On the surface, it seems that measuring key metrics for a business can lead to improvements. Many businesses will try to quantify their operations instead of relying on qualitative goalposts. This is probably a good idea in most situations. However, the real world is messy and difficult. Sometimes employees will game the metrics used to measure their performance.
I’ve been researching the dialysis industry because Berkshire Hathaway owns DaVita (DVA), one of the largest dialysis providers in the US. However, I’m not quite sure why Berkshire Hathaway owns this stock. The for-profits are rarely rewarded for creating value while there are large financial rewards for unethical behaviour. Buffett has been vocal about not owning Lorillard (a tobacco company) so I don’t see why he would be ok with owning DaVita. It is possible that Buffett hasn’t researched the company much as Ted Weschler (probably) made the decision to buy it.
Historically, DaVita has been very rewarding for shareholders ever since Kent Thiry saved it from bankruptcy and turned it around. However, his integrity strikes me as questionable and I’m of the opinion that entrusting your money with unethical people is not a good idea.
