Case | HBS Case Collection | February 2015 (Revised June 2017)

Intrapreneurship at DaVita HealthCare Partners

by Joseph B. Fuller, David J. Collis and Matthew G. Preble

Abstract

Josh Golomb, president and general manager of DaVita Rx (Rx), was about to meet with Kent Thiry, CEO of Rx's corporate parent, DaVita Healthcare Partners Inc. (DaVita), in August 2013. The two would discuss whether Golomb should lead a new DaVita venture, Paladina Health (Paladina), which operated a network of primary care clinics.
DaVita had launched Paladina in early 2011, and the startup was struggling to gain traction: Paladina had already used a significant amount of the $40 million in funding committed by DaVita; the company's primary care clinics had not yet reached the number of patients necessary to sustain a profitable business; and it was in the midst of trying to integrate with another primary care clinic operator that it had acquired years earlier but was just now merging into Paladina.
Although the startup was young and still finding its way in an emerging industry, Thiry believed that Paladina would benefit from Golomb's experiences at Rx, which had also struggled in its early years. The situation at Rx became so precarious at one point that many of DaVita's senior leaders wanted to shut it down entirely. Rx made it through those challenging early years though, and was expected to exceed $600 million in revenues for 2013.
However, Golomb wondered how relevant his Rx experience was to Paladina. Rx was closely tied to its parent company—DaVita provided dialysis services to patients with end-stage renal disease (ESRD) and Rx supplied medications to ESRD patients—while Paladina's connection to DaVita was less obvious. If Golomb took the job, what could he do to make Paladina's clinics as efficient as possible in terms of service and its economics, without compromising on its value proposition? Was Paladina just too different of a business to be part of the DaVita family?
This case offers an example of "intrapreneurship"—i.e. entrepreneurial ventures launched within large companies—at a Fortune 500 company. DaVita has already had a successful experience launching Rx (after some difficult early years), and the company is now even serving patients from some of DaVita's leading competitors. However, Paladina is the company's first intrapreneurial venture outside of its core focus of serving end-stage renal disease (ESRD) patients—DaVita's main function is to provide dialysis services to ESRD patients and Rx provides medication to ESRD patients. Can Paladina succeed simply by following Rx's example, or will it face different challenges?

Keywords: Intrapreneurship; entrepreneurial organizations; startup management; Startup; strategic planning; strategic positioning; corporate strategy; corporate entrepreneurship; Corporate Entrepreneurship; Corporate Strategy; Business Startups; Strategic Planning; Competitive Strategy; Health Industry; United States;

Language: English Format: Print 28 pages EducatorsPurchase

Citation:

Fuller, Joseph B., David J. Collis, and Matthew G. Preble. "Intrapreneurship at DaVita HealthCare Partners." Harvard Business School Case 315-046, February 2015. (Revised June 2017.)

Related Work

  1. Teaching Note | HBS Case Collection | August 2016 (Revised August 2016)

    Intrapreneurship at DaVita Healthcare Partners

    Joseph B. Fuller and Matthew Preble

    DaVita Healthcare Partners Inc. (DaVita) is one of the U.S.'s leading dialysis providers, a process whereby persons with end-stage renal disease (ESRD) are connected to a machine that performs the functions of a healthy kidney. Kent Thiry, DaVita's CEO, has expanded the company's scope of activities since he first arrived in 1999. He initially focused on consolidating the company's dialysis business, which included acquiring the company's primary U.S. competitor, before expanding into related businesses such as pharmacy services for people with ESRD. In the 2010s, Thiry again broadened DaVita's scope by moving into primary care via the acquisition of Health Care Partners (HCP, a company that owned medical practices and health care facilities) and by forming Paladina Health (Paladina), a company that sells primary care services to self-insured employers. Thiry's strategic decisions reflect several considerations, including his belief that value- and performance-based reimbursement will become the norm in the U.S. health care system, a commitment to extending DaVita's ability to execute on its mission, and DaVita being excessively reliant on a single medical condition for revenue. The latter concern is partially explained by DaVita running out of logical growth vehicles within kidney care/dialysis (i.e., there are no more sizeable competitors or companies to buy) and, in the longer term, the potential reduction in ESRD patients due to innovations in the treatment of the underlying problems (e.g., diabetes) that lead to ESRD.

    Keywords: Intrapreneurship; entrepreneurial organizations; startup management; Startup; strategic planning; strategic positioning; corporate strategy; corporate entrepreneurship; Corporate Entrepreneurship; Corporate Strategy; Business Startups; Strategic Planning; Competitive Strategy; Health Industry; United States;

    Citation:

    Fuller, Joseph B., and Matthew Preble. "Intrapreneurship at DaVita Healthcare Partners." Harvard Business School Teaching Note 317-020, August 2016. (Revised August 2016.)  View Details
    CiteView DetailsPurchase Related

  2. Supplement | HBS Case Collection | January 2017

    Intrapreneurship at DaVita HealthCare Partners: Cash Flow Tool

    Joseph B. Fuller and Christopher Payton

    DaVita Healthcare Partners Inc. (DaVita) is one of the U.S.'s leading dialysis providers, a process whereby persons with end-stage renal disease (ESRD) are connected to a machine that performs the functions of a healthy kidney. Kent Thiry, DaVita's CEO, has expanded the company's scope of activities since he first arrived in 1999. He initially focused on consolidating the company's dialysis business, which included acquiring the company's primary U.S. competitor, before expanding into related businesses such as pharmacy services for people with ESRD. In the 2010s, Thiry again broadened DaVita's scope by moving into primary care via the acquisition of Health Care Partners (HCP, a company that owned medical practices and health care facilities) and by forming Paladina Health (Paladina), a company that sells primary care services to self-insured employers. Thiry's strategic decisions reflect several considerations, including his belief that value- and performance-based reimbursement will become the norm in the U.S. health care system, a commitment to extending DaVita's ability to execute on its mission, and DaVita being excessively reliant on a single medical condition for revenue. The latter concern is partially explained by DaVita running out of logical growth vehicles within kidney care/dialysis (i.e., there are no more sizeable competitors or companies to buy) and, in the longer term, the potential reduction in ESRD patients due to innovations in the treatment of the underlying problems (e.g., diabetes) that lead to ESRD.

    Keywords: Intrapreneurship; entrepreneurial organizations; startup management; Startup; strategic planning; strategic positioning; corporate strategy; corporate entrepreneurship; Corporate Entrepreneurship; Corporate Strategy; Business Startups; Strategic Planning; Competitive Strategy; Health Industry; United States;

    Citation:

    Fuller, Joseph B., and Christopher Payton. "Intrapreneurship at DaVita HealthCare Partners: Cash Flow Tool." Harvard Business School Spreadsheet Supplement 317-703, January 2017.  View Details
    CiteView DetailsPurchase Related

  3. Case | HBS Case Collection | February 2015 (Revised June 2017)

    Intrapreneurship at DaVita HealthCare Partners

    Joseph B. Fuller, David J. Collis and Matthew G. Preble

    Josh Golomb, president and general manager of DaVita Rx (Rx), was about to meet with Kent Thiry, CEO of Rx's corporate parent, DaVita Healthcare Partners Inc. (DaVita), in August 2013. The two would discuss whether Golomb should lead a new DaVita venture, Paladina Health (Paladina), which operated a network of primary care clinics.
    DaVita had launched Paladina in early 2011, and the startup was struggling to gain traction: Paladina had already used a significant amount of the $40 million in funding committed by DaVita; the company's primary care clinics had not yet reached the number of patients necessary to sustain a profitable business; and it was in the midst of trying to integrate with another primary care clinic operator that it had acquired years earlier but was just now merging into Paladina.
    Although the startup was young and still finding its way in an emerging industry, Thiry believed that Paladina would benefit from Golomb's experiences at Rx, which had also struggled in its early years. The situation at Rx became so precarious at one point that many of DaVita's senior leaders wanted to shut it down entirely. Rx made it through those challenging early years though, and was expected to exceed $600 million in revenues for 2013.
    However, Golomb wondered how relevant his Rx experience was to Paladina. Rx was closely tied to its parent company—DaVita provided dialysis services to patients with end-stage renal disease (ESRD) and Rx supplied medications to ESRD patients—while Paladina's connection to DaVita was less obvious. If Golomb took the job, what could he do to make Paladina's clinics as efficient as possible in terms of service and its economics, without compromising on its value proposition? Was Paladina just too different of a business to be part of the DaVita family?
    This case offers an example of "intrapreneurship"—i.e. entrepreneurial ventures launched within large companies—at a Fortune 500 company. DaVita has already had a successful experience launching Rx (after some difficult early years), and the company is now even serving patients from some of DaVita's leading competitors. However, Paladina is the company's first intrapreneurial venture outside of its core focus of serving end-stage renal disease (ESRD) patients—DaVita's main function is to provide dialysis services to ESRD patients and Rx provides medication to ESRD patients. Can Paladina succeed simply by following Rx's example, or will it face different challenges?

    Keywords: Intrapreneurship; entrepreneurial organizations; startup management; Startup; strategic planning; strategic positioning; corporate strategy; corporate entrepreneurship; Corporate Entrepreneurship; Corporate Strategy; Business Startups; Strategic Planning; Competitive Strategy; Health Industry; United States;

    Citation:

    Fuller, Joseph B., David J. Collis, and Matthew G. Preble. "Intrapreneurship at DaVita HealthCare Partners." Harvard Business School Case 315-046, February 2015. (Revised June 2017.)  View Details
    CiteView DetailsEducatorsPurchase Related

About the Authors

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Joseph B. Fuller
Professor of Management Practice
General Management

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David J. Collis
Adjunct Professor
Strategy

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