Some 37 million Americans have chronic kidney disease, and kidney disease is the ninth-leading cause of death in the United States. Government spending for chronic and end-stage kidney disease, also known as kidney failure, reached $114 billion in 2016. That’s roughly a quarter of all Medicare payments for health services, according to the most recent data available from the U.S. Renal Data System, the registry for information on end-stage kidney disease funded by the National Institutes of Health.
About 468,000 people in the U.S. are on dialysis, a process that typically uses a machine to remove waste from blood, doing the job that failed kidneys can’t. There are more than 7,500 dialysis centers in the U.S. People with kidney failure typically visit a dialysis center three days a week or more, at a cost of roughly $239 per treatment to the government. These centers make up a multibillion-dollar, mostly for-profit industry.
But how dialysis is done in the U.S. may be on the precipice of a major shift, with thousands of patients potentially moving from care at dialysis centers — the way patients usually receive treatment today — to do-it-yourself dialysis at home. Last summer, President Donald Trump signed an executive order aimed at improving health outcomes for people with chronic kidney disease, reducing treatment costs and encouraging home dialysis.
In coming years, home dialysis may be a more readily available option for people with kidney failure, if recent investments from the major dialysis center companies and the push at the federal level are any indication. And there may be good reason for the federal push. Some research shows home dialysis can bring benefits for patients.
“Home dialysis has several advantages over incenter [hemodialysis],” according to a May 2019 paper in the journal Nephrology Dialysis Transplantation. “Clinical outcomes are observed to be either better or similar, and patient-centered outcomes generally enhanced (lifestyle, flexibility, increased self-management and quality of life).”
The last major shift in the industry came in the 2000s, when a series of mergers consolidated dialysis center ownership to less than a handful of companies. A recent paper in the Quarterly Journal of Economics offers a cautionary tale of how patient health can suffer when a lucrative sector of the health care industry flies under the regulatory radar.
Will quality of care indeed improve with more at-home dialysis? How will the government monitor and measure at-home quality of care? How will at-home dialysis look in practice at the state and local levels? Will dialysis centers provide adequate training for patients or their caregivers to do dialysis at home? Will the federal push for home dialysis fizzle under industry pressure?
These questions and many others remain open — and are ripe for investigation. This piece provides research-based groundwork for journalists who want to dig into the kidney dialysis market on the local or national level, including an embeddable map with dialysis quality-of-care ratings across the country.
State of the home dialysis market
Roughly 29% of dialysis centers offer home hemodialysis training, according to a Journalist’s Resource analysis of the latest government data. Two companies control the bulk of the U.S. dialysis center market: Fresenius Medical Care and DaVita Healthcare Partners.
DaVita, based in Denver, reported $11.4 billion in 2018 revenue, according to Securities and Exchange Commission filings. Fresenius, which is headquartered in Germany but does most of its business in North America, reported roughly $10.1 billion in 2018 North American revenue, SEC filings show. Ninety days after an end-stage renal disease diagnosis, patients of any age can get Medicare coverage, making the federal government the biggest payer for dialysis treatment. The two largest companies treat roughly 200,000 patients apiece each year, according to filings.
In February 2020, Fresenius’ chairman, Rice Powell, said on a quarterly earnings call with financial analysts that by the end of 2019, 13% of its U.S. dialysis treatments were done at home. The company is aiming for better than 15% by 2022. Last year Fresenius bought home-dialysis equipment maker NxStage for $2 billion.
“Patients and physicians and nurses need to be educated,” Powell said, according to a transcript of a previous call. “We have home training clinics. We may need to refurbish some, we may need to build some new ones.”
About 13.5% of DaVita patients do their dialysis at home, former CEO Kent Thiry said on a November 2018 earnings call. DaVita executives have likewise talked about potential growth in home dialysis, though they haven’t offered specific targets on subsequent earnings calls. Government data show 35% of Fresenius and 25% of DaVita centers currently offer home hemodialysis training.
By 2025, the Department of Health and Human Services would like 80% of new patients with kidney disease to have transplants or do dialysis at home, but industry executives have criticized that target as being overly prescriptive, according to Reuters.
Kidneys filter water and waste from blood, keeping the body’s salts and minerals in balance. When kidneys stop working, waste builds up in the blood. Diabetes, high blood pressure, heart disease and family history are all risk factors for developing chronic kidney disease. People with kidney disease are at higher risk for stroke or heart attack. Black and Hispanic people and American Indians are at greatest risk for developing chronic kidney disease, according to the National Institute of Diabetes and Digestive and Kidney Disease, part of the National Institutes of Health.
Kidney failure happens when kidney function falls below 15% of normal. Kidney transplant isn’t an immediate option for most people with kidney failure. There are more than 94,000 people nationwide waiting for new kidneys, by far the longest organ transplant waiting list, according to data from the Department of Health and Human Services. Median wait time is nearly four years, according to the U.S. Renal Data System. Some 14,000 people — about 15% of the list — have been waiting for a new kidney for more than 5 years.
This is where dialysis centers come in. There are two types of dialysis. Hemodialysis is the most common method. Blood flows into a machine, where it passes through a filter before it returns clean into the patient’s body. A nurse or other trained technician sets up the machine, places needles in the patient’s arm and monitors the process. Hemodialysis can be done at home with the help of a family member or other caregiver, but for now it mostly happens at dialysis centers.
With peritoneal dialysis, a solution of water and salt flows through a catheter into the patient’s abdomen, where the solution absorbs waste and fluid. A few hours later, the solution is drained out of the patient’s body. The exchange of solution can be done manually or by machine, and patients can go about their regular activities, including sleeping, while the solution does its work.
Both methods are effective at cleaning patients’ blood, and both come with pros, cons and risks. If home dialysis becomes commonplace, center chains would stay in the market by providing equipment, supplies, training on both types of dialysis for patients and their caregivers, monitoring patients and providing on-call support, according to DaVita’s end-of-year 2018 SEC filing.
Quality of care ratings for dialysis centers
At the national level, the dialysis industry has received close media scrutiny. A ProPublica investigation from 2010 found dialysis treatment to be expensive, and risky for patients. In 2017, HBO news satirist John Oliver did a segment on dialysis cost and quality of care. Kaiser Health News in August 2019 shed light on the complexity, and difficulty, some patients and caregivers have faced with home dialysis treatment. The recent paper in the Quarterly Journal of Economics — more on that later — blames consolidation for the industry’s past failings.
The federal government in recent years has tried to improve transparency when it comes to quality of care at dialysis centers. The Centers for Medicare & Medicaid Services, an agency of the Department of Health and Human Services, rates the quality of care of dialysis centers on a 1-to-5 scale, with 5 being the best. The agency rolled out dialysis center ratings in 2015 in response to Affordable Care Act requirements for transparent quality-of-care reporting across health care.
Roughly 90% of the nation’s 7,566 centers receive star ratings that the agency calculates from Medicare claims and data that centers report to Medicare and the Centers for Disease Control and Prevention. The remaining centers don’t have ratings because they didn’t report data of high enough quality. For example, some centers are new or are small and don’t treat many patients, so they couldn’t provide enough data.
The biggest chunk of rated centers — about 34% nationally — get a three-star rating, and no states average below three stars across their dialysis centers. The national average is 3.71, according to a JR analysis of the most recent data released in October 2019. That’s about the same as the 3.68 national average from the October 2018 data release. About 10% of rated centers nationally are below average.
But contrasts in quality of care emerge state-by-state. These ratings can serve as a jump-off for regional and local investigations.
The map above shows states that may have room to improve and states that may have individual centers worth investigating. For instance, look at the lowest-rated state, Vermont, which has a 3.13 average for the eight dialysis centers there with star ratings. Two centers in Vermont have a one-star rating, while the rest score three stars or better.
But Vermont is a small state, with relatively few centers. Florida, which has the second-worst rating, has an average of 3.27 stars across 437 rated centers, including 25 centers with one star and 54 centers with two stars. That indicates 18% of rated dialysis centers in Florida offer below-average quality of care.
Among bigger states, Pennsylvania is the best performer with a 3.74 average across 292 rated centers. Eight of its centers received one star and 18 centers received two, meaning 9% of centers there operate below the average quality of care. Rhode Island, the smallest state in the U.S., has the highest average at 4.75 stars across few centers, with none of the state’s 16 rated centers scoring lower than four stars.
Notes on the data
The Centers for Medicare & Medicaid Services releases new ratings each October, usually based on data collected over the previous three years. So for the October 2019 release, data was collected from January 2015 to December 2018.
The methodology is a little complex, but it’s designed to compare quality of care in an individual facility against quality of care across all facilities. A two-star facility isn’t necessarily providing poor care, but it is performing below average.
“Facilities with five stars are considered to deliver much above the national average quality of care and those with one star are considered to deliver care that is rated much below average quality,” according to a technical report the University of Michigan Kidney Epidemiology and Cost Center prepared for the agency.
The ratings capture how well a facility avoids patient death, avoids unnecessary blood transfusions, removes waste from patients’ blood, keeps patients’ minerals in balance, and performs on other measures of patient quality of care, according to the agency’s Dialysis Facility Compare Handbook.
The quality measures that underlie the ratings significantly changed with the October 2018 data release, meaning the most recent data are, by and large, not comparable to past releases, an agency spokesperson confirmed to JR. A massive improvement or drop in an individual center’s rating from the October 2017 release to the October 2018 release could be due to the change in methodology, not necessarily because quality of care suddenly became much better or worse.
Dialysis center consolidation: A cautionary tale
Chances are good that the dialysis center near you is owned by DaVita or Fresenius. National chains own or manage 89% of centers — up from 86.4% from the 2015 data release — with 81% of chain centers split about evenly between DaVita and Fresenius, according to JR’s analysis. More than 88% of dialysis centers are for-profit enterprises, compared to 57% of community hospitals that are non-profit.
The November 2019 paper in the Quarterly Journal of Economics offers a cautionary tale of what can happen when a market is taken over by a handful of for-profit companies that have to provide quality health care while also answering to shareholder profit demands.
In the early 1990s, some 86% of dialysis centers in the U.S. were independently owned and operated, according to the QJE paper. The number of players in the industry shrunk through the 1990s and 2000s, sometimes through something called stealth consolidation — a term University of Chicago economist Thomas Wollmann popularized in a June 2019 paper — which lets smaller-money mergers fly under the regulatory radar. Roughly half of dialysis center mergers in the 1990s and 2000s went forward with little or no scrutiny from antitrust regulators, according to Wollmann’s paper.
The result of industry consolidation? Worse quality of care for patients, according to the QJE paper. The authors combined treatment history data from the U.S. Renal Data System with Medicare claim data from dialysis centers — which include line-item claims for drugs used during treatment — from 1998 to 2010.
After an acquisition, patients were 10% more likely to be hospitalized for septicemia, a blood infection, the authors found. Hospitalizations overall increased 4.2% following an acquisition. A year after starting dialysis at an acquired center, patients were 8.5% less likely to receive a transplant, or be on the waitlist. A patient with a functioning kidney would no longer need dialysis.
One big thing that lowered quality of care: Acquired facilities adopted practices of the new parent company, according to the QJE paper. Sometimes, those practices included upping doses of high-cost anemia drugs.
“Perhaps reflecting the profits at stake,” doses of one anemia drug increased 129% after independent facilities were taken over by large chains, the authors found. By the mid-2000s, a single anemia drug accounted for 40% of DaVita’s profits, according to the paper — despite research linking excessive doses of the drug with higher risk of death and worse heart health.
Acquiring companies also began forcing center staff to do more with less, the authors explain.
“When you look at resource utilization after acquisition, they are treating more patients on fewer machines,” says Paul Eliason, an assistant professor of economics at Brigham Young University and one of the paper’s authors. “What that suggests is there’s also a drop in the ratio of employees to patients, so there are fewer nurses and dialysis techs around monitoring what’s going on.”
The Centers for Medicare and Medicaid Services changed its drug reimbursement methods in 2011, tying payment to quality of care and making it no longer profitable for dialysis centers to overuse anemia drugs. DaVita agreed in 2015 to pay a $450 million settlement to resolve allegations from whistleblowers that the company had billed the federal government for drugs never used.
“Big firms seem to be more capable of exploiting the regulatory environment in which they operate,” Eliason says. “And so in this era before 2011, they were able to exploit that in a way that was expensive to Medicare and harmed patients.”