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Goodwill | 12 Months Ended
--- | ---
Dec. 31, 2016
Goodwill And Intangible Assets Disclosure [Abstract] |
Goodwill |
10. | Goodwill
Changes in the carrying value of goodwill by reportable segments were as follows:
|  | U.S. dialysis and related lab services |  |  | DMG |  |  | Other ancillary services and strategic initiatives |  |  | Consolidated total |
Balance at January 1, 2015 |  | $ | 5,610,643 |  |  | $ | 3,562,534 |  |  | $ | 242,118 |  |  | $ | 9,415,295 |
Acquisitions |  |  | 21,910 |  |  |  | 29,910 |  |  |  | 45,273 |  |  | $ | 97,093 |
Divestitures |  |  | (3,370 | ) |  |  | (5,411 | ) |  |  | — |  |  | $ | (8,781 | )
Goodwill impairment charges |  |  | — |  |  |  | (188,769 | ) |  |  | (4,065 | ) |  | $ | (192,834 | )
Foreign currency and other adjustments |  |  | — |  |  |  | — |  |  |  | (16,294 | ) |  | $ | (16,294 | )
Balance at December 31, 2015 |  | $ | 5,629,183 |  |  | $ | 3,398,264 |  |  | $ | 267,032 |  |  | $ | 9,294,479 |
Acquisitions |  |  | 75,295 |  |  |  | 248,901 |  |  |  | 123,632 |  |  | $ | 447,828 |
Divestitures |  |  | (12,891 | ) |  |  | (2,223 | ) |  |  | (29,645 | ) |  | $ | (44,759 | )
Goodwill impairment charges |  |  | — |  |  |  | (253,000 | ) |  |  | (28,415 | ) |  | $ | (281,415 | )
Foreign currency and other adjustments |  |  | — |  |  |  | — |  |  |  | (8,816 | ) |  | $ | (8,816 | )
Balance at December 31, 2016 |  | $ | 5,691,587 |  |  | $ | 3,391,942 |  |  | $ | 323,788 |  |  | $ | 9,407,317 |
Balance at December 31, 2016: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  | $ | 5,691,587 |  |  | $ | 3,833,711 |  |  | $ | 358,112 |  |  | $ | 9,883,410 |
Accumulated impairment charges |  |  | — |  |  |  | (441,769 | ) |  |  | (34,324 | ) |  | $ | (476,093 | )
|  | $ | 5,691,587 |  |  | $ | 3,391,942 |  |  | $ | 323,788 |  |  | $ | 9,407,317 |
Each of the Company’s operating segments described in Note 25 to these consolidated financial statements represents an individual reporting unit for goodwill impairment testing purposes, except that each sovereign jurisdiction within the Company’s international operating segments is considered a separate reporting unit. Within the U.S. dialysis and related lab services operating segment, the Company considers each of its dialysis centers to constitute an individual business for which discrete financial information is available. However, since these dialysis centers have similar operating and economic characteristics, and the allocation of resources and significant investment decisions concerning these businesses are highly centralized and the benefits broadly distributed, the Company has aggregated these centers and deemed them to constitute a single reporting unit. The Company has applied a similar aggregation to the DMG operations in each region, to the vascular access service centers in its vascular access services reporting unit, to the physician practices in its physician services and direct primary care reporting units, and to the dialysis centers within each international reporting unit. For the Company’s other operating segments, discrete business components below the operating segment level constitute individual reporting units. During the fourth quarter of 2015, the Company recognized impairment charges of $188,769 on goodwill of certain DMG reporting units based on assessments performed after circumstances indicated it had become more likely than not that the goodwill of certain DMG reporting units had become impaired. These circumstances included under-performance of the business in recent quarters as well as changes in other market conditions, including government reimbursement cuts and the Company’s expected ability to mitigate them. Based on continuing developments at the Company’s DMG reporting units during 2016, including the Medicare Advantage final benchmark rates for 2017 announced on April 4, 2016, further changes in expectations concerning future government reimbursement rates and the Company’s expected ability to mitigate them, as well as medical cost and utilization trends, underperformance of certain at-risk units in recent quarters and other market conditions, the Company performed additional goodwill impairment assessments for certain at-risk DMG reporting units during each of the first three quarters of 2016 and as of their November 1 annual assessment date. In addition, during the quarter ended December 31, 2016, the Company determined that circumstances indicated it had become more likely than not that the goodwill of the Company’s vascular access reporting unit had become impaired. These circumstances included changes in future governmental reimbursement and the Company’s expected ability to mitigate them. Specifically, on November 2, 2016, CMS released the 2017 Physician Fee Schedule Final Rule and the Ambulatory Surgical Center Payment Final Rule which reflected significant changes in reimbursement structure for this business unit. Accordingly, the Company performed the required valuations to estimate the fair value of the net assets and implied goodwill of this reporting unit with the assistance of a third-party valuation firm. As a result of the assessments described above, the Company has recognized the goodwill impairment charges below:
|  | Year ended December 31, |
Reporting unit |  | 2016 |  |  | 2015 |  |  | 2014 |
DMG Nevada |  | $ | 161,800 |  |  | $ | 181,253 |  |  | $ | — |
DMG Florida |  |  | 91,200 |  |  |  | 5,800 |  |  |  | — |
DMG Arizona |  |  | — |  |  |  | 1,716 |  |  |  | — |
Vascular access |  |  | 28,415 |  |  |  | — |  |  |  | — |
International operations |  |  | — |  |  |  | 4,065 |  |  |  | 1,000 |
Total |  | $ | 281,415 |  |  | $ | 192,834 |  |  | $ | 1,000 |
Further reductions in reimbursement rates, increases in medical cost or utilization trends, or other significant adverse changes in expected future cash flows or valuation assumptions could result in goodwill impairment charges in the future for the following reporting units, which remain at risk of goodwill impairment:
|  | Goodwill balance |  |  | Carrying |  |  | Sensitivities |
Reporting unit |  | as of December 31, 2016 |  |  | amount coverage(1) |  |  | Operating income(2) |  |  | Discount rate(3) |
DMG Nevada |  | $ | 261,204 |  |  |  | 11.4% |  |  |  | -2.2% |  |  |  | -3.9% |
DMG Florida |  | $ | 442,835 |  |  |  | 7.1% |  |  |  | -1.7% |  |  |  | -3.2% |
DMG New Mexico |  | $ | 70,926 |  |  |  | 2.6% |  |  |  | -1.5% |  |  |  | -2.2% |
DMG Washington |  | $ | 244,502 |  |  |  | 3.7% |  |  |  | -1.8% |  |  |  | -3.4% |
Vascular access |  | $ | 34,696 |  |  |  | 4.3% |  |  |  | -2.7% |  |  |  | -5.3% |
| (1) | Excess of estimated fair value of the reporting unit over carrying amount as of the latest assessment date.
| (2) | Potential impact on estimated fair value of a sustained, long-term reduction of 3% in operating income as of the latest assessment date.
| (3) | Potential impact on estimated fair value of an increase in discount rates of 100 basis points as of the latest assessment date.
There were no major changes in the business, prospects, or expected future results of these reporting units from their latest assessment date. Except as described above, none of the Company’s various other reporting units were considered at risk of goodwill impairment as of December 31, 2016. Since the dates of the Company’s last annual goodwill impairment tests, there have been certain developments, events, changes in operating performance and other changes in key circumstances that have affected the Company’s businesses. However, except as further described above, these did not cause management to believe it is more likely than not that the fair value of any of the Company’s other reporting units would be less than their respective carrying amount.

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