Privatization and Monopoly of Dialysis Services in Broome County

By: The Recalcitrant Gourmet

Back in 1972 (under Nixon) Congress authorized comprehensive Medicare coverage for patients dealing with Chronic Kidney Disease (CKD): dialysis and transplantation. Some consider this as close as the United States has come to some form of universal healthcare. The initial price tag was $135 million. This newly expanded coverage was expected to assist approximately 11,000 individuals. Now the United States spends approximately $20 billion annually, on dialysis alone, for the nearly 400,000 patients who would most likely die without the treatment. This is more money than any other industrialized nation and the number of patients is increasing yearly. Yet, like other aspects of the US’s healthcare system, the money spent does not give us better outcomes: we lead the industrialized world in mortality. Furthermore, this ideal of universal healthcare has consistently been under attacked by corporate America, as Socialist (meant to be a dirty-word). During their decades long blitzkrieg of privatization, both the Democrats and the Republicans, have enthusiastically supported the corporate for-profit power grab: with the exception of Medicare. Now that too, is under constant attack from the über-rich.

In February of 2011 the non-profit United Health Services (UHS) sold both its inpatient and outpatient dialysis centers to Mercer Island based Liberty Dialysis: the third largest for-profit dialysis company in the nation, after its November 2010 merger with Tennessee based Renal Advantage. Liberty competes with Da Vita and Fresenius the nations two largest dialysis companies in the US. Combined, they (Da Vita and Fresenius) have consistently shown $2 billion in profits annually. Liberty, alone, plans on doing 1 billion in sales for the 2011 year.

Locally, Liberty is doing business under the name Vestal Healthcare LLC. However, they purchased the UHS name, so it appears to the general public that nothing has changed. This transaction now provides Liberty with a monopoly on dialysis services in the Binghamton area and consequently leaves local dialysis patients with no local alternatives in renal care. Furthermore, the ‘Lourdes’ name appears on the Vestal Parkway dialysis center: that too is owned by Liberty.

This sale was not unique to the Binghamton area; it is part of a national trend of privatization. The catalyst for the sale, at least locally, was Medicare’s restructuring of how it reimburses hospitals and clinics for dialysis services. The assumption on the part of UHS was that the money it receives from Medicare was going to get tighter. Prior to January 2011, a dialysis center could bill separately for the dialysis treatment, above cost for the injectable drugs (which vary from patient to patient), lab work, supplies and a nephrologist visits.

As of January 1, 2011 the payments are bundled into one lump sum (per treatment) inclusive of all aspects of dialysis care; whether an individual patients utilizes all these services, drugs and supplies or not. It is expected that not every patient will need to utilize all items and/or all drugs, and yet it is also expected that Medicare patients will experience an increase of co-insurance costs universally.

One obvious concern regarding the sale was: How will this affect the quality of services, safety, infection rates, supplies and equipment offered to the patients? The patients were told in writing that they “shouldn’t notice any changes”. However, this has not exactly been the case. Liberty has started to take cost savings measures: from injectable medications prescribed to supplies available.

The patients were also told in writing that in order  “[t]o continue offering [a] high level of care, while at the same time ensuring the long term viability of renal services in Greater Binghamton, [UHS] ha[s] chosen to collaborate with Liberty Dialysis” In other words the patients were told that the only way dialysis services were to survive locally was to privatize what used to be non-profit. This seems to be a manta of the times: privatize or die! Yet Liberty and others in the industry maintain that Medicare (the largest funding stream for dialysis clinics) does not provide enough funding to cover the cost of dialysis for most patients. How then is this a successful business model in an allegedly free market system? Moreover, how is it that Liberty and others in the industry (collectively) have experienced annual profits in the billions?

It should also be noted that two very large investment banks back Liberty: Bain Capital and KRG Capital. According to KRG’s own website they have a controlling interest in Liberty. Additionally, there   is no telling exactly how much of the Medicare tax dollars and private insurance monies go towards Liberty’s corporate profits as Liberty is not publicly traded.

Last but not least, when looking at the national blitzkrieg of privatization in general and specifically that of our healthcare system, we must ask, as a society: Why are we allowing OUR tax dollars to enrich a few citizens who sit at the top of private for-profit corporations, which lack transparency and stifle local consumer choice? These services could be delivered for less money by a nationalized universal healthcare system that does not profit from the sick and injured while giving us better outcomes. Other countries, such as France and Italy, have lower mortality rates, pay less for the same or similar dialysis services and are run by nationalized systems. These nationalized systems have only their populations and doctors to answer to: not shareholders and investment banks. We must stop the national trend of privatization, as it plows through our tax dollars and increases our national debt. This privatization blitzkrieg is adding to the disparity of wealth (and health) with each passing year and will eventually be the undoing of our Nation.

Written research sources for this article were the following:

In Dialysis Life Saving at Great Risk and Cost, Robin Fields, ProPublica November, 2010

Renal Business Today January 12, 2011

Liberty to Merge with Renal Advantage, Jon Kamp- Dow Jones Newswire

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