excellent care to so many in the region.
DaVita needs to assure that level of care continues.