Total Renal Care
Background
Total Renal Care was the original, troubled corporate precursor company to the modern DaVita empire. Founded to rapidly consolidate the heavily fragmented, localized outpatient dialysis industry, the overleveraged company infamously struggled with severe financial mismanagement, toxic culture, and crushing debt, nearly facing total corporate bankruptcy before a dramatic, radical management overhaul transformed the entire enterprise into DaVita.
Role at DaVita Inc.
DaVita possesses a historic founding story rooted in the early, chaotic privatization of American healthcare, followed by a legendary corporate turnaround that saved the company from bankruptcy. The company was originally founded in 1989 as Medical Care International (which later became Total Renal Care) by an aggressive group of healthcare entrepreneurs who recognized the guaranteed financial opportunity created by the 1972 Medicare dialysis mandate. Throughout the 1990s, Total Renal Care executed a debt-fueled strategy of acquiring hundreds of small, independent dialysis clinics across the country. However, the integration was a disaster. The billing systems failed, the company lost track of amounts of cash, and by 1999, Total Renal Care was functionally bankrupt, facing SEC investigations and a collapsed stock price. The foundational pivot that created the modern company occurred in 1999 when the board hired Kent Thiry as CEO to attempt a turnaround. Thiry, an eccentric and brilliant executive, overhauled the company's culture and financial architecture. He renamed the company DaVita (meaning 'he gives life' in Italian) and famously styled himself as the 'Mayor' of a corporate 'Village.' He instituted rigorous, operational metrics to improve clinical outcomes and fix the billing failures. His turnaround was successful, transforming DaVita from a financial catastrophe into a profitable, cash-generating machine. His success was so that it eventually attracted the attention of Warren Buffett, whose conglomerate, Berkshire Hathaway, became DaVita's largest shareholder, owning roughly 40% of the company today.