'Dialysis Centers on Every Corner' in Southern California, the Business of Kidney Disease is Booming | KCET
'Dialysis Centers on Every Corner' in Southern California, the Business of Kidney Disease is Booming
Chronic kidney disease is at epidemic levels worldwide. And as Americans live longer and get heavier, the number of patients with kidney failure requiring dialysis is growing at 5 percent a year.
That’s all helped make dialysis a multi-billion-dollar business.
In California, dialysis companies are making revenues of roughly $3 billion annually, according to the California Legislative Analyst’s office.
That money is the target of Proposition 8, a union-backed effort to cap profits at the state’s dialysis clinics. In its campaign to defeat it, the industry is spending more than $110 million, the most any one side has spent on an initiative anywhere in the U.S. since 2002, the Associated Press reported.
The lion’s share of those contributions are coming from DaVita Inc. and Fresenius Medical Care, the two companies that control roughly 70% of the dialysis market in the state and nationwide. About 10 percent of DaVita’s clinics nationwide are in California.
Germany-based Fresenius also makes dialysis machines, which filter the blood through an external circuit and then pump the cleansed blood back into the body. The machines essentially perform the function of kidneys. Patients with End Stage Kidney Disease typically undergo three dialysis treatments a week.
Epidemic levels of diabetes have created a steady stream of patients at dialysis machines. Diabetes is the leading cause of kidney disease. Half of Californians are diabetic or pre-diabetic.
Costly dialysis used to be only available for the rich, or for people whose lives were considered worth saving. In the 1960s, at least one hospital committee, nicknamed a ‘God Panel’, would decide which patients would receive dialysis, essentially handing out a death sentence to those didn’t qualify.
Realizing the critical need for care, In 1972, President Richard Nixon extended Medicare coverage to people with kidney failure, regardless of age.
Taxpayers through Medicare cover most of the cost of dialysis, which averages an annual cost of $89,000 per patient. Dialysis now accounts for $34 billion of Medicare’s costs, more than triple the total annual budget of the US Department of Labor.
The passage of the Affordable Care Act (ACA) inadvertently opened up another revenue stream for the dialysis industry. When the ACA went into effect in 2014, insurance companies could no longer deny coverage to people with pre-existing conditions, including kidney disease.
Insurers and lawmakers have accused the industry of steering patients from Medicare and Medicaid to private insurance to boost their companies’ profits. Each dialysis patient on private insurance can bring in $100,000 or even $200,000 a year in insurance reimbursements. Those costs are passed onto all the customers of an insurance company, and are reflected in continually rising insurance rates, as observers and insurers have pointed out. Dialysis companies deny the steering accusation, but DaVita in its recent corporate filings points to private insurance as a “major driver” in its treatment revenue.
The steering accusations are related to the American Kidney Fund, a charity which helps to pay insurance premiums for dialysis patients, and which has received hundreds of millions of dollars in contributions from DaVita and Fresenius in recent years. In 2017, the Department of Justice under President Barack Obama subpoenaed the companies and the Kidney Fund about the charitable insurance premium assistance.
SoCal Connected obtained net dialysis patient revenue from the state’s Health and Human Services Agency for 2016, and calculated the average net per patient revenue at DaVita and Fresenius clinics. KCET mapped the data so readers can check revenue information at individual DaVita and Fresenius clinics. Some centers are heavily concentrated in minority communities. In Inglewood, for example, there are more dialysis centers than McDonalds.
In 2016, most Fresenius clinics had average net per patient revenue between about $40,000 and $50,000. DaVita’s average per patient revenue tended to fall between about $23,000 and $30,000.
Dr. Arshia Ghaffari, the medical director of a dialysis clinic that’s a partnership between USC and Davita, told SoCal Connected that DaVita clinics are run very efficiently, even while losing money with patients on Medicaid.
“Yes, maybe they make money. But I don't think it's all about the margins per se. It's more about volume.”
DaVita has over a million patients worldwide according to its website.
SoCal Connected also reviewed hundreds of state deficiency reports from 2014 to 2017 involving clinics in the eight-county Southern California region. Out of the roughly 280 clinics where complaints were filed, we found that deficiencies were substantiated in about 25 percent of the cases. Deficiencies ranged from minor issues, such as staff not wearing protective gowns in the dialysis unit, to far more serious issues, like the death of a patient.
In the early morning of February 2, 2017 a patient was found unresponsive at a North Hollywood dialysis center hours after beginning a treatment.
State inspectors found the staff had failed to check a patient’s blood pressure or note its dangerous drop, as per protocol.
According to records, a staff nurse interviewed by inspectors claimed the facility had “no policy on the number of staff necessary to care for 25 patients.” The nurse also claimed staff on the first shift was not assigned to specific patients. “‘It’s everybody’s patient. When they (staff) take breaks we don’t have the right number of staff on the unit.’”
Other problems noted in the deficiency reports include a medication error at a DaVita in Banning and threats to discontinue patients’ treatments at a DaVita in Riverside. At a DaVita in Inglewood, staff failed to provide care for a patient, and left him sitting in feces for hours.
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