Dialysis Unit Profit Primarily From Small Percentage of Privately Insured Patients

MedicalResearch.com Interview with:

Chris Childers, MD, PhDDivision of General SurgeryDavid Geffen School of Medicine at UCLA10833 Le Conte Ave., CHS 72-247Los Angeles, CA 90095

Dr. Childers

Chris Childers, MD, PhD
Division of General Surgery
David Geffen School of Medicine at UCLA
Los Angeles, CA 90095

MedicalResearch.com: What is the background for this study?

Response: Patients with end-stage renal disease – poorly functioning kidneys – often have to receive dialysis. This typically requires a patient to visit an outpatient clinic several times a week to have their blood filtered by a machine. Over the past few years, two for-profit companies have increased their control over the outpatient dialysis market – DaVita and Fresenius. Combined they control approximately ¾ of the market.  A number of concerns have been raised against these for-profit companies suggesting that the quality of care they deliver may be worse than the care delivered at not-for-profit companies. But, because they control so much of the market and because patients have to receive dialysis so frequently, patients may not have much choice in the clinic they visit.

Medicare covers patients who are 65 years or older and also patients on dialysis regardless of age.  Medicare pays a fixed rate for dialysis which they believe is adequate to cover the clinics’ costs. However, if a patient also has private insurance, the insurer is required to pay for dialysis instead of Medicare. Whereas Medicare rates are fixed by the federal government, private insurers have to negotiate the price they pay, and may pay much more as a result.

MedicalResearch.com: What are the main findings? 

Response: Our study found that only 10% of patients cared for in DaVita’s clinics have private insurance but these patients account for one-third of the company’s overall revenue. We found that, on average, government payers (such as Medicare) paid an average of $248/treatment, but private insurers paid $1,041/treatment – over 4 times the amount. DaVita makes a large profit each year in large part because of capitalizing on these privately insured patients. 

MedicalResearch.com: What should readers take away from your report?

Response: Previous research has shown that the reason healthcare is so expensive in the United States is because the prices we pay for services are much higher than other developed nations. We believe the dialysis market epitomizes this concept.  Two patients with the same disease can pay prices that differ by a factor of 4 depending on their insurance.   This undoubtedly has downstream effects on all Americans. If your insurer is required to pay $1000/treatment ($150,000/year) for some of its members, those costs will eventually trickle down in the form of higher premiums. 

MedicalResearch.com: What recommendations do you have for future research as a result of this work?

Response: Future research should look at potential strategies for reducing the prices paid by private insurers for dialysis. The two broad approaches to this would include increasing competition or government intervention to cap prices.  Efforts are needed to understand what strategies would be most effective, while ensuring patient access to care and safety. 

No disclosures 

Citation:

Childers CP, Dworsky JQ, Kominski G, Maggard-Gibbons M. A Comparison of Payments to a For-Profit Dialysis Firm From Government and Commercial Insurers. JAMA Intern Med. Published online May 13, 2019. doi:10.1001/jamainternmed.2019.0431

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