How federal spending enabled the growth of Idaho's kidney-substitution industry

adutton@idahostatesman.comFebruary 23, 2011 

Janis Jenkins sits in a dialysis chair for three hours, three days a week. Wearing a surgical mask and a blanket, the 73-year-old passes time with Sudoku or her favorite hobby, making greeting cards out of bright ribbon and paper. Sometimes she chats with other patients at Table Rock Dialysis while they “process,” hooked up to loud machines that basically function as giant kidneys, pulling toxins and quarts of excess water from their bodies.

The nurses all know Jenkins — some call her J.J. — because, like many patients, she has been coming for years. “Since the first Monday in March of 2006,” she says. “I got a pacemaker in the morning and a (dialysis) catheter in the afternoon.”

The retired Boise elementary school teacher is diabetic. That caused her kidneys to fail after about 20 years. Now she is a model dialysis patient, treating her appointments like the life-or-death tasks they are.

The morning drive to Table Rock Dialysis, at 5610 Gage St., about a block from Saint Alphonsus Regional Medical Center in Boise, is “kind of like getting up and going to work,” Jenkins says. “Friday night’s probably my low night. I’m pretty tired by then.”

Table Rock is one of a growing number of dialysis centers in Idaho. There are six in the Treasure Valley and 17 elsewhere in the state. Twenty years ago, there were none.

Dialysis is a small but profitable industry, backed for the most part by federal money. Three major companies are carving out niches in Idaho, with two claiming the biggest market shares in the Boise area. New federal mandates are already shaping how they do business and treat patients in Idaho.

Seattle was home to the first dialysis center in the mid-1960s. Since then, the need for them has outgrown what hospitals offered in the early years of Medicare dialysis coverage. Private companies are filling that gap — although hospitals still provide it in some places. For instance, Bear Lake Memorial Hospital in Idaho’s southeastern corner opened its dialysis unit in 2006, offering relief to people who had to drive to Idaho Falls or Pocatello before.

The main reason for more clinics: more need. Like the rest of the nation, Idaho is more diabetic than it used to be. More people have high blood pressure. Kidney-toxic drugs like some painkillers don’t help. As a result, dependence on dialysis in the state has grown by almost half since 2000, and the number of Idahoans using it for the first time grew by about 30 percent between 2006 and 2009, according to the Northwest Renal Network.

The industry’s lifeline is its steady source of funding. Congress authorized Medicare in the 1970s to pay for dialysis treatments. Now, patients usually have about 80 percent of dialysis costs paid by Medicare. The rest is either billed to patients, paid by private insurance or Medicaid, or written off by the providers. Medicare covers most of the bill for people with private insurance after 30 months.

About 1,300 dialysis patients in Idaho were on Medicare in 2009, according to federal data compiled by the Kaiser Family Foundation.

HOW NEW FEDERAL RULES ARE CHANGING THE INDUSTRY

Like many Idaho centers, Table Rock has a home program. Patients who meet certain criteria can dialyze by themselves or with help from a family member or friend. Table Rock has 52 of those patients, 13 of whom started in the past year.

Most home patients use a catheter to pump liquid into their bellies, where the abdominal membrane acts like a kidney. Patients drain urine-like water from the catheter throughout the day or night.

Doctors, nurses and the federal government prefer home dialysis. It is more consistent than the every-other-day purge in a clinic. There is even evidence to suggest it helps with depression — a huge factor in how long a patient will live with kidney failure, as with other chronic illnesses.

Most people in the dialysis industry predict that in-home dialysis will become more common as new health care rules are rolled out this year — chiefly the “bundled” payments rule that give providers a lump sum for everything they do or buy while treating a patient. Government planners want companies to trim costs and be more efficient, since kidney failure costs the United States about $30 billion a year to treat.

Home dialysis is pricey, and companies still have to spend weeks training patients at home, but overhead and long-term expenses can be lower. Dialysis equipment companies are pushing their in-home products more aggressively, too.

But many Idahoans don’t want to do home treatment. They don’t want the extra work. Or they don’t want metal and rubber contraptions cluttering up the house. Or they can’t find someone to help them because, as Sharon Headrick, Table Rock’s in-home nurse said, “you have to have a caretaker who’s willing to pull somebody’s blood out of their body.”

And while Medicare and insurance will cover much of the equipment and service costs, the extras get expensive. It can run from $750 to $1,500 just to install waste and water piping for a home system, according to the American Association of Kidney Patients.

Often in Idaho, Headrick said, patients don’t have adequate health insurance. So they put off going to the doctor for kidney checks. That eventually lands them in the hospital on emergency dialysis. Once they have used that kind of dialysis — which often starts and ends with tubes in the arm and a machine doing the work — dialysis providers said the average patient doesn’t want to bother switching to the more-favored peritoneal dialysis. That method requires surgery and in-home equipment, and the patient’s abdominal cavity does the work.

So although Idaho has a higher-than-average rate of home dialysis — partly because so many patients live far from a provider — most Idahoans still head to centers.

The state helps with the costs of getting to and from those appointments. The Idaho Division of Vocational Rehabilitation pays for things like medication, travel costs and insurance premiums for about 150 to 200 people each year. The patients must be poor and either unable to work or not earning enough in their jobs to afford the costs themselves. The governor has proposed cutting the program’s funding for 2012 by one-quarter, to about $400,000.

DAVITA, FRESENIUS AND LIBERTY: HOLDING THE IDAHO KIDNEY MARKET

Table Rock is the largest facility in Idaho, with 25 stations and more than 50 patients cycling through each day. (The smallest, according to Medicare records, is in Blackfoot with six stations.)

The main room is about the size of a school cafeteria. Nurses and technicians wear face shields and papery white jackets as they monitor patients, weigh them and help them sit and stand. There is a constant hum, like a generator room with old fluorescent lights. Most patients doze off in their cushioned chairs. One watches Dragnet on a small television screen at the station. There are yards of tubes for each patient — some maroon with blood, others pink as saline mixes in near the end of a cycle.

The place is tidy and well-lit, with Idaho-themed murals.

Table Rock used to be a Saint Alphonsus clinic, until DaVita Inc., a Denver-based dialysis corporation, bought it in 2006. The company now owns and operates 10 Idaho clinics.

Most of the centers elsewhere in Idaho belong to either Fresenius Medical Care, a 1,700-facility powerhouse under German owner Fresenius Medical Care AG & Co. KGaA; or Liberty Dialysis, a Washington company often described as “emerging.” Liberty is staking its claim on patients in rural and remote places, with a focus on in-home treatment. Naturally, it has a big footprint in Idaho, with seven sites.

Dialysis companies grew aggressively in recent years, buying up or partnering exclusively with independent facilities — and each other. The pace of acquisitions has picked up even more since the federal government decided to start bundling payments, a rule that may inherently favor bigger, more-connected, better-capitalized players.

The companies compete, but they say they put their customers first.

“If patients live closer to a Liberty facility, we’re not going to say, ‘You have to stay here,’” said Dana Camacho, the administrator of Table Rock.

DIALYSIS FOR PROFIT: MEDICARE-DEPENDENT COMPANIES

DaVita announced earlier this month that it will buy privately held DSI Renal for almost $700 million. DSI Renal had planned to expand into Idaho, but a DaVita spokesman said it is too soon to know if that still will happen.

Liberty also just announced plans to merge with a Tennessee-based dialysis company, Renal Advantage. And Fresenius acquired part of a major dialysis manufacturing company, Gambro.

DaVita’s net operating revenue in 2010 was $6.4 billion, up $340 million from 2009. It did about 18 million treatments last year. According to its Securities and Exchange Commission filings, DaVita’s patient traffic grew about 4 percent last year, and it brought in about $339 per dialysis treatment in its third quarter.

Fresenius reported its North American dialysis-services revenue for the third quarter of 2010 was $1.9 billion, around 7 percent higher than the previous year. (DaVita’s third-quarter dialysis revenue, for comparison, was $1.6 billion.) Fresenius earned an average of $359 in revenue for each dialysis treatment in its U.S. clinics during the quarter.

Liberty Dialysis is privately held. Executives declined to disclose any financial information and did not respond to questions about their business in Idaho.

SAFETY AND PATIENT DEATHS

Some patient advocates have raised concerns about the industry, pointing to death rates and serious problems with inspections in many states.

But almost every Idaho facility is in line with the national average for death rate — about one in five people — and other important metrics like how effective the treatments are.

One facility trails behind on an important measurement: Liberty Dialysis in Nampa. The death rate for patients in their first year of treatment there was 101 percent higher than it should have been between 2006 and 2008, according to federal reports examined by the nonprofit news organization ProPublica.

But the rate of overall patient deaths — measured between 2006 and 2009 — was lower than average and lower than other facilities in the Treasure Valley, according to ProPublica. ProPublica found the center’s mortality rate was 19 percent, compared with the national average of 20 percent.

“Although the Boise dialysis population as a whole is about average in terms of patients who have seen a doctor and have multiple conditions, there is a disproportionate amount of patients who come to our centers with a higher number of illnesses and who have not been seen by a kidney specialist — this is higher than the national average,” said Alia Henson, spokeswoman for Liberty. “Unfortunately, the best dialysis care in the world cannot eliminate serious healthissues that can quickly develop for these patients such as cancer, heart disease and a number of complications.”

For that facility and the other 22 in the state, inspectors from the Idaho Department of Health and Welfare do weeklong visits about every 4› years — less often than the three years Medicare would like, but not egregiously so.

These inspections are publicly available online, as are the complaints that people make against facilities.

Inspectors have uncovered problems that threaten Medicare eligibility in many of the dialysis centers. Many times, employees did not clean or help change the clothes of someone who was incontinent, or there was a serious but correctable administrative fumble.

The problems at dialysis facilities have been fixed in time to avoid losing Medicare status, according to records and the state Department of Health and Welfare.

The trouble is that state inspectors are short-staffed, and it takes a couple of years to train someone in the state’s Bureau of Facility Standards to do inspections on their own, said Tom Shanahan, spokesman for Health and Welfare.

“We don’t lose sleep over these (facilities),” Shanahan said. “In a lot of these small towns, you know the people. ... Even if they are owned by a big company, they’re very community-oriented because it’s their neighbors and friends who come in there.”

Audrey Dutton: 377-6448

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