Project: Leading Strategies change at DaVita: The Integration of the Gambro Acquisition Course: MGT 215 Submitted: 7thDecember, 2011 Acknowledgement ………………………………………………7 Introduction……………………………………………………….. 8 Synopsis…………………………………………………………9-20 Conclusion…………………………………………………………… 23 Bibliography…………………………………………………………. 24 Acknowledgement I would like to thank God for the strength he gave me to do this course. It was a challenge but through it all he brought me to the end of twelve weeks of studies.
I would like to thank Mr. Veron Johnson for the patience and time he took to impart his knowledge to me. Thanks to everyone who assisted in any way. Introduction DaVita Inc. , a FORTUNE 500 company, is a leading provider of kidney care in the United States, delivering dialysis services to patients with chronic kidney failure and end stage renal disease. DaVita strives to improve patients’ quality of life innovating clinical care, and by offering integrated treatment plans, personalized care teams and convenient health-management services.
As of September 30, 2011, DaVita operated or provided administrative services at 1,777 dialysis facilities, serving approximately 138,000 patients. DaVita supports numerous programs dedicated to creating positive, sustainable change in communities around the world. DaVita Medical Mission Statement: “To be the Provider, Partner and Employer of Choice We are becoming the greatest dialysis company the world has ever seen through our commitment DaVita Medical Mission Statement: “To be the Provider, Partner and Employer of Choice We are becoming the greatest dialysis company the world has ever seen through ur commitment to upholding our Mission and Values every day, in everything we our Mission and Values every day, in DaVita Medical Mission Statement: “To be the Provider, Partner and Employer of Choice We are becoming the greatest dialysis company the world has ever seen through our commitment to upholding our Mission and Values every day, in everything we wed” Synopsis Total Renal Care (TRC) a company founded by Victor Chatiel in 1994, offered renal services. One of his strategies was to apply strict business principles and reap rewards upon entering the traditionally non-profit domain of Kidney Dialysis centers.
He focused on growth through acquisition through the 1990’s. Unfortunately, chatiel and his team failed to integrate their acquisition leading to some operational incoherence. Firstly, there was no uniformity to a critical patient data form used to record and monitor patient care during dialysis. Secondly, there was little standardization in reporting work methods across centers, this absence made routine management activities, such as transferring personnel and patient across, much more difficult if not impossible.
Thirdly, cash flow issues created serious problems like operational weakness in insurance reimbursements – a critical problem for a company whose revenue was entirely dependent on it. Insurers and government would frequently question charges and demand additional documentation. They would occasionally unilaterally reduce the reimbursement amount and delay payment until they received answers to queries and requested documentation.
Finally, senior’s executives paid very little attention to the dialysis centers themselves, which were seen more as an avenue of corporate growth where patient and caregivers were economic units in a bigger financial structure. This headquarters- centric, financially oriented operating culture did not win friends among the health care practioners who worked hard in the field to deliver quality care. In 1999 Total Renal Care (TRC) ran into severe financial difficulties. The board of directors turned to Kent Thiry, who worked at another dialysis center in 1997.
Kent Thiry is a Harvard MBA graduate and an ex-brain consultant. Before accepting the job offer he reached out to a set of people who had been with him in his previous dialysis venture, people whom he trusted, liked and respected. He recruited Harlan clever, to be the chief technology officer, David Barry to be COO (chief operating officer) and Doug Vlchek to lead the organizational change and culture building efforts. When he came to lead the company October of 1999, the organization was in a mess. It had financial operational regulatory and moral difficulties. They were technically bankrupt, and being investigated by SEC, they were sued by shareholders, had turnovers at twice our current level, was almost out of cash and in general, wasn’t the happiest of place. ”(Thiry) Thiry and his colleagues begin assessing the talent in the company, moving people who could not perform and hiring people who could “get stuff done” (GSD remained a popular acronym in the company; being considered “good at GSD” was the highest compliment a teammate could receive) persons were sent to the billing office, to work on collections and to fix the cash flow problem.
In May 2000 more than 400 clinic managers, plus people from corporate headquarters assembled in Phoenix Arizona, for the first of what has become an annual ,corporate-wide meeting. At this first meeting suggestions for a new name for the company were presented. The company’s teammates, the board of directors and senior management collectively voted to chose the new name “DaVita” which in Italian phrase which means “to give life or he/she gives life. ” At this meeting groups discussed, debated and voted on proposal for the core values and a mission statement was presented.
A few persons were sent to Tacoma’s billing office to work on billing and collections and to fix cash flow problems. The situation became severe when the government stopped paying DaVita for laboratory tests because of records and document issues. The company had to decide what to do with the patients whose lab tests were not being reimbursed, however the company decided to continue performing tests that it felt were essential in delivery of care and to appeal the decision to an administrative law judge to attempt to obtain the denied funds. Four (4) years later after winning successive judgments, the government paid them over $90 million.
The issue of outstanding debt was dealt with under much constraint. The banks wanted the company to sell parts of the business to honor debts. The management group did not buckle, and after long and difficult discussions, the loans were restructured and financial penalties for default were discontinued. Eventually the company sold the dialysis centers that were outside the United States to direct it focused in a geographically area. In the area of technology, the chief information officer introduced an automated patient registration and to incorporate all the clinical records and activities, an electric file cabinet was also created.
It was the first step to standardize the paper-based system used to keep track of patient care in the various centers. Continuous improvement and teammate education was critical at this point, so a change process was initiated using continuous quality improvement (CQI). Each center manager attended these training sessions and was expected to train their own staff at the various centers in quality improvement techniques. They were on the road to a new philosophy where patients care was delivered and where most DaVita teammates work were important to the company’s success.
To emphasize the importance of the centers, Thiry and his senior manager “adopt” a center and drop by occasionally. They later replaced the adopt-a-center program with the practice of having everyone hired in or promoted to the vice president level or above go through “Reality 101”, which entailed spending a week in a center helping to do the day-to- day-work. DaVita’s strategy was characterized by their attention to detail; they took painstaking attention to operational details and compliance with government regulations.
Also managing financial outcomes rested largely on small but important behaviors and decisions. One such activity was carefully using supplies to avoid waste and maintaining appropriate stock levels so that inventory costs were unnecessarily high, yet avoiding emergency ordering. Another was achieving good clinical outcomes, it was important to take care while putting the patient on the machine, monitoring the treatment as it was occurring and taking the patient off the machine at the end of the session.
The final strategy which was used was employees attraction and retention, this was important because turnovers was costly, entailing finding replacement people and possibly paying overtime labor rate if a center was temporarily short- staff. There strategy can be characterized in organization development and change as leading and managing change where after they diagnosed the causes of the problem, management took a leading role in implementing the change. They created a vision, develop a political support, manage the transition and sustained the momentum. With the increased focus and attention to perational detail, the commitment of the company’s teammates and the bank negotiation behind it, DaVita embarked on a remarkable transformation in its performance. Achieving great financial result and was consistent over the years in improvements in clinical outcomes and reduction in turnover. The organizational culture at DaVita was a result of what Thiry call “purposeful action” that “articulated and demonstrated” what a company could be. His approach took the form of a clear concise mission- that was quickly turned into a song. He then got his colleagues to come to consensus on core values, he also use benchmark questions.
Employees became teammates and if they “cross the bridge” of believing the company could be special, they become “citizen of the village” (not the company) with Thiry as “mayor. ”A general synergy of teammates and executives brought the organizational change concept to life. A closer look at DaVita’s culture and leadership showed that the management team’s focus had been on creating a strong and positive value-based organization where levels of the organization had an emotional commitment to its success. The foundation was Mission and Values, created at the first meeting in 2000 and now widely practiced throughout the company.
To the management team, the company’s rebirth strategy was based on the belief that they had to create something larger than themselves in order to be successful. DaVita offered a comprehensive benefit and pay package that was somewhat unusual for a company that had a reasonably large number of relatively low-paid, hourly employees. Pay was pegged against competitive benchmarks. There was a broad- based profit-sharing program that covered virtually all team members, based on the idea of sharing the village’s good times and success with all citizens.
There were also benefits that provided people an opportunity to invest in professional and personal growth. Health and welfare benefits included a comprehensive package of medical, dental and vision benefits, extended illness leave, both short-term and long-term disability insurance, life insurance and flexible spending account to set aside pre-tax dollars for health or childcare expenses, and an employee assistance program Another incentive offered by DaVita to encourage the teammates to be fully involved in their work and to be present in the company, not just physically but also emotionally was “we are here awards. This was a $1000 in vacation expenses given to a randomly selected non-exempt teammate who had perfect attendance during a 90 – day period. There was also the “shining star award,” for people who not only perform their job with exceptional proficiency but who also exemplified the DaVita’s values and who contributed to the well-being of the team. DaVita have many training program within the organization to assist teammates in their development.
DaVita University started within a year of Thiry arrival in the company and offers program in continuous quality improvement (a two day program required for newly hired facility administrators, managers and vice presidents that had not taken the class previously) presentation skills, leadership development, team skills and programs for vice presidents. There are also numerous courses on clinical subjects. Two of the most important programs that reach the people directly or indirectly were the DaVita Academy (more recently called Academy 11) and a program called F.
A. S. T (Facility Training Administrator Survival Training) Academy11 was a newer program attended by all teammates from a specific region, designed to “take facility performance to the next level by fostering mutual accountability amongst the team. ” By emphasizing how to hold difficult and honest conversations among the teams to resolve interpersonal issues, the course fostered better and more productive interaction. It also contained numerous team building activities and joint planning for operational improvement at the facilities. F. A. S.
T (Facility Training Administrator Survival Training) is a five day program taken by all new clinic managers. The program consist of training in managerial skills such as time management, communication, providing coaching and feedback to team members, and interviewing, as well as material on DaVita culture ( DaVita Way and One for All). The company integrated programs to give back to the community; they introduced a program “one for all, all for one. ” This program the DaVita village Network is where teammates make contributions and the company matched this with its profit.
These funds were used to assist persons in the communities where centers are located who use their services and have difficulties in meeting their financial obligations. In 2005, Thiry and his senior executive team met to discuss the next step the company should take to continue its organizational development and strategies evolution. Their special focused was how to manage several looming challenges because they were just in the process of completing a $3. 1 billion purchase of Gambro, a large competitor. The acquisition would nearly double its size from 700 to more than 1200 dialysis centers and from 13, 000 to 25,000 people.
As such it would cement its position as the second largest Kidney Dialysis centers in the United States. Their task immediately entailed integrating Gambro into the DaVita’s way of managing and its culture. Gambro was significantly more hierarchical and formal than DaVita, and did not have a strong people- oriented culture. Gambro had purchased Vivara in 1997 , a small publicly traded dialysis company led and transformed by Thiry during the 1990’s, now as leader of the combined organization, his goal is to be respectful of Gambro, its people and its capabilities, while maintaining DaVita’s unique culture and way of management.
Gambro is a global medical technology company and a leader in developing, manufacturing and supplying products and therapies for Kidney and Liver dialysis, Myeloma Kidney Therapy, and other extracorporeal therapies for Chronic and Acute patients. Kidney (renal) dialysis was the world’s first extracorporeal therapy (i. e. a therapy that treats organ failure outside the body). Dialysis saves the lives of a growing number of patients every year, and innovation in the field is essential.
The only current alternative to renal dialysis – kidney transplantation – is not an available option for most patients, due to a shortage of donor organs. Dialysis technology is now being developed for new applications such as liver dialysis and an emerging field of other extracorporeal therapies, to remove different fluids and toxins from chronically and acutely ill patients. For decades, Gambro has been first to market many groundbreaking innovations. By designing and delivering solutions to dialysis clinics and intensive care units, they offer not just improved treatment quality, but also improved efficiency.
Gambro was founded in 1964, and had 8 000 employees, production facilities in 9 countries, and sales in more than 100 countries. Their purpose and culture unified as a company and remind us as individuals of how we can make a difference for patients and their families. Customer focus was always strived to exceed customer expectations and they keep patient safety and quality as a key priority. They hold themselves accountable to their customers, team members and partners by delivering on their commitments. People are the biggest asset of the company and teamwork is important for success.
They conducted business in an ethical manner with courage to do the right thing and continuously seek ways to improve their business. The Gambro Healthcare acquisition is the largest acquisition we have made to date. There is a risk that, due to the size of the acquisition, we will be unable to integrate Gambro Healthcare into our operations as effectively as we have with prior acquisitions, which would result in fewer benefits to us from the acquisition than currently anticipated as well as increased costs.
The integration of the Gambro Healthcare operations will require implementation of appropriate operations, management and financial reporting systems and controls as well as integration of the clinical policies and procedures of both companies, all of which could have a material adverse impact on our revenues and operating results. In addition, it requires the focused attention of our management team, including a significant commitment of their time and resources. The need for management to focus on integration matters could have a material and adverse impact on our revenues and operating results.
I would advice Thiry to design a team to lead in managing the integration. This team should include the (COO) the chief operational officer, the chief technology officer and the structure design manager. I would share the effective change management program with him, which include four phases. The first is to motivating change this includes creating the readiness for change among organization members and helping to address the resistance to change. The second would be creating a vision in providing a purpose and reason for change and describe the desired state.
The third would be developing a political support for change where there can be powerful individuals and groups that can either block or promote change, they you need to gain their support. The fourth would be managing the transition from the current state to the desired future state and finally you should sustain the momentum for change so that it will be carried to completion. The team should relate to individuals, interpersonal relations and group dynamics. The individual approach should be aimed at coaching and training.
Coaching attempts to improve one’s ability to set and meet goals and improve interpersonal relations. Training and development aimed at transferring knowledge and skills to individuals. Interpersonal and group process approach includes process consultation, third party intervention and team building. Process consultation help group members understand, diagnose and improve behavior, the third party intervention focus directly on dysfunctional interpersonal conflict and team building is aimed at doth helping teams perform its tasks better and at satisfying ndividual needs. The first 100 days action plan should include recommendation for the organizational structure the organization should implement. The new structure and action plan need to be communicated to the organization. The design team will conduct its initial activities in a relatively easy manner and follow it by implementing a monitoring, correcting and evaluation process. As the plan is implemented new information, changes in the environment and other issues will arise that required adaptation and adjustment.
The team is charged with the monitoring implementation by collecting implementation feedback to find out if the plan is working. The data collected would be analyzed and if they are feasible would be implemented. To preserve the DaVita’s culture I would suggest training in the various program areas such of team building, communication skills and clinical areas. DaVita has Academy11 for all teammates to improve team building amongst workers. It hast F. A. S.
T a program for 5 days in the various management skills and also DaVita University for quality improvement for newly hired managers DaVita’s culture and leadership showed that the management team’s focus had been on creating a strong and positive value-based organization where levels of the organization had an emotional commitment to its success. Their mission “to be the provider, partner and employer of choice” had made an impact on the organization and the core value had kept them in second place in the dialysis industry.
Their financial position has been exceptional over the years Mission Statement Kent Thiry Conclusion I have learned a lot about Kidney Dialysis and the time and patience that caregivers give to save a life on a daily basis. DaVita’s team led by Kent Thiry made the organization a village community rather than a company and in doing so working became a part of their life style. I realized that an organization with a strong culture can be a leading company. Bibliography Organizational Development and change 8th Edition by Cummings & Worley The internet
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