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Name and title: Joseph Schohl, vice president, general counsel and secretary. Age: 39 Dialysis empire: About 300,000 people in the United States suffer chronic kidney failure and require a lifetime regime of dialysis three times a week for up to five hours per visit, unless they receive a transplanted kidney. DaVita Inc. provides dialysis services for slightly more than one-third of those patients through a nationwide network of 1,300 outpatient dialysis facilities, plus acute units in more than 800 hospitals. The company brought in nearly $4.8 billion in 2006. “We are an integrated kidney care enterprise,” Schohl said. “Our quality outcomes are second to none. We lead in most categories and we are tied in the others. We have a very strong culture of trying to make it fun to work here and fun for the patients. People enjoy the warmth and interaction with the caregivers.” Kidney failure is the only disease for which Medicare provides reimbursement regardless of the patient’s age. Consequently, the cost of dialysis for nearly 90% of patients is reimbursed by the government at a rate that for decades has lagged behind the rate of ordinary inflation and been virtually frozen relative to the rise in medical costs. “Medicare has had a rate per treatment that was set in 1972 without an inflation update,” Schohl said. “The reimbursement is not sufficient to cover the cost of treating those patients. The one patient in 10 who has private insurance is, in effect, subsidizing the losses from Medicare. As the insurance companies are looking for ways to reduce their costs, that is putting business pressure on us and pressure on the government to increase their reimbursement rate.” Route to present position: Schohl, a native of Chicago, took his undergraduate degree in finance from the University of Illinois in 1990 and his law degree from Columbia Law School in 1993. “From my first day in law school I knew I wanted to be a general counsel. That was a very early career goal,” he said. Schohl began his career as an associate in New York-based Milbank, Tweed, Hadley & McCloy’s Los Angeles office. He left in 1995 to work in the Sidley & Austin office in his hometown. In October 1998, Schohl made his move in-house to Baxter Healthcare, now Baxter International Inc., in Deerfield, Ill. During his stint at Baxter, Schohl found the time to earn a master’s degree in business administration from the Kellogg School of Management at Northwestern University. In December 2003, Schohl moved to Baxter’s BioScience division in Westlake Village, Calif. He left in 2004, when he took the general counsel position at DaVita in nearby El Segundo, Calif. “When I went to Baxter, I wrote down as a goal, and I still carry it with me, that I wanted to be general counsel of a health care company that betters society,” Schohl said. “I didn’t expect to get that chance as soon as I did, but if you have a goal, you write it down, and everything you do you put through the filter of whether this will help you some day achieve the goal, you get there faster than you might have expected.” Legal team and outside counsel: When Schohl started at DaVita, he was one of six in-house attorneys. “We’ve staffed up significantly with generalists so we could use outside counsel only for what couldn’t be done in-house,” Schohl said. “Even though we’ve grown from six to 19 [lawyers], our overall legal spend, inside and outside combined, has been decreasing. We do a lot more inside and it is much less expensive because even the [general counsel] doesn’t get paid $750 an hour.” McDermott, Will & Emery has long been DaVita’s primary outside counsel. The firm has represented the company during three federal investigations, two of which ended without any finding of wrongdoing. One remains pending. “The company is absolutely dedicated to compliance, and we’ve had excellent representation by McDermott, but when 90% of your patients are Medicare patients you are going to have scrutiny by the government. It’s as certain as the sun rising in the East,” Schohl said. “An investigation out of the federal attorney office in Philadelphia lasted six years. We turned over 200,000 pages of documents and spent millions of dollars in legal fees. At the beginning of last year they closed that investigation without taking a single action against the company.” In addition, DaVita has a list of preferred law firms that includes Epstein Becker & Green for labor and employment, California firm Hooper, Lundy & Bookman for health care reimbursement and Boston’s Mintz, Levin, Cohn, Ferris, Glovsky and Popeo for transaction work. Daily duties: Schohl has all the duties of the general counsel at a publicly traded company, but nothing that happens day-to-day compares to his first year on the job, when he guided DaVita through the acquisition of a major competitor, Gambro Healthcare. “The second day I was here, I was told we might be acquiring one of our competitors. I went out to New York and spent the next 10 days there,” Schohl said. “We bought the other company and that prompted our largest competitor [Fresenius Medical Care] to buy the next largest company. The whole industry landscape changed.” The Federal Trade Commission required DaVita to complete substantial divestitures before approving the deal. The result was that DaVita and Fresenius, combined, serve nearly two-thirds of dialysis patients in the United States. “I see myself as more of a managing partner than anyone’s boss, because we have very competent people. I make sure we have the right resources in the right places,” Schohl said. “Most of my day-to-day lawyering is with the senior management team. I am counselor to the senior executives and the board.” Chief Executive Officer Kent Thiry, he said, “is very into the details.” Personal: Schohl is an athlete who competes in running and triathlons. He is the father of two daughters, Annie, 10, and Natalie, 6. Schohl climbed Mount Whitney last year and typically camps out for 10 to 15 nights a year. “I look forward to doing a lot of that in the future with my daughters,” he said. Last book and movie: Duel in the Sun: Alberto Salazar, Dick Beardsley, and America’s Greatest Marathon, by John Brant. Regarding movies, in anticipation of a planned bike trip to France that will include a pilgrimage to the beaches of Normandy, Schohl recently watched the The Longest Day and Saving Private Ryan.

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