So first I want to start just our Safe Harbor statement and forward-looking statements. For those of you listening in on the phone call, this is available on our webcast and please refer to the webcast to read the statements. And now, I would like to introduce Rick Whitney, our Chief Financial Officer, who is going to start off the presentation.

Good morning. Okay. Roadmap for today. We’ll start with our comments on the fourth quarter performance, move on to an overview of DaVita, then we’ll have a discussion of the risks and opportunities of investing with us, on to a deep dive in our business fundamentals, financial review and then we’ll wrap up with a summary and taking your questions. Q4 results. First of all, non-acquired growth continued to be solid at 4.8%. It was a nice bounce back from a low of 3.8% back in Q3 of 2008. The other comment I’ll make on treatments you may notice they are a little bit light sequentially this quarter and that’s due to two things. No. 1, the way the calendar fell, more Tuesday, Thursday, and Saturdays in this quarter, which tend to be light treatment days for us as well as the holidays. Revenue, almost $1.6 billion, up 7%, on about 5% volume growth and 2% revenue per treatment growth. Revenue per treatment, as I said, up 2.1% from last year and then sequentially down $3.71, a little more than 1%. A couple of factors drove that. First of all, lower physician prescribed intensities of pharmaceuticals. That was about 60% of it. About 20% of that change were rate changes. Most notably a reduction in ASP rates, medical reimbursement of drugs. And then the final 20% was due to a continued deterioration in our private pay mix. Operating income, up 7% from last year’s Q4, up 8% for the full-year which was in line with our guidance and then sequentially down 3%. And that was driven by the revenue per treatment decline, the impact of the calendar on treatment volumes as well as a sequential increase in G&A spend, which is typical for us in the fourth quarter. And finally…

Okay. Good morning. Good to see many of you again and it’s a new folks as well. Our objective today is the same as it is every year, which is to provide you with analytically thorough, intellectually honest characterization of our industry situation, our Company situation and hopefully in terms of meaningful dialogue about the risk reward relationship in those situations and also try to facilitate your ability to evaluate our coherence and competence in taking advantage of the rewards and avoiding the risks. So that’s the spirit in which we come here today and hopefully you will help us pull that off. It is important for us to start with a mission particularly for those of you that are new, our mission is to be the provider partner and player and choice the way we think about it. And the way we think about is first is as if you were one of our patients. And it is our first priority to please you in that scenario, in that scenario which you are in one of our centers being taken care of first and then secondarily as shareholder. In addition, the employer choice is our third and final component of the mission that we take a lot of pride in being able to provide 34,000 people with a suite of benefits and hopefully a life sustaining income. And so these are important elements of what we’re about and what our people are focused on while simultaneously bringing amazing intensity to our fiduciary responsibilities. We also think over the long-term the fact that we are maniacally focused on providing superb care, ever improving care and compassionate care will rebound to our shareholders benefit, although in our system find that be a directly casual relationship in the short-term, but hopefully with…

Okay. Into the financial review. Going on a couple hours here so I will try to zoom through this and get to the Q&A. Okay, starting with revenue. About $6.1 billion this year, three year CAGR, about 8% which is consistent with the performance in the current year 2009. If you look at revenue per treatment we’ve been on a pretty steady CAGR of about 1% for the last year. If you wound that back a few more years, very similar story. And as I mentioned before, 2009 did a little bit better than that 1% trend line the reasons that we mentioned. Patient care costs, similar. About a 1% CAGR over that time period. Again, wind it back, doesn’t change that CAGR, does not change that CAGR story very much. And then like revenue, we had a little bit higher cost trend in 2009 versus 2008. Operating income, margins pretty stable given that the cost from the revenue, CAGRs are pretty comparable and you can see that we’re right around 15.4% operating income margin. Earnings per share growth – you’ve seen this slide already a couple of times I think. Five-year CAGR, 14%. That’s consistent with the 15% in 2009. Of course, we’re benefiting in the last year or two from a low interest rate environment. Okay. Strong cash flows. Consistent, growing. And the other point I would make is that in each one of these years our free cash flow is more than 100% of our net income. So from a quality of earnings standpoint we turn our earnings into cash. Okay. Okay. Move over to our balance sheet. We have on a net debt basis, net of cash about $3.1 billion of debt. That’s a leverage ratio of about 2.6 times debt-to-EBITDA you can see the components…

Okay. So, summary for your partners, the reasons not to invest, gosh, rates could come under more pressure. There’s no way to dismiss that risk. And we already know there’s a rate cut coming up next year on the Medicare side and if the economy gets worse or sustainably this bad what might that do to people planning up for private insurance. Good news is clinical outcome is strong and getting better and that’s increasingly relevant from a shareholder point of view. The demand and cash flow looks awfully steady. So, boy, what a floor that puts under the downside scenarios. Hard to have a much better market position, although we have every intent to making it better over the next few years, and ironically, if there is some bad news, the fact that we’re a buyer with cash is over the longer-term, medium-term and longer-term a big positive. And then the markets increasingly thoughtful about the value of integrated care. Our data for establishing the value of it is cumulatively getting a lot better. And so, we are not only well-positioned for the current system, but we’re very, very well-positioned to both facilitate, accelerate and take advantage of the new system. And final slide, bundling is this big thing, but as Rick indicated, bundling is a one-time discontinuity, that has some bad news in it, and then has this stunning opportunity to innovate $1.1 billion of costs which $750 million is currently sole source with $600 million of gross margin and it’s not going to be sole source. So, gosh, that’s a nice offset to the fact that the rate cut hurts. And the good news is the rate cut applies to everybody in the space so in some ways might, might intensify our competitive advantage. So that’s the…

Could you first elaborate on the risks you’re starting to see in the joint venture strategies with some of the smaller players? Darren Lehrich – Deutsche Bank: Sure, I think the risks that I’m asking about is do you see an increased activity of joint venture strategies with smaller players and do you think that is a legitimate risk factor to your ability to grow market share?

Okay. Let me take a cut at this and then Rick will correct my mistakes. On the small players doing joint ventures, the fact that there are a few small players and that they are aggressively out there is a competitive reality and it does mean we’re going to lose some deals to them, particularly, sometimes when you have a very strong position in the market that can make someone else more attractive to a small group, because they’re worried about being a second-class citizen, with some affiliated with the big group. So that’s a reality. We’ve done very nicely against them. We’ve done more joint ventures than anybody else by far and so there’s nobody that has our track record in duration nor in depth, no small player, no big player in joint ventures. That also probably saw that spurt of 86 de novos in 2008, because the part of it was that preemptive element that I talked about. Getting out there and reducing your return on capital, your shareholder return on capital versus what would have existed in a perfect world, but improving it versus if we hadn’t been preemptive and gotten out there and done a bunch. And so, we feel very comfortable that with our heightened level of intensity as is reflected in the math for the last 18 months that we’re going to do very nicely versus the small players, who will still get some victories. And then as to the broader non-acquired growth question, we are thinking we still can hit in that 3.5% to 5% range. But, we are monitoring very closely that which you should also monitor closely which is, my gosh, if FMC is going to do more de novos and the small guys are doing de novos and we’re going…

Yes. Two things led to the failure and they are both relevant to why we don’t know exactly what’s going to happen in 2010 at this point. We’re not going to put a stake in the ground. One was inadequate management by us. The second was conscious decisions around making some investments which we think are very much in your best interest in terms of protecting our revenue per treatment and our unit growth. And then the changes in the IT system and some of the things around integrated care. So, those are the two things that caused it in '09. Hopefully, we will address the inadequate management side of it that I own. But on the other hand we are playing with a bunch of things that we think are quite powerful once again in the IT sector, in particular, and then some stuff in integrated care. And so, right now we cannot commit that we’re going to leverage it more in 2010. Darren Lehrich – Deutsche Bank: Do you think the –

Because you said one more. Darren Lehrich – Deutsche Bank: Well, this relates to the G&A question.

(inaudible) quarter numbers, I can change mine. Darren Lehrich – Deutsche Bank: The headquarter move to Denver, does that do anything at all for corporate G&A over the long-term, do you think there will be some ability to consolidate the costs there?

Yes, in general, it won’t be material for a long time. In the short-term there will be a miniscule incremental G&A cost over the intermediate term there will be some savings. But it’s not going to be material. Economically, on a microeconomic basis it’ll be very powerful for shareholders in terms of improved decision-making. As we’ve gotten bigger we never really had a corporate headquarters in the sense of having most of our executives in one place and as we became bigger and more complex it was no longer the right, the distribution of executives across America, which worked very well for us, for the first decade, is not right for the second decade. So, the move to Denver will be the one of the best decisions for shareholders for the second decade, but it’s not going to lead to a material savings.

Darren, back to your joint venture question, just to give you some specifics for context, about 16% of our business right now is joint ventures, and if you look at the pace of which we’re adding about a third of the center that we have are joint ventures. And so as Kent pointed out we do like some of the other players we do a fair number of joint ventures. Kevin Fischbeck – BofA Merrill Lynch: Okay. Kevin Fischbeck from BofA Merrill Lynch. And just first to Darren’s defense, you did say we could ask as many questions as we want, which is kind of dangerous to say to, so. I guess, Rick, when you mentioned that sequentially the rate was down and you mentioned 20% of that was due to commercial rate pressure, was that actual rate pressure or were you talking about mix shift. I just want to get clarity on that given that you are talking before about it –.

It’s worth repeating three pieces. The biggest was declines in physician prescribed pharmaceutical intensities and that was 60% of the sequential change. Second part represents 20% of that change were rate changes and the biggest one there was change in ASP pricing on Medicare drugs. Okay? And then the last 20% is the commercial mix, not rate mix. That’s the phenomenon that Kent was talking about, which is about, I don’t know if we mentioned the breakdown, but is about 50-50 due to retaining patients longer on the one hand and on the other hand the actual impact of the economy and the declines in insured lives that I’m sure you all are tracking with your other HMO managed care investments. Kevin Fischbeck – BofA Merrill Lynch: Okay. And then you talked a little bit about the transition of the bundling cut and whether to go full in or go in overtime and one of the considerations was IT spending as potentially a headwind. I just wanted to understand how real of a headwind that is given that it sounds like an IT spend you are going to have to make anyway at some point over the next four years and the cash flow certainly doesn’t seem to be a headwind. Maybe give a sense of what kind of a cost that might be and how much of a headwind do you think that might be?

A lot of IT work required for the bundle because you have to change the way you submit every Medicare claim. And we don’t know exactly all the ways in which we have to change it until they come out with a final rule. So as much as it were a one DRG entity there’s a lot of line items in that DRG.

And we’re going to have to do it on an accelerated basis because of the timing of the rule.

Correct. On the exact math of it we won’t know until we see the final rule. But when you think about leveraging G&A it doesn’t take that much math of stock different going from 7.4 to 7.3. We can’t have a specific number until we get the final rule. But it’s enough to tweak that G&A. Kevin Fischbeck – BofA Merrill Lynch: And I guess you said we don’t have the final rule, but I guess one of the numbers that we don’t have which I don’t know if you have a perspective on since they’re going to be setting the rate base upon the lowest drug utilization in 2007, 2009, do you have a sense of what kind of headwind that might be to the rate?

I will defer to LeAnne. I do not have a number in my head. LeAnne, do we have a number in our head as to they’re probably going to go for 2008, right? And what kind of cut that represents from the industry? I doubt that we have industry '09 data yet so we probably don’t know.

I’d just say '08 looks like it would be the year, but we don’t have all the data and neither does CMS. And it is built-in cut for us because just mathematically if you take the lowest of three years of which '09 was one of those years and we’re going to have a cut as it relates to that. And then in addition to that our pharmaceutical intensities and by the way our clinical outcomes are higher than the average. Now if you compare with the other large provider, Persinues [ph] who virtually identical when you compare to the overall industry average they are higher, so for those two reasons, we have a bigger hill to climb as it relates to that issue. Kevin Fischbeck – BofA Merrill Lynch: My last question, I think it is the last question, the demand growth slide that you had before, demand growth slide being stable and this is the same slide we’ve had for the last ten years, what are your thoughts about it being the same slide ten years from now, you mentioned therapies potentially in the works, but it sounds far off, what do you think the biggest risk of having to change that slide is and how far away do you think that is?

Over ten years if treatments for diabetics and private insurance significantly improves, while that will not have a large effect on aggregate demand it could have a material impact on that portion of demand which subsidizes most of our population. So that’s the most significant negative on the ten-year front or any other comparable advances that are disproportionately taken advantage of by that segment. The most significant positive over ten years would be if science emerges that more and more people should have more than three treatments. Kevin Fischbeck – BofA Merrill Lynch: You are not worried about medical technology like portable kidneys or things like that, that sounds like it's way too far from the future.

At this point, what I’m told and this is a function of me listening to people whom we think know a lot, who either work for us or work for others, that the portable technologies, I guess if you go to the ten-year timeframe that is feasible, Kevin. However, it’s not all clear that that’s a bad business model for us. Just as we have more home patients anybody in the world today. I think that’s why I don’t have it on the short list. It’s not clear to me that’s a negative. In addition, the way it works now if you are a company with new technology, who is the first person you go to in the world? Us. Because Persinues is a wonderful company, is going to be your competitor and so if it’s anybody other than Persinues they come to us first so there’s a tremendous opportunity to partner with new technology and if it is Persinues they come to us because we have a wonderful working relationship and we can drive an amazing enhancement on their return and there’s salacious antitrust consequences not coming to us with a proprietary technology. So for shareholders that space that you brought up, probably has more upside for us than downside, and in part because it really could change the capital intensity of growth to the extent that you don’t have to build all the centers. So that would be an answer to a different question that has nothing to do with demand change, but structural change which we think is good for us. Kevin Ellich – RBC Capital Markets: Kevin Ellich of RBC Capital Markets. I had a couple questions. Starting off, Rick, I was wondering if you help us understand why non-acquired treatment growth increased faster than total treatment growth in Q4. It was 4.8% for non-acquired and 4.5% for total.

If you look at it on a treatment per day basis you wouldn’t see that same relationship treatment per day growth year-over-year with higher than non-acquired treatment growth, so that’s part of the problem now. What you say why would that be the case? It has to do with the way the calendar falls on treatment days. The sequential growth in treatment is actually lower than it typically would be for the reasons that I mentioned and as we look at January we see the effect of that bouncing back. So, I think may just be the number that you’re looking at. If you look at treatments per day growth it does have an increment above non-acquired growth. It’s a smaller increment than it was earlier in the year and that relates to the timing of the acquisition with the way they’ve rolled out. Kevin Ellich – RBC Capital Markets: Does it have anything to do with the center closure or the five centers that were merged?

No, Jim or anyone else, correct me if I’m wrong, the center closures are baked into the non-acquired growth calculation. Kevin Ellich – RBC Capital Markets: And then thinking about DaVita Rx and the bundle, Kent, I was wondering if you give us your thoughts behind opting in or what you plan to do if CMS doesn’t change the oral medication payment amount of $14 per treatment and how much would you like them to include in the bundle?

To fully fund accepted clinical protocol of orals in the bundle at current economics would be something like $43 or $45. Are those the right words, LeAnne? And $14 is a ridiculous number. And they are stuck and working hard to figure out what to do because since there are so many patients right now who don’t get what they should get, how do you estimate what that number is when you don’t even have the data so you don’t know for sure how many patients are getting what now. So you might know a number of what you’re spending but you don’t know exactly what percent patients it covers and how compliant they are. And so they are in a very tough spot because they can’t accept our number, although we have given them an honest one. They know their originally number is totally wrong. They want to move in this direction for very sound reasons. We’re not against orals in a bundle in theory, we just want it to be at the right number so patients get the right drugs in the right quantity which is why we advocate they spend a couple of years working with us so they can feel comfortable with calculating the number, testing all assumptions, seeing all the data and then put it in. So that’s the spread and that’s the quandary they find themselves in. We hope they work with us over a couple of years to figure out the right number and implement it in a very transparent way. Is that responsive? Kevin Ellich – RBC Capital Markets: Yes. And then thinking about DaVita Rx, could you give us some information how many patients you have using your pharmacy and how the grassroots efforts have been going?

The answer to the second question is the grassroots efforts have been going well. 2009 was our best year for incremental penetration and the total number of patients on is between 18,000 and 20,000. Anybody know the exact number?

It’s very close.

It gives you the range. It is by far the largest focused kidney care pharmacy in the world and we got a growing database that’s unique for helping pharma companies, think about enhancing the penetration of their drugs, for remarkable influence, making sure the right people get the right drugs as well as data tying it to reduced hospitalizations when patients do comply. So it’s really a unique data set, it’s one of the assets separate from the incremental margin on delivering the script. Kevin Ellich – RBC Capital Markets: And then my last question has to do with people and your thoughts on the new ESA tests were coming to the market soon like Hematide and also the upcoming government meeting for ESAs. I think there’s one at the end of March. What are your thoughts going into that meeting, what do you think it’s all about?

On the new ESAs coming to market, we are very excited. We think the world of Amgen as a company and their drug has been a great gift to thousands of patients. At the same time, we would love for there to be a competing great gift because there’s an awful lot of gross margin sitting there. And then the meetings coming up, I don’t know where they’re going to come out, you talk to 20 nephrologists, you get 20 different opinions about what some of the new studies suggest or don’t suggest, prove or don’t prove and they have not yet even published the exact questions they’re going to address in some of those meetings and so you end up doing hyper speculating, which isn’t time well spent. So I think that’s both questions.

Hey, Jeff, the gentleman, next to Schaff [ph] in the back has hand up for quite a while.

Thank you. Your profitability is in part derived from a pricing floor that set by the less efficient providers in the industry, by your own description; we can’t have them go out of business at a rapid rate. And I’m wondering therefore if you can describe a little bit what the size and shape of the industry cost curve is sort of with an eye to how many years is it until we have nothing but efficient providers in which case who knows what the profit structure would look like? Thanks.

We don’t know you can look right now at our current non-acquired growth 4.5% to 5%, what FMC is doing, what the MDOs are doing, the medium investor-owned enterprises and if you just extrapolate out a straight line it’s a long time before you have a critically material body of independence. And some of them will never sell. They may lose share. So maybe they’ve gone from 30 patients to 40 to 50 to 60 and they’re going to then go from 60 to 50 to 40 as they lose share to us and others but they’re still going to have their center, because if a doctor doesn’t want to sell or it’s a hospital doesn’t want to sell or it’s an investor doesn’t want to sell. Then further delays the curve. So absent some discontinuity like a really bad bundle at least a lot of people do want to sell quickly, it’s quiet sometime but I don’t have the model in my head.

I think the other interesting thing is that we’re about to go through industry transition here where several billion dollars the industry costs are going to move from cost plus into the bundle and so that has the potential to widen the gap between the floor and the efficient providers as scale advantages are likely to be more important in the bundle than they were previously.

A follow up again, how large is that more inefficient part of the market and at what rate is it departing today?

About 25% of the market. 1,000 centers more or less, again sort of defining the boundary is a quest somewhat subjective, but that gives you a sense, and the market is growing at 3.8% and you will see we’re at 6%, FMC is at right about the market, and the MDO is a little hard to quantify but they are so tiny so you are not moving much each year on a share basis. But we probably can give you an actual set of the numbers. So I can only give you the directional business answer and some of the mathematical components. I just can’t do it in my head and I don’t have the numbers memorized.

I’ll wait, is that okay?

Andreas. Andreas Dirnagl – Stephens Inc.: Good morning. Andreas Dirnagl from Stephens.

You usually wait until closer to the evening Andreas Dirnagl – Stephens Inc.: Well, I can always come back.

It’s been twelve years and you don’t age ever. Andreas Dirnagl – Stephens Inc.: Kent, just to pick up on a term you used a couple times, now there are really bad bundle. Would you characterize the current proposal as a really bad bundle?

The interim rule? Oh yes. That would be an understatement. Andreas Dirnagl – Stephens Inc.: The $14 versus $45 makes it a really bad bundle?

It’s an abomination. Andreas Dirnagl – Stephens Inc.: Okay. On the same line when it comes to the current rule than as it’s proposed now assuming that there would be no changes, do you have an opinion as to whether DaVita would opt in immediately or would you take it in over the four years?

On the current rule you would head for the hills. You would opt to resign. Under a new rule you got to wait to see it to know what you would do. Andreas Dirnagl – Stephens Inc.: And majority, you put out I think three or four different things that you and the industry were working on. Would you say that the oral drug is the number one key focus of your conversations now?

The math of a few of them. A few of them have striking math if they get them as wrong as what’s contemplated. But I want to go back and emphasize. They were very open in saying, hey, we had to get this out because the fastest way for us to get a better handle on it was to get it out and start the communication in a more intense and open and deadline kind of way. So, we know they are going to change some of that stuff, which is why you end up getting caught, how much you have to talk about it, because they said it’s not going to stay that way. It doesn’t mean that we’re trying to tell anyone that you should be (inaudible) exactly what we think is right, although we try to be credibly open and honest in our analysis with them, because we’re just trying to get to the budget neutrality that the legislation mandated. We just wanted what the legislature wanted. We don’t want leakage. That’s really, that works for us. So it’s not a case of we’re trying to add stuff in. But they did the right thing by bringing it out the way they did to accelerate progress and learning and they listened with great intensity. There you go. That’s all we can say factually. Andreas Dirnagl – Stephens Inc.: Okay. And another issue then you made a comment that what would be positive for both DaVita and the industry would be an expansion of coverage with no public option. Do you therefore see the Senate version of healthcare reform as a positive to the industry and to DaVita as being the most likely thing if we’re going to get reform to pass?

If the legislation that passes creates subsidies of any sort which make it easier for citizens to buy or retain private insurance, which parts of the Senate bill might do, that is an unambiguous good. And as probably you all know, state facts here that are very time sensitive, a fact that is true today, may not be true tomorrow, but the public option is quite severely politically damaged, yet the desire to have more people covered by insurance remains strong. And so ergo someone this year soon or later might try to do something in order to show their constituents that there is more insurance coverage without tackling the monster, the third rail of the public option. I’m not predicting that, but it wouldn’t surprise me if someone tries to do it. The big countervailing factor, of course, is just spending money is very difficult right now and then the countervailing fact is in our case, if you extend private pay you can pay for it providing coverage. Andreas Dirnagl – Stephens Inc.: One or two relatively quick ones, can you remind us when your current Amgen contract is up and what you’ve done in terms of starting to renegotiate that?

I don’t think there is ever been a period in ten years we’re not negotiating with Amgen. And I don’t know, do we disclose when it ends? I don’t remember.

(inaudible) files Amgen this year.

Okay. So it’s the end of 2010, December 31, 2010, isn’t that right?

Yes. Andreas Dirnagl – Stephens Inc.: You mentioned going, switching to acquisitions for a moment you’ve been talking for, I think a year or a little bit more than a year about your desire for potential MDO acquisition. You mentioned today that you haven’t been able to get there in price which has been a good thing. Can you talk about not for any specific transaction, but just in general, what you are willing to pay for acquisitions in terms of say on a per patient basis the way we always looked at them in the past?

I don’t think it’s in your best interest for me to talk about that publicly. But maybe the generic answer might be useful. Want to give you a good internal capital. Andreas Dirnagl – Stephens Inc.: Looking back at the Gambrel acquisition if I recall correctly you paid about $75,000 a patient or $80,000 a patient. Looking back on that, is that sort of, yes, we think that’s a good pricing level in general, or no, we got a bargain, you shouldn’t be expecting that going forward?

I don’t even know our per patient numbers for '09. We just simply don’t look at it that way. We look at it in two ways, an IRR and a year three after tax cash return on the actual net capital invested to do the deal. So, one very, very hard core intermediate term, pragmatic cash, cash, cash, cash, cash, and the other, the more normal conventional financial IRR with the terminal value and all that stuff. That’s what we use. In evaluating an MDO one also takes into account that it could be by buying, having two more centers in Milwaukee, you actually help strategically the performance of the four others that you already own, which then adds a return and that’s not has anything to do with the multiple you’re paying on their profit. And so, all I can say is, we want to be very comfortable that we are going to get a sustainable after-tax return on capital. That’s what it’s got to be. Andreas Dirnagl – Stephens Inc.: Okay. And then the finally one for me for now and you’ve hated this one in the past but it’s been a while so I will ask again. Your own commitment to the Company, can you remind us what your length of your employment contract is and what the options for renewal are?

You are still trying to get rid of me. There’s no date set by me as to when I will go and I’m totally committed and loving what we do and are trying to do. Of course, when at the board wants to fire me any time soon it’s not something I can control, but I have no personal date set and I’m very, very, very excited about some of the stuff we are doing. We will go here and then there’s a gentleman in the middle. Andreas Dirnagl – Stephens Inc.: One quick question, you talked about village health and then coordinated care both you present has been pretty vocal about the opportunity. Understanding MSP has some political opponents in Washington, who could be the gaining factor in getting accord any care pilot large or more on track?

Who could be an obstacle or gaining factor? Andreas Dirnagl – Stephens Inc.: Why hasn’t it been more?

It was frustrating this last year because we were told, we were advised by the right people not to pursue a large globally capitated pilot because they just were sick of dealing with us after the whole HIPAA legislation for the bundle. They spent a lot of time on dialysis they wanted a break. And they knew they were going to tackle the healthcare reform. They got to deal hospitals, doctors, insurance companies, pharma, so they had to deal with the aircraft carriers and they don’t want to, were going to have time. Against odds, we refused to listen and moved forward anyway and created a significant body of support to the point where they were working with us and crafting language. So all the legislation, the language was drafted. And it got sent to the CVO. So we climbed a tall, tall mountain and got people excited, even in the context of, my gosh, we’re already working 18 hour days and why would we add to this thing which is not the political main event. And then we tried very hard to make clear to the CVO that we will do anything to avoid a concern that we would cherry pick which is a concern when losing global capitation will people cherry pick and somehow pick patients where they are going to make money just because they were superior underwriters. And visual, we will put whatever language you want, but they don’t craft language for you. They still had a concern so they didn’t give us a neutral or a saving score. They gave us a slight costing score which then knocked us out in this go around. So we overcame all the obstacles and got into the legislative red zone and were stopped by a relatively small costing score, but it was a costing score and so the optics of that were not acceptable. But it does put us in a very good position going forward because there’s a lot of familiarity with the concept. And everything they talk about those of you are familiar ACO is with a big concept in the Senate bill, other people talk about integrated care, we can be a poster child for the kind of thing they want to deal with all chronic care in America and that’s what we were offering up, a substantive political victory and so we will be back at it, but that’s what happened this past year. Is that responsive? Gary Lieberman – Wells Fargo: Thanks. Gary Lieberman from Wells Fargo. You talk a lot about the cost opportunity from bundling, are there any revenue opportunities from bundling, does it make more sense to do more hemo or do PV?

Excellent question. We have to wait for the final rule. Gary Lieberman – Wells Fargo: : :

I don’t know. We know this we thought a moving target. We spend more times just focusing on trying to get the problems fixed so I don’t honestly know the answer to the question. Rick?

I would say, no, I think the dominant focus is really on the cost side. Gary Lieberman – Wells Fargo: And then with regards to EPO you talked about there being an opportunity and the contract with Amgen ends in 2010, I guess is there any opportunity to potentially get some significant cost savings prior to the expiration of the patents?

Don’t know. We would like that. Gary Lieberman – Wells Fargo: So I guess the other piece of that is it sort of in your mind if you could share with us what do you think the potential size for the savings is on $800 million piece it is EPO?

It’s going to be fascinating. They have what they have. You know the facts. How this place out is, who knows. It’s going to be quite exciting. Gary Lieberman – Wells Fargo: Alright, I’ll hope for too. I will go for my third one. Is there anything different that you’re doing in terms of the contracts, the long-term contracts that you have with your directors, is there anything you are doing different because, I guess, some of the competition from some of the new entrants or some of the other guys doing JVs? Is there anything that you are doing different in your contracts to keep those physicians either longer or to get physicians the first time?

Short answer is no. Our medical director agreements are quite similar to what they’ve been in the past. What we’ve demonstrated in the last few years back when we talked about some of the headwinds is that we had a lot of physicians who’s contracts were expiring, who didn’t have tails, who didn’t have non-compete tails. And what we’ve demonstrated is very, very, very high percentage capability of renewing even with that, which is why we don’t even talk about it anymore because our hit rate is so strikingly high. And so that was the one watch that throughout there a couple of years ago but the end for all, going forward contracts noncompete tails are a part of doing the business and virtually always achieved. So that would be the only difference. But it’s only a difference for those contracts. It was always the standard, but we inherited a bunch of contracts that didn’t have that provision. Everything else is pretty much the same.

We generally are it’s a matter of course entering into a discussion about renewals far in advance of expirations. That’s something it’s not different over the last couple of years, but it’s one of the reasons why we had pretty good success. I guess the last thing is people don’t take the impression that it’s all about contracts is the other thing is all the work we’ve done to improve our position as a high value provider, high value partner is really critical for a lot of docs, particularly, as we go into a time of significant industry changes with the bundle. Gary Lieberman – Wells Fargo: Okay, thanks a lot.

Thank you. Justin Lake – UBS: Thanks. Justin Lake with UBS. Just a few questions on your commercial mix. The number was 13% last year; it looks like it went down to 12%. Any more color you can give us on that? You can get from 13% to 12% a lot of different ways, was that 30 basis point move or was it a 120 basis points decline?

I don’t know the answer to that.

Less than 100. Justin Lake – UBS: Less than 100?

I remember the first time I was told the rounding has moved. I know it was less than 100 but I don’t know the exact. Justin Lake – UBS: Right. Was it materially different, it’s probably a full year average, was it materially different coming out of the year than the 12% or the decline?

No, if I’m answering the question correctly or incorrectly, let me know. It did continue to deteriorate in Q4, so the number we’re giving you is where it’s declined to. Justin Lake – UBS: That’s the Q4 spot number?

Yes. And again sort of half, the reason half the retaining patients longer, half tied to the economy, and then the other thing for a little bit more color that we’ve been saying for the last several quarters is that it seems to be disproportionately in the lower rate segment of our business. That was a little bit different in Q4. Still disproportionate to the low rate but not as “favorable” as it had been in previous quarters. Justin Lake – UBS: Is there anything figure out as to why that’s been the case?

Honestly, no. Justin Lake – UBS: And then you’ve been pretty clear that the existence of COBRA, your ability to get people covered there, has buffered the economic impact to some extent. I know you track this pretty closely so as you go through the year, as you see people ticking off in that cobra coverage expiring, do you have an idea of where you think that number, nothing else change in the economy, we came out at the same unemployment rate we came in. At the end of the year where do you expect that 12% number to be just because of cobra expirations?

Yes, I don’t have a number for you because we haven’t isolated it in that way. As we think about mix going forward we’re hoping that it’s not going to continue to deteriorate, but planning for it to. And we don’t have a handle on is the lag time between sort of the impact of unemployment and the related decline in commercial membership. And the impact on our business, we are working furiously to get a better view on it, but we, at this point in time don’t have a forecast that we have a lot of confidence in, in terms of what our mix will be as the year progresses. So, as I said hoping that it doesn’t decline, planning that it will.

And just on COBRA, LeAnne, you correct me if it’s wrong, the Congress passed a temporary COBRA extension provision. That did not apply to our patients. And so when that expires, it doesn’t affect us. So the only thing that would change our COBRA reality is nothing tied to all that legislative, the stuff that got the legislative attention, but just that a fewer people in the normal course of life sign up for COBRA. Justin Lake – UBS: And then just lastly on from a commercial contracting standpoint, it’s pretty clear that you have an understanding with commercial payors that they are the subsidy for Medicare, more people are on Medicare, is there anything you can do from a rate perspective in 2010 or have done from a rate perspective to try to increase that subsidy to offset this mix change?

2009 was a solid year in terms of our rate trend and we hope 2010 will be solid as well. Justin Lake – UBS: You think it will be better or worse? I would assume most of that’s already contracted?

No, because I think as you know most of our business is up for renegotiation early every year because they are not long-term contracts. So, it’s not a situation where you go into the year with the rates locked and loaded. In some cases that is the case, but predominantly there’s a lot of discussion that have to take place between January and December. I don’t think we’re in a position to predict. Justin Lake – UBS: And then just last question…

And, Justin, we’re doing a better job now of analytically establishing the credibility the fact that the rates are higher to subsidize the government. However, having said that when we go to them and say, well, our Medicare deficit is going to grow this year, they beg to differ when we suggest that, that means they should do something to incrementally make up for that. Justin Lake – UBS: :

The problem is the quote, yes. Justin Lake – UBS: Commercial bundling, can you give us an idea of where you are right now as far as the percentage of your contracts that are bundled and where you expect to go into bundling on at the end of the year?

We never reveal the exact number but it’s substantial and continues to grow and it’s going to continue to grow probably this year more than the normal year and 2011 more than the normal year. Justin Lake – UBS: Great. Thanks.

He’s back.

You mentioned more frequent dialysis a few times and so I’m just wondering if you could comment a little bit more about, what clinical data do you think is important and maybe important overtime and I guess how you view this as a public policy item for your industry and how you lobby it? Just kind of where do we stand as far as more frequent dialysis goes, how should we think about that?

I’ll make a couple of statements and then you come back to fill the gaps. The policy makers are horrified at the prospect of doing anything that would lead to lots of people getting lots more treatments. And therefore, will set a high bar for data and/or physician frequency. That’s the policy side of it. On the data side of it, the people who are critical say the data is or I guess technically are not clear about sustained comparable adequacy and reduction in total healthcare cost. The supporters argue vehemently that the data are clear although there’s no massive control study that in fact outcomes are better. We are neutral because the fact is there’re not the kind of controlled studies that you might have for a new drug. We do more home hemodialysis than anybody in the world, so there isn’t anybody with as much data as we have. We are continuing to learn very objectively every month or more about it and look forward to helping shape policy in whatever direction it should go. What is clear to me as a relatively ignorant lay person in the conversation, but as an observer, is that for some percentage of people it is better. I am quite persuaded of that. But as to what percentage that is, it’s just too wide a possible range right now. So that’s our answer. Did I cover all of it?

I think so. I guess my other part of the question just relates to a recent announcement you made regarding a hire, who is in charge of your home therapies. And my understanding is that person came from an organization with a much hire home hemodialysis and home-based therapy penetration. So maybe just talk about that hire in context around your strategy?

Yes, we just successfully recruited a gentleman named Dr. John Moran. He is one of the best known physicians in the world when it comes to home therapies and particularly PD with both PD and frequent dialysis. He came to us from a competitor who has placed lots and lots of emphasis on the home. And so we’re very excited that he wanted to come and join us. And what that reflects is the fact that it is our stated intent to be, and we have not only more home hemopatients than anyone in the world, we have more home patients than anyone in America. I don’t know FMCs global numbers. And so our agreeing to get together with him is a reflection of our stated intent to be the most thoughtful, the most informed, the best equipped organization in terms of data on clinical outcomes and operational realities in home therapies in the world. That’s what that hiring reflects. And then exactly where that’s going to go in terms of policy advocacy we don’t know yet. But it further positions us to be what we’ve said we wanted to be for a few years, which is when Congress or CMS is looking to change anything, they want us in the room, because all along we’ve been ruthlessly objective players in this debate.

I guess my other question here just relates to some of the strategic initiatives that you talked about in these forums in the past. You highlighted really three in your slide presentation. I’m just wondering if you could maybe talk a little bit more about some of the other that make up that 5% of your revenue, in the last year comprise about $15 million or $20 million of investment for your shareholders?

Sure. We’re developing a fourth one, that’s consuming dollars is we’re developing an electronic health record, electronic medical record for physician practices, nephrology practices. It’s called Falcon. It an exciting piece of work. What are the once are sort of material? I hit the big once in terms of the math.

Fusion, you talked about in the (inaudible).

Oh just focused on kidney care, the home infusion company we bought a couple years ago at a very strong year in 2009 after we almost killed it in 2008 after we bought it and smothered it with value-added, had a very strong year, and we just hired a new Chief Operating Officer and are hoping to ramp up the growth significantly relative to '09 in 2010, primarily on a de novo basis in order to continue to test whether or not this is an area where we can throw substantial chunks of your capital to grow. It’s a highly fragmented industry. It’s a very good fit with our core competencies. It could be that significant portions of it are susceptible to dialysis being dialysized in terms of a more clinical focus with more standard outcomes and a more coherent deal with payors. So we’re still learning and trying to decide and as we explained when we bought it, this could be another big growth pillar. We’re going to take some time and see if it’s a place where we want to place some significant bets and the best way to do that is place a small bet rather than consultants do PowerPoints in your conference room or with all due respect just reading your reports. We felt by owning it and running it for a couple of years we’re learning a lot and hoping that it ends up being something that we want to place some big bets.

And just financial part of it I guess I want to ask is the 30 basis points or 40 basis points of margin that you’ve been absorbing on a consolidated basis, how does that look in 2010? Do you think you can get to break even in all these businesses that you segment report now separately or do you think you still have start-up losses that you will be investing in, in 2010?

I will take it, Rick. What I said in the presentation is that we would expect the investment, the operating losses to be comparable in 2010 to 2009, not significantly higher or lower. And that number is 0.3% of revenue. There’s Andreas Dirnagl. Andreas Dirnagl – Stephens Inc.: Just a couple more. Kent, we don’t talk about it a lot for obvious reasons, because there’s really not a lot to talk about, but you did put up a list of the investigations that you successfully completed. There are still three outstanding anywhere from two years old to five years old at this point. Is there any color you can give in terms of would you consider any of those active investigations still, are you still getting requests, etc.,?

One of them has been dormant for some time. And there’s been activity in the other two. In one case, positive activity in our mind, in another case, negative activity. It probably doesn’t make sense to go further but that gives you a some sense of how that portfolio is evolving. Andreas Dirnagl – Stephens Inc.: That’s great. And, Rick, maybe just a question on the slide that you put up in terms of growth going forward, bottom-line was 9% to 11%. That’s clearly below what you’ve been doing on a CAGR basis for the past couple of years a good 300 basis points to 400 basis points. And I was wondering maybe one or two quick ones. You put in further share repurchases as one of the drivers for the leverage down there. Any assumptions that’s in there of how much or that you are going to do them or it could possibly add to that?

The assumption is built into that that basic financial model is that we reinvest our free cash flow in either acquisitions or share repurchases. Andreas Dirnagl – Stephens Inc.: Okay. And you’ve done a good job in the past, always sort of talking about the levers and the probabilistic outcomes and things like that, what sort of a lever do you think particularly in 2010, 2011 that you can sort of push and pull against so that’s going to cause that number to potentially be versus the 9% to 11% more in line with your historic range of 14% to 15%?

The things that could cause us to be above that range or below that range I would say are outcomes on private rates, we’re able to get consistent increases overall on the portfolio, similar to what we’ve done historically or not. And bundling transition, I think, would be part of that answer as well that could put us out on either end. Those are the two that I would say. And they are both the same answer for the high end and the low end. I don’t know would you add anything to those?

What happens in that portfolio of the quieter government programs, VA Medicaid and Medicare Advantage is up there in the pantheon of big factors and then whether or not we get a private pay extension or private insurance subsidy would be a fourth one in the pantheon. Andreas Dirnagl – Stephens Inc.: Of the three other programs that you mentioned and I think you said in general that they have higher than Medicare rates, do all three of them actually have higher than Medicare rates or is it them as a bundle?

Definitely as a bundle and I know two of three do, I can’t state definitively on the third. Andreas Dirnagl – Stephens Inc.: I’m assuming its Medicaid.

I think it’s in your best interests that I not respond. Andreas Dirnagl – Stephens Inc.: Okay, finally, and then one final question on just de novos or actually two on de novos, I’m assuming are we pass sort of the big certification issue now, has the log jam cleared or are there still some waiting and then finally are we still in a situation you’ve said in the past where clearly your development people bring you many more projects than you actually do on a de novo basis? Kent, you mentioned that you brought down your IRR hurdles. Are we still in a situation though where you probably have more capacity to do de novos than you are actually doing?

The actual number of centers delayed right now is 62 I believe. It’s down a little bit from its peak, not, what that? Still quite a few. Although just to make sure that everybody knows what we’re talking about, it’s not that we have a bunch of centers out there that are getting older and older and older where you have to say, oh my gosh, are they ever going to open those centers. Instead it’s taking longer to get from completion to certification. So you kind of build up a little backlog there. So that is predominantly the nature of that pipeline. So a little better. We’ve also done a little bit better in controlling our costs for those de novos while they situating and so that’s helped a little bit, but there is still a drag on our costs right now. Now that number will never go to zero and it never has been at zero, it’s just about two times what it would typically be if you look back in history.

There’s another part to your question about capacity for growth. I might ask you to ask that again to make sure we hit that part, too. But we had a significant public policy victory on the survey and certification front which is there’s an appropriations bill that allocates money to the agencies for doing that sort of stuff and the related stuff. And this year we worked very hard again to be in the lead by far and the provision, the funding for dialysis survey certification went up by 65% or so. An increase, a dedicated allocation changed the likes of which had never been seen. And so that will overtime begin to help us, holding all other things constant reduce that number further. But you asked another question about sort of capacity to grow? Andreas Dirnagl – Stephens Inc.: (inaudible).

The answer is, yes, we probably have 200 projects being evaluated right now and you saw the prediction for this year was comparable to the last two. And then many of the decisions we’ll make in the next few months actually affect what happens in 2011, but if I had to guess right now, I’d say '11 will be comparable to '10 absent again any discontinuity there. Our objective is always to see if we can stay here until no one has another question. Andrea Bici – Schroeder: Andrea Bici, Schroeder. You talk about maybe transitioning to other ESA products, can you maybe give us the time line of, I know you run your clinical protocols very carefully, just how you run your pilot programs and if you were to be considering a new therapy how long a decision process is and then how long it would be to roll it out to all the centers?

Specific to ESA? Andrea Bici – Schroeder: Yes.

There isn’t another ESA on the market yet. The one that appears to be closest is Affymax’s Hematide, which they’re saying late 2011. If you’re betting you probably bet that it flips from there. So we think about 2012 as possibly being the year that there could be a real alternative and then two years later is when the patents fall away and we anticipate several other alternatives which are already in the pipeline. So we don’t actually have an alternative right now. However, the spector of competition hopefully will be relevant today even before products are on the market.

She’s asking about the timing of penetration. LeAnne and Jim, are we doing clinical trials? Are we involved in the trials with AFFE? That’s what I was 99% sure, but. So as is often the case, if you want to bring a new drug to the kidney care market you want to come, work with the DaVita clinical research to do it because that way we’re developing mutual familiarity organizationally with the drug with all the subtleties of the results. Our leading physicians are getting familiar with it because they’re going to be using it in a highly controlled manner. So that’s all done on a advanced basis, with us unlike virtually anyone else in our space. It gives us a tremendous leg up for the stage that you’re asking questions about, which is that when is it like to make a final go-decision and then implement the go-decision. I can’t answer using a number of months, but because of our involvement with them all along the way and between now and then, any more expansive testing or pilot phase can be relatively short and then if our physician leaders communicate to the rest of the community that this is equivalent or differentiated in some way, the take-up can be quite quick, very quick, as we’ve demonstrated. LeAnne, how many years ago was it when we made the conversion to? It’s been for it was a fair number of years ago now, but, as there’s been in the last ten years there’ve been a couple of instances, where a new drug has either been clinically equivalent and economically superior or clinically superior or operationally superior, for example, by changing vial size between ampul [ph] and vial. And if you look at our track record even back then and we’d be better now at our ability to marshall communication across physicians and drive rapid implementation of something that is superior along one of those dimensions is fast. It’s fast. And I wouldn’t expect this to be any different. Andrea Bici – Schroeder: Are you in any clinical trials for generic EPO? I heard there’s a few on the market in Europe.

(inaudible). Andrea Bici – Schroeder: Okay, thanks.

Do you have any interest in licensing is something like Micera or generic EPOs when EPO goes fully generic to FAS 14?

Yes, we have a huge interest in any and all alternatives. And we love, we’d be very clearly to love to keep using EPO also if it’s clinically equivalent to everything else and we can strike a good business deal. We worked exceptionally well with Amgen for a long time other than the normal tussle on rates.

Would that mean it’d be a slight change in strategy instead of buying drugs, you would start to distribute and license them?

Oh, okay, I understood, I didn’t catch all honestly the question. That is unlikely, but it’s not off the table.

We would be very up for anybody’s advice on that score.

I guess, certainly, people have come to us with offers in that regard.

We typically conclude in those situations that it’s better to have complete flexibility and freedom to pursue all different alternatives than to be tied to one house drug.