Javier Rodriguez
Chief Executive Officer at DaVita
Thank you, Joel, and thank you for joining the call. Today, I will cover five topics. Health equity, the Supreme Court case, second quarter performance, an update on our integrated kidney care or IKC business, and I will conclude my remarks with our current thinking for 2023. Before we discuss business matters, let me start with a clinical topic that is critical for society, health equity. Given the disproportionate impact kidney disease has on patients of color, health equity is of utmost importance. Across the key dimensions of access to care, access to information and clinical outcome, DaVita and the kidney care community have achieved unparalleled equity relative to the vast majority of other disease states.
We have used the focus of our scale to provide consistent equitable access to care and education. Our leading clinical outcomes and protocols have reduced variability across all patient populations regardless of race or socioeconomic status. Our Black and Hispanic patients are at parity when it comes to dialysis adequacy, phosphorus and calcium lab values as well as hospitalization and mortality. As another example of our efforts to drive health equity, our kidney smart program is now available in 10 languages. And we're participating in a pilot to develop culturally tailored education to underrepresented and underserved patient communities. As it relates to access, dialysis services are available to most patients within 10 miles of their home.
We are proud of these results and now have set our ambitions to improve access to transplants and home dialysis. Now, moving on to SCOTUS. The ruling in the Marietta Memorial Hospital matter opened a loophole for plans to circumvent the historic protections for our patients in the Medicare Secondary Payer Act or MSPA. We continue to believe that this narrow interpretation is not only contrary to Congress' intent when enacting these provisions but could also result in harm to this vulnerable patient population and set health equity efforts back. We are working with the community on several initiatives to not only close this loophole but apply other anti-discrimination provisions to protect these patients' right to be able to choose the insurance options that works best for them.
The first step in the process is supporting legislative efforts of members of Congress who are passionate about protecting not only dialysis patients' rights but also the Medicare trust fund. We're excited that last Friday, bipartisan legislation was introduced to allow Congress to do just that, amend the text of the MSPA to close the loophole opened by the Marietta decision. The proposed legislation clarifies the benefit plan seeking to limit or impair benefits based on the need for renal dialysis services like the Marietta plan would be considered a violation of the MSPA.
While getting any legislation passed will be difficult in an election year, we believe the restoration of the MSPA is noncontroversial, and we will work with the Congressional Budget Office to ensure that it will be scored to the saver, which should help with passage. The community is also working with regulators to ensure other anti-discrimination protection would apply to address the type of discrimination implemented with the Marietta Memorial Hospital employer group. The proposed revision to the anti-discrimination provisions of the Affordable Care Act that were released last week demonstrate that HHS is serious about protecting against insurance benefit designed to discriminate based on a variety of things, including disability.
Should we start to see efforts by employer groups to modify benefit plans to take advantage of the workaround of the MSPA created by the Marietta decision, there could be legal actions based on these anti-discrimination provision. Now, moving on to financial results. For Q2, we delivered operating income of $433 million and earnings per share of $2.30. Operating income was up sequentially by $95 million as seasonal impact of Q1 abated and treatments per day increased quarter over quarter by approximately 1%. COVID infections and mortality in our patient population declined after the Omicron surge in Q1 through May but increased in June and again in July.
Net treatment rates were also down significantly from the highs in Q1 but above the seasonal norms in Q2. The impact of COVID on mortality, missed[phonetic] treatment and treatment volumes remains difficult to forecast and is the biggest swing factor for our performance in the second half of 2022 and into 2023. Labor costs remain a challenge in Q2 with higher contracted labor utilization and base wage increases similar to what we experienced in Q1. We're managing other patient care costs and G&A to help offset the impact of wage and other inflationary increases.
With all these challenges, we continue to believe it's more likely that our performance will fall within the bottom half of our guidance range of $1.525 billion to $1.675 billion for 2022. Turning to an update on our IKC business. Operating losses in our IKC business were better than expected in Q2. This was a result of timing within 2022 with our recognition of some shared savings revenue earlier in the year than anticipated. We also benefited from positive prior period development in our Special Needs Plans. For the full year, we are anticipating overall performance in IKC to be better than initially expected.
Looking forward, we're gaining confidence in our model of care given the early results of our 2021 share saving true-up[phonetic]. For 2023, we're also expecting significantly higher growth in our membership and dollars under management in both MA lives and from CKCC program. As a result of the better performance in 2022 and the first year costs associated with significant growth, we are now expecting improvement in IKC operating income in 2023 to be lower than previously expected. Last, I want to provide an update on our thinking about 2023 overall. To help our investors and analysts with these updates, I refer you to the table in the outlook section in our press release that lays out our views on the primary drivers of operating income growth from 2022 to 2023.
We continue to believe that we will deliver a significant rebound next year, although the challenges and uncertainties around treatment volume growth and the healthcare labor market have led us to lower the improvement range to $200 million to $300 million. Let me walk you through the updated thinking. First, back in November 2021, we expected the volume headwinds from COVID to be over in 2023, and we're anticipating benefits from a pull forward of mortality from COVID. These factors would have resulted in a higher-than-normal volume growth in the middle of our range and a tailwind from volume in 2023 compared to our historical results.
Based on what we have learned from the Omicron surge in the winter and the continued evolution of the pandemic, we now expect COVID to remain a headwind to growth in 2023. Uncertainty around treatment volume incentive growth continues to be the single largest source of variability in our year-over-year profit forecast. Second, our confidence in the likelihood and the magnitude of the cost-saving initiatives we've been working on has increased. We have plans in the way to reduce our procurement costs, lower our fixed cost structure, and shrink our G&A. This will result in some nonrecurring expenses in 2022 and 2023 but is expected to lower our cost structure for the long term.
Third, relative to what we knew at capital markets day, we are now anticipating higher revenue per treatment growth next year. This is the result of higher rate increases and lower patient bad debt. To summarize, for 2023, we still expect to deliver a meaningful OI[phonetic] increase of $200 million to $300 million. But based on volume and wage pressure, we are lowering that range. I will now turn it over to Joel to discuss our financial performance and outlook in greater detail.
