The Transformative Culture of DaVita
Culture starts with people, and oftentimes betting on the corporate culture of a failing company goes beyond risky. But Kent Thiry, chair and CEO of DaVita, a kidney dialysis company, took the realm of a sinking ship in 1999 and did just that. To save a company on the brink of bankruptcy, Thiry’s first task required a full restructuring of the company, and now nearly 13 years later, his approach to people, process and team has transformed the company into a Fortune 500 company with more than $7 billion in annual revenues and a stock price that has increased more than 2600 percent.
KT, as they call him in the workplace, believed that to turn the company around, it would take the commitment of the people as well as an approach with the end in mind. He was determined to create a special community in a real-world work environment. He said, “I wanted to create community where people cared about each other with unusual intensity; had an unusual shot at realizing their full potential as businesspeople and as humans; and would band together to give gifts to their patients, their families, their local communities, and the world—first by their behavior, and second by their accomplishments.” But, his words are really more than a rah-rah speech or excessive rhetoric; KT really means it—he believes in creating cohesion and a positive culture at work.
Thiry’s mind-set toward creating a transformative corporate culture and his leadership style are the basis for study and active discussions at prestigious business schools including Harvard, Wharton, Stanford and Kellogg. And, his unwavering determination is one of the most impressive corporate success stories in recent history. Upon taking the helm of DaVita (at the time Total Renal Care), Thiry had to first address the significant issues presented by a disgruntled board of directors and upset employees, as well as declining results. In fact, the company was being sued by stockholders, was under investigation by the Securities and Exchange Commission and had lost nearly 40 percent of its employees while much of the top management had been fired or had left—there was no CIO, CFO, COO or VP of HR.
In search of a competent and brave CEO, Thiry was called by a headhunter to lead the broken company. He had a strong background in leading and structuring companies, first in his role at Bain & Company and later at a small dialysis company called Vivra. After leaving Vivra, he promised his wife he would slow down, not work so many hours and perhaps lead a nonprofit. KT said, “As I started to listen to the recruiter, all the positive memories of my first time in dialysis, at Vivra, came flooding back. It had been the most powerfully positive time of my professional life. There is a saying I love, and we use it at DaVita all the time: ‘Begin with the end in mind.’ I started at DaVita with more of an end in mind than any other beginning in my professional life.” Today, DaVita has 42,000 employees, of whom 18,000 are technicians, and 142,000 patients who are seen three times a week—that’s more than 22 million procedures a year. DaVita is currently 157th on the Fortune 500 list, and has been awarded and recognized among Fortune World’s Most Admired Companies for the past seven years and honored as a democratic workplace by WorldBlu. DaVita, a public company, has enjoyed 10 consecutive years of increased revenue—from $1.4 billion in 1999 to more than $7 billion today. Moreover, the stock price has soared from $2 per share when Thiry arrived, to nearly $86 per share today. The company’s success stems from a fundamental feeling of being in a community—or “village,” as DaVita says. They set out to create a special place to work—a unique strategy that in some ways runs contra to a traditional capitalistic corporate environment—it is an environment of community first and company second.
DaVita Inc. 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 by innovating clinical care and by offering integrated treatment plans, personalized care teams and convenient health-management services. As of March 31, 2012, DaVita operated or provided services at nearly 2,400 outpatient dialysis centers located in the United States and 15 outpatient dialysis centers located in India, China and Saudi Arabia. Furthermore, the company boasts 11 consecutive years of improved clinical outcomes—some of the best in the industry.
They also support numerous programs dedicated to creating positive, sustainable change in communities around the world. The company’s leadership development initiatives and social responsibility efforts have been recognized by Fortune, Modern Healthcare, Newsweek and WorldBlu. As a care provider, patients who interact with DaVita are often very ill. Therefore, Thiry made a conscious commitment to transform the corporate culture into one that turned purpose into action and action into values. It was about creating a positive atmosphere in which to work—and it was a purposeful leadership commitment. “Virtually nothing we do has anything to do with health care. Nearly every human being wants to be a part of a special team that cares about one another, and for that team to be a part of an organization that is trying to be a force for good in the world, in addition to achieving the overall business objectives,” he said. Additionally, DaVita is committed to what they call the Trilogy of Care: caring for the world, caring for each other and caring for their patients. Besides the demonstrable work of caring for each other and their patients, the company participates in more than 20 patient-, teammate- and community-focused programs. Committed to raising awareness and giving back, the company has raised more than $3.4 million for more than two dozen charitable organizations, and more than $5.7 million has been given to teammates and their families through corporate support programs. DaVita is also the only kidney care company recognized by the Environmental Protection Agency for its sustainability efforts—saving approximately 8.5 million pounds of medical waste by offering dialyzer reuse and diverting nearly 95 percent of its corporate waste through composting and recycling programs. Additionally, the company’s Bridge of Life Medical Missions have brought treatment and education to developing countries—18 missions since 2006 with more than 75 participating teammates spending more than 650 days abroad. Furthermore, their taxpayer savings programs focus on keeping costs low while improving access to care, reducing hospitalizations and leading innovation, resulting in DaVita generating approximately $509 million in overall health care savings.
KT feels strongly you don’t have to make concessions at work and settle for an unpleasant, unfulfilling workplace. In the early days, when he and his chief advisers walked in the board room, they were grilled on spending rather than capital assets or technical training that could logically improve the bottom line. Resisting the pressure to be a traditional corporate leader, Thiry and his team focused on the outcome of patients at the clinics. Compliance with their treatment was critical to their long-term health and survival. According to various DaVita clinic reviews, one important factor affecting a patient’s continued return to the clinic was the extent to which patients felt comfortable with and trusting of the dialysis center and its staff and their comfort in the dialysis center. Recognizing early on that incorporating a positive team experience into the core values of the company creates a positive impact on patients, the company focused on helping the technicians become more positive, helpful and caring. This approach was a catalyst for change within the organization and ultimately benefited both inside and outside stakeholders.
Thiry does not believe in, nor does he practice, top-down management. Rather, he believes in community. So the company created the DaVita Village, where employees are referred to as teammates or citizens of the village. The executive team carries nontraditional titles such as Chief Wisdom Officer or Chief People Officer, and Thiry serves as Mayor. Thiry also takes pride in the fact that DaVita is the only Fortune 1000 company where teammates democratically decided on the company name, which means “giving life,” and voted on the company core values and logo design. When it comes to your people and culture, “You can’t take this stuff for granted, especially as the difficult forces of life, and budgets, and bosses that are jerks squeeze out those behaviors that we aspire to—to me it’s a big disconnect,” he said. “If you don’t invest in it, you’re going to lose.” That’s why the company has invested nearly one-third of every dollar of revenue into teammate development, compensation and benefits, leading to an overall turnover rate that is astounding. In 2010, 377 of their centers had a 0 percent turnover, and 551 centers had less than 10 percent turnover.
“There is no I in team,” said Thiry. “Our core values must be articulated and demonstrated to all.” That’s why the executive team brought full intellectual rigor to the culture shift and engaged systematic continuous improvement processes. Every teammate is evaluated with a recruit, review, revere, reward, reinforce and reality check. He says, “Without it, we would’ve failed.” Every new teammate is evaluated against the core values—it is part of the recruitment, interview and screening process. In the review stage, teammates are scored in a 360 review, which is also aligned to the mission and the core values. “It’s about personal and professional growth. I needed help in breaking out so I tracked myself every day. It was helpful for me to take public accountability.”
The company reveres its teammates as well. One of KT’s favorite quotes is, “Affinity produces most what it honors most,” and he said the company honors those who model the core values and possess noble human behaviors. To reward its teammates, the company has profit-sharing, recognition ceremonies and special events to honor teammates who excel. To reach and reinforce 42,000 teammates is not an easy job; therefore KT (the Mayor) hosts a bi-monthly update with his citizens. This unique approach allows teammates to stay aligned with corporate efforts, and allows them to talk directly to the leadership. But Thiry also walks the talk—dressing as a musketeer at national team meetings and supporting an almost evangelical environment that is highlighted by singing, dancing, chanting and shouting. In fact, at annual meetings Thiry shouts, “One for all” and his teammates shout back “All for One!” creating a sense of belonging and camaraderie. He describes the culture as having characteristics of a sporting event shouting in the crowd a repetitious saying, or perhaps a military showing loyalty to country. While it may sound weird that a company would create this atmosphere, “It creates positive energy and its fun. We’re not weird!” proclaimed Thiry.
KT also believes that the company “must be the safety net” that doesn’t exist for most of his people. That’s why they established the DaVita Village Network. Says one teammate whose four-year-old daughter experienced a grand mal seizure and was behind on the medical bills, “I came to work this morning with a lingering worry in my heart. Ever since my daughter has been in the hospital I have been afraid … afraid of how I will provide for her financially with the hospital bills calling my name—afraid that I will not make it.”
During a staff meeting, the woman was presented with $2,000 raised by her team and a $9,000 grant from the netwok. She said, "I have a feeling of family and love—a feeling of a village that will stop at nothing to help another person in their time of need … The human soul is one of the most powerful sources in making good things happen.”
And finally, the company performs reality checks so that they do not fall into “believing their own rhetoric.” Uniquely, DaVita does not hide their core values in a strategic plan, but rather lives them, reminds others of them and speaks of them every day. These seven core values provide guidelines to help fulfill their mission. “Words matter,” KT declared. In a recent talk at the University of Denver, Thiry likened talking about the corporate core values to telling your children that you love them and that caring about family is important. “How can it be that equally spiritually significant values can’t be talked about at work. Certainly it’s different from loving your children, but it is equally tied to things that are important in life. How can you live them in a robust way if you don’t talk about it? It’s like saying ‘I don’t have to tell the kids I love them—it’s implied.’”
DaVita gives life and hope to many people—their patients, their teammates and their communities. They have a social contract with one another that details respect and loyalty first. They have turned the value chain of profit versus people on its head, and the approach has proven extremely beneficial. And they have created a thriving, sustainable community for all that is inspired by helping others. Thiry recounted two of his high school teachers, Robert Orth and John Morita, “Who were inspirations in terms of believing in community and leadership, and me. They planted the seeds which lay dormant for the early part of my career, but then finally blossomed as I moved thru my late 30s, ‘watered’ by my first dialysis company experience from 1991-97 (it was taken over) … and then nurtured by DaVita starting in 1999. They sparked the focus on people and culture.”
Claiming himself a student, Thiry argued that leadership is a journey and not a destination. “I need to keep living our value of continuous improvement if we are to make the dream come true. I need to continue to learn more about people, business and myself,” he remarked. “And to have been a part of creating the DaVita Village has been immensely fulfilling. But we have so much more that we can give each other and the world, and that is immensely exciting.”
So with the end in mind, Thiry stated, “We believe that companies can be a formidable impressive force for good in our communities and for their people without sacrificing an inch of their capitalistic ambitions—without sacrificing one iota of their responsibility to shareholders. It is not a zero sum game … Profit is essential, and we reward those people who help us generate it—we never lose sight that it’s the means. The end is the value that we add to the lives of the people that we work with and to our communities. Doing good and living the core values is a pretty contagious thing.”
The legacy will live on.
“Damn straight!” One for all. And, all for one!