Moving Nonprofit Dialysis in the Right Direction

Can you explain some of the key differences between operating as a nonprofit dialysis provider versus a for-profit provider?

I have to qualify that my perspective is only from working with a nonprofit dialysis provider, and I haven’t worked at a for-profit. So I can’t really speak from experience in terms of the actual comparison. I’ve worked in healthcare for over 25 years in Washington state, which is a heavily nonprofit-oriented community. About 95 percent of our hospitals are nonprofit. So I come from a very nonprofit-orientation and background. As I understand it, the key difference is it starts out with mission, the reason for being. For us as a nonprofit dialysis and healthcare provider, our mission is really improving the kidney health of the community. Our mission statement talks about how we’re here to promote the optimal health, quality of life and independence of people with kidney disease. A for-profit has a mission to create return for investors. In essence, a nonprofit has that same mission, but our investors are the community, and they’re not expecting a financial return, they’re expecting an improved health return. A for-profit really has to, through its service delivery, ultimately meet the expectations of the investor, and I think that’s a key, fundamental difference. Being nonprofit at our organization is all about attitude; it’s about our approach and it’s about our actual outcomes. And that seeps into everything we do. It’s all about advancing the field. I’d expect this of all nonprofits, not just the Northwest Kidney Centers because if we don’t, as a nonprofit, add that benefit back into the community, then really we are no different.

It gives us a couple of benefits. It gives us access to capital through the nonprofit borrowing mechanisms in this state, and it gives us access to philanthropy, and to donations. So those are some capital benefits. I think it really makes it imperative to add benefit than to just "provide dialysis."

The advantage is expertise for our physicians and patients. We have four renal pharmacists, so we have an enormous amount of expertise. So as individuals choose to use us for their outpatient meds—and about a third of our patients do—they get expertise from pharmacists who really are experts in kidney-related care. The second advantage is continuity of care because we serve not only dialysis but also transplant patients. There’s that sense of, "Okay, you’re here. You understand my particular needs and you’re with me as I move into transplantation," where you take a lot of meds. Finally, it produces a positive margin.

Having an onsite pharmacy manager, who is really quite expert, is just a real delight because he’s able to help analyze options, understands the vendor pitches, and understands how to put them in perspective. We have that expertise to advise us at a strategic and tactical level. Also, our physicians really benefit from it. It’s definitely an advantage.

That’s one of our core messages describing our organization. We’ve considered ourselves innovators in home dialysis for 45 years. We were founded as the world’s first out-of-hospital program in 1962, and we started our home dialysis program only a year or two after we were founded when a 17-year-old girl was not selected by the committee to receive dialysis. Of course, that was in the days when there was the Life-and-Death committee and individuals under 18 were excluded. So Dr. Scribner was so troubled by it that he and a gentleman named Dr. Les Babb created the first home dialysis machine, and this girl ended up living for five or eight years and went to college because of that. Ever since then, we’ve taught folks from around the world how to run a hemo program, and particularly in home hemodialysis, we’ve been involved in the advances in care and in models of how to use home helpers. Now we don’t use them as much, but at the time they were critical. In summary, I’d say we’ve been an early adopter in home therapy. Sometimes we’ve been the innovators, and often we’re the early adopters. Then others come to us and ask, "How did you do it?" And part of our mission is that we are open to sharing our knowledge with other. We did the FDA 510(k) trials with the Aksys machine. We were their largest first customer. We now have 52 patients on NxStage, which NxStage tells us is one of the individual largest programs they have. We’re really interested in DEKA’s announcement that they are working with Baxter. Dean Kamen’s firm is taking the Aksys technology and trying to turn it into the next version of home hemodialysis machine. We’re very interested in how that’s advancing. Our executive director, Chris Blagg, is internationally known as a major home hemodialysis expert. We’re champions of it, we carry the flag, we believe in it, it’s like a religion.

Home hemo and PD are very different. PD is very cost effective. We have 115 PD patients, which Baxter tells us for one program is very large. Home hemo always has been cost effective compared to in-center. It still is, but less so a little bit with the model NxStage is using because we have to lease all the equipment, so we have less control over our costs. Overall, yes, home is more cost effective.

There are a lot of barriers. It is a program much more than a machine. The billing side, the technical services side, etc. have a whole of expertise throughout a variety of departments. There are other barriers. A major one is physician knowledge, and if nephrologists aren’t trained as fellows to understand PD or hemo at home, they are much less likely to offer it up or consider it. Physician knowledge and comfort with home therapy is a huge issue. Data shortage is another. When people are at home, you don’t have the constant inflow of data to physicians in the program, so it’s been described as having a long leash type of model. That can make physicians very nervous not knowing what’s really happening out there. So data shortage is a key thing. Also, IV meds are not paid for by Medicare. Medicare will only pay for EPO IV. They don’t pay for iron or vitamin D at home. We’re actually trying to champion to get that changed. Even if bundling is approved and it’s three years out, why not pay for iron and vitamin D at home? Those patients are not allowed to have it, even though it’s safe. That’s a discriminatory practice. Finally, it’s just an alternate path, and if you’re in a single-focus modeled business—and that’s in-center hemodialysis—doing something different is costly. And there’s predialysis education. If people don’t hear about it ahead of time, then once they’re in-center they are settled in and it’s very hard to change. But I think the future is quite bright. As the informed consumers of the world—the baby boomers, etc.—come down with kidney failure, they are going to want to take control of their care. They’re going to want to travel, they are going to want to have dialysis when they want and where they want, and that bodes well for home therapy.

There are lots. We do not have economies of scale in the purchase of medication we use, the equipment we use, the supplies we use, even the labs. We don’t run the labs. Even things like insurance and health benefits. Really, economies of scale run throughout the organization, not just supplies. We don’t have the economies of scale for a management team who can negotiate contacts or leases or commercial payers. That whole thing about being small makes you more vulnerable. In a consolidated industry it makes you logarithmically more vulnerable. Because we’re smaller, we don’t run our own labs, have vascular access centers, have disease management companies—all the different spin-off options out there are much more difficult to organize when you’re smaller to start up and run effectively. We can’t spread our risks well. There’s just a whole concept of economies of scale, vertical integration, diversification and risk-spreading limitation that make us much more vulnerable in a consolidated world.

I just can’t imagine if I was a patient and I had only had two options in the United States. I think America is a land that highly values choice, freedom, competition, independence—and that is a fundamental value system for us and that’s why we don’t have a single-payer healthcare system or a single-provider healthcare system. We all have different strengths and assets and for patients to have choice and options is absolutely critical.

I think so. We have been a member of various D.C.-related coalitions that include all size providers—the Kidney Care Council and the Kidney Care Partners. The National Renal Administrators Association is a great option for the smaller and more moderately sized organizations, and they have and continue to position themselves as a voice for the smaller dialysis-related organization. That’s a valuable mechanism for all of us to tap in to.

A major positive, if it happens, is not bundling, but that it gets us an annual update mechanism. That has always been our focus. We are willing to consider ESRD "reform," which has now become an expanded bundle, if it gets the annual update mechanism. Without an update mechanism, the Medicare ESRD Program is fundamentally flawed. And discriminatively because other elements in Medicare do have an annual update. It is not appropriate for Congress to be determining every year or two whether we get paid more for care. The bundling positive is that it can hopefully get us to that fundamental improvement, which is some update mechanism for long-term stability. Without that, every year we are being cut, and that’s bad for patient care.

If a bundle is not demonstrated or piloted, two things could happen. One is if the bundle is paid well enough for us to survive, it will pay that much better for the large providers, and therefore we become that much more vulnerable to competition. If the bundle is just enough for the larger providers to survive, then we’ll go out of business because we won’t be able to deal with the costs. Either way, it makes it difficult for us. I’m very concerned about labs being included in the bundle. If there is one thing I would advocate to be changed, it would be labs. The composite labs are fine; those are the ones we’ve had. But other labs ordered to benefit patient care need to be excluded from the bundle because we don’t run labs, so if we’re at risk for all laboratory costs, we’re really going to have to significantly reduce the use of labs, and that’s really bad for patient care. We do a lot of non-ESRD labs. We have access to blood, so we draw labs for other reasons based on the nephrologist’s order just to improve patient care. It would be a real shame to send somebody to an outpatient lab a day after dialysis because we couldn’t draw their blood.

The only reason we signed onto the Kidney Quality bill, which included the extension to 42 months, is to get the annual update—the Holy Grail. We know that in a pay-for environment, Congress needs to find a way to pay for an annual update. Without that quid pro quo, we do not support an extension of the MSP because we don’t think it’s good for dialysis patients to take away an entitlement program. I worry about employer backlash and commercial payer backlash. If greed is your motivator, let that MSP go to 60 months because you’re going to get a better payment from a commercial insurer, hopefully. That’s not our motivator. There’s so much fear when you find out that you need dialysis for life, but when you hear, "Well, after two-and-a-half years, the government will pay," that is an enormous release and relief for patients. And to take that away, or to claim that is better for patients, is disingenuous. The only reason we said it would be a good thing is to get the annual update, which puts the whole program on a more solid footing, and that is good for patients.

We have always been quite active at the Washington state level because there is a lot of state pride in our role in innovation and starting the outpatient field. At a state level, we have a state kidney disease program. We’ve always gotten the support of the state legislature for that, and we have lobbyists in Olympia—our state capital. Every year, we visit the capital with a team of people and visit all our legislators, we blanket the capital with information about kidney disease and CKD, and based on the issue of the year, we advocate for whatever is relevant. At the national level, in the last six years since Kidney Care Partners has formed, we’ve been more deliberate in being involved in that group.

That would be such a radical change since Medicare payments are so far below costs. The thought of a single-payer system is frightening to me because we do depend on commercial payment. To move to a single-payer would be very difficult, although I guess you could say we’re almost there anyway. I guess you’d have to ensure that the payment levels would be reasonable for our long-term sustainability. Very big deal, but we may be a model because we have an entitlement program that covers most people eventually. I’m a realist when I hear single-payer. That’s a long way away.

We’ve been around for 45 years. We’ve been nonprofit, and we’ve been meeting the community’s needs as we define it in our basic service area here in Washington. Our board and I are committed to continuing on that path. Our vision is to be a model for the field. We envision acting with integrity and putting the patient first and advancing, not only patient care, but the education and the research areas. We’ve worked with the University of Washington to create the Kidney Research Institute; we’re really advocating the field through clinical research because so much more needs to be done to improve patient care. We’ve done this for quite some time. We have a deep commitment to the field and to our patients in this community, so the future holds a lot of challenges, but also a lot of opportunity. We’re going to do the best we possibly can.