Entrepreneurship Development

Case Study – 1 

Intrapreneurship at DaVita HealthCare Partners

 

 Introduction:

The Intrapreneurship at DaVita HealthCare Partners Case study

focuses and allows us to experience a real-world problem and solve it
accordingly. The case study, allows us to develop a broader, and a
clearer understanding of the business world and dynamics.

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.
  Q/A:

Q.1. Explain Intraprenurship with respect to this case and

evaluate entry strategy

A.1. The term intrapreneurship refers to a system that allows an

employee to act like an entrepreneur within a company or other
organization. Intrapreneurs are self-motivated, proactive, and action-
oriented people who take the initiative to pursue an innovative
product or service.
DaVita’s core business was dialysis, and it created Rx to provide
pharmacy services to its patients. Rx was on track to exceed $600
million in revenues for 2013, and 60% of DaVita’s eligible patients
received medications through Rx. The path to success, however, had
been tortuous: Rx grew too fast, incurred large financial losses, and
struggled to deliver the quality of service that DaVita expected.
DaVita was formed in the late 1970s as a subsidiary managing
National Medical Enterprises’ dialysis centers. The company spun out
in the mid-1990s as Total Renal Care Inc. TRC owned or operated
fewer than 70 dialysis centers initially, but “nearly doubled in size in
little more than a year,” TRC raised $107 million in its 1995 initial
public offering and purchased a competitor for $1.3 billion in stock in
1997. The integration proved challenging: “The acquisition doubled
the company’s patient and staff base overnight, straining its
infrastructure,” TRC was in a dire financial position.

Thiry, who had previously led Vivra Holdings Inc. (which managed
dialysis clinics), was hired in 1999 to turn TRC around. Thiry
convened a meeting of 600 team mates, representing all levels of the
organization in Phoenix, Arizona intentionally chosen for the
symbolic connection with the mythological bird, the Phoenix, which
was reborn from its own ashes where he facilitated the name
nominating and election process for these 600 teammates to select a
new name for TRC. “We’re the only Fortune 500 company where the
teammates chose the name,” Thiry noted. The teammates chose to
rename TRC as DaVita, an approximate translation of the Italian
phrases “giving life” or “he/she gives life”
Thiry nurtured a culture at DaVita that emphasized service and patient
care, and engendered a shared sense of purpose among DaVita’s
teammates. DaVita was known as “the Village” and Thiry as its
mayor. He elaborated: “We introduced the [Village] as a way to
communicate that DaVita is a community that takes care of its own
We work together to make our lives better. Running a sound business
for everyone’s benefit is an integral part of that.”
The company hosted regular events for new teammates around the
country, known as DaVita University Academy, to spread DaVita’s
values. “Academy is designed around human skills, not business
skills,”. “Most of the content is about teaching them to grow as
human beings.” DaVita had also launched the Redwoods Leadership
Development Program in 2005 for high-potential recent college and
MBA graduates to drive innovation and new business opportunities.
The program had yielded over 600 participants.