Dialysis Provider Expects COVID-19 Mortality to Stay High

A company that provides care for people with serious kidney disease is assuming that COVID-19 mortality will be higher this quarter than it was in the fourth quarter of 2021.

Executives from DaVita, a Denver-based kidney dialysis provider, talked about their pandemic mortality outlook Thursday, on a conference call the company held to go over earnings for the latest quarter with securities analysts.

DaVita’s patient population is much older and sicker than any commercial life or health insurer’s enrollees, but the company’s experience could give insurers a preview of what might happen to the mortality level for their highest-risk insureds.

The Numbers

DaVita is reporting $249 million in net income for the fourth quarter of 2021 on $2.9 billion in revenue, compared with $254 million in net income on $2.9 billion in revenue for the fourth quarter of 2020.

DaVita was providing dialysis services for about 243,000 people at the end of 2021 at 3,154 outpatient dialysis centers. The company has 2,815 dialysis centers in the United States and 339 in 10 other countries.

The typical mortality rate for people on dialysis was about 15% to 20% before the COVID-19 pandemic, meaning that about 35,000 to 50,000 of its patients died every year.

COVID-19 increased the number of deaths by about 7,000 in 2020, according to DaVita.

The pandemic increased the number of deaths by about 6,200 in 2021.

Here’s what happened to the company’s excess patient mortality in 2021, according to estimates given on quarterly conference calls with securities analysts:

• January-March: 3,000
• April-June: fewer than 500
• July-September: 1,600
• October-December: 1,100

“While it’s too early to accurately forecast incremental mortality in 2022, given a significant uptick in infections in January, we expect COVID-driven mortality in the first quarter to be at or above what we experienced in Q4,” Joel Ackerman, DaVita’s chief financial officer, said on the earnings call.

DaVita assumed when it developed its mid-range 2022 earnings forecast that its patients will experience about 6,000 excess deaths this year due to COVID-19.

For DaVita, dialysis patient mortality is of keen interest, because the flow of new patients in need of dialysis has been growing at a slow, steady rate. The main factors throwing off treatment volume forecasts are fluctuations in the number of treatments patients miss due to illness and the number of patient deaths.

The Future

One analyst on the earnings call cited reports that the COVID-19 omicron variant appears to have milder outcomes than the delta variant. The analyst asked whether DaVita earnings forecasts include the possibility that COVID-19 variants could continue to be more mild in the future.

Javier Rodriguez, DaVita’s CEO, said the company no longer wants to speculate about how COVID-19 is going to behave.

“We have been so surprised over time,” Rodriguez said. “We all had such hope when the vaccines came out and then when the boosters came out. And of course, it has resulted in a milder hospitalization and mortality but, at the end of the day, I think we can all now accept that no one can speculate where this is going.”

Ackerman noted that, for DaVita, most pandemic-related effects other than excess mortality tend to cancel each other out, and that excess mortality is the only one that has much impact on earnings.

“What you see with omicron is that, while, yes, it is it is a milder disease, because it was so much more transmissible, it’s still led to a big wave of excess mortality,” Ackerman said. “We saw that in Q4. We’re continuing to see that in Q1.”

Medicare vs. Commercial Coverage

Rodriguez also touched briefly on how the kind of health coverage patients have affects their longevity.

Many patients are doing what they can to keep commercial insurance, rather than moving to Medicare coverage, Rodriguez said.

The level of excess mortality has been higher for Medicare patients than for patients with commercial insurance, Rodriguez reported.

He did not go into detail about that, and he did not distinguish between Medicare Advantage coverage or traditional Medicare coverage, or talk about the possible effects of factors such as age and general level of health on the excess mortality gap.

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