Davita Change Management Case Study

Case | HBS Case Collection | May 2010 (Revised May 2011)

Kent Thiry: "Mayor" of DaVita

by William W. George and Natalie Kindred

Abstract

Kent Thiry, CEO of dialysis provider DaVita, is considering how to integrate employees from recently acquired Gambro Healthcare without damaging DaVita's robust, unconventional internal culture. When Thiry joined DaVita in 1999, breaking an important promise to his family in order to do so, he was determined to create a differentiated company with a community-like culture. Over six years, he had engineered an impressive financial turnaround and successfully developed the strong culture he had envisioned. In late 2004, DaVita acquired arch-rival Gambro Healthcare, whose 12,000 employees would nearly double DaVita in size once the integration is completed in fall 2005. Confident that the deal makes business sense but worried about potential adverse impacts of the integration-especially in light of rumors that Gambro employees are suspicious of Thiry's authenticity and critical of DaVita's arguably eccentric culture-Thiry is considering whether to impose DaVita's culture on the new arrivals, or just allow Gambro to operate independently for a period of time.

Keywords: Mergers and Acquisitions; Experience and Expertise; Employee Relationship Management; Leadership Style; Organizational Change and Adaptation; Organizational Culture; Personal Development and Career; Integration; Health Industry;

Eileen R. NahLeading Strategic Change at DaVita Wk. 7June 18,2016This case is designed to support and enforce strategic interventions. It is a very interesting strategy case that has a strong human resources and culture themes running through it. This case has three primary purposes. First, one must design the integration activities associated with a large acquisition. DaVita is acquiring the Gambro organization which will more than double the size of DaVita. Second, the case discusses the transformation—cultural and organizational—of the DaVita organization from Total Renal Care. Finally, DaVita has put into place many of the features associated with a Built to Change organization and there is a good opportunity to see how those principles might look in practiceIntroducTonOrganizaTonal change is ofen related to environmental Factors or internal disrupTons within the organizaTons (Cummings and Worley, 2014). As noted in the case analyses, when Kent ±hiry, was appointed as CEO, in October oF 1999, the organizaTon was struggling in all Fronts From its ²nances, how it operated its FaciliTes, government regulatory regulaTons and employeemorale was at the center oF the organizaTons issues (Cummings and Worley, pg. 645). ±he company was on the verge oF bankruptcy along with being “invesTgated by the SEC”, as well as, various lawsuits ²led against it From its shareholders (Cummings and Worley, pg. 645). AsDaVita was experiencing high employee turnover rates among nurses and technicians, lower reimbursement From the government due to healthcare reForm, dissaTs²ed paTents, along witha highly compeTTve industry. ±he organizaTon needed to change its operaTonal and perFormance pracTces in addiTon to, its cultural norms and values; in order to obtain growth and sustainability For the Future. (Cummings and Worley, pg. 645) By 2005, CEO ±hiry, along with his execuTve management team was able to turn the organizaTon around. “DaVita (publicly traded on the New York Stock Exchange and grossed $2.2 billion annual revenue operator oF Free-standing and in-hospital kidney dialysis centers” (Cummings 645). However, DaVita was Faced with new challenges in conTnuing its development and expansion oF its strategic vision and Future oF the organizaTon (Cummings and Worley, 2014).How would you characterize DaVita’s strategy? ±he characterisTcs oF DaVita’s strategy was one oF transFormaTonal change in which the Focus was on changing its employee’s percepTon, thinking and behavioral work place pracTces within the organizaTon. (Cummings and Worley, 2014) In order to become a more cohesive and uni²edorganizaTon that would adapt a culture that embraces its organizaTon as a community, built on collaboraTve teamwork, responsibility and togetherness. Having a uni²ed mindset that emulates across the enTre organizaTon ‘I am my brother’s keeper mentality’ would ensure a successFul redesign oF a reinvented Dialysis healthcare centers. ±he Focus oF the key issues as ±hiry and his management team outlined would be on:

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