TIMES ARGUS: $26M Dialysis Deal Rejected

$26M Dialysis Deal Rejected

Article published Dec 3, 2011

By Thatcher Moats VERMONT PRESS BUREAU MONTPELIER —

Vermont's top health care regulator intends to reject a $26 million offer from a for-profit Massachusetts company to buy the state's five dialysis centers, including the centers in Berlin and Rutland.

Steve Kimbell, the commissioner of the Department of Banking, Insurance, Securities and Health Care Administration, said the proposal from Bio-Medical Applications to buy the dialysis centers from Fletcher Allen Health Care fails to meet the legal requirements for a sale.

“Without limitation, that failure is shown by a proposed nearly four-fold increase in charges to commercial (payers) in just the first year of operation, an increase of nearly $6 million over current charges,” Kimbell wrote in a proposed decision. “This is not containing costs. It would be less costly for Fletcher Allen, which claims to be losing money on its dialysis operations, to raise its charges to commercial (payers) by $1.8 million, which would both cover its losses and provide a surplus, based on the financial data submitted.”

Kimbell added that the statute requires services to be improved as a result of a sale, not simply maintained. And he said that Bio-Medical Applications scored lower than Fletcher Allen on quality tests.

“To sell facilities to a buyer who — by the seller's own data — scores lower on key quality measures is not an improvement, nor does it give reason to believe that the current quality standards will even be maintained,” Kimbell wrote.

Bio-Medical Applications is a subsidiary of Fresenius Medical Care, a global company based in Massachusetts valued at $23.4 billion that calls itself the largest dialysis services provider in the world.

Dialysis acts as a substitute for the normal functions of kidneys and is crucial for people with kidney problems. About 240 patients receive chronic dialysis treatment at the five clinics in Vermont, which are in Berlin, Rutland, St. Albans, South Burlington and Newport. Kimbell's decision, issued Thursday, clearly states: “The application is denied.”

But it's still a “proposed decision,” leaving a chance for the groups involved in the deal to urge regulators to approve it. Any briefs are due Jan. 4, and Kimbell has set aside time to hear oral arguments Jan. 18. Jane Kramer, a spokeswoman for Fresenius, said the company— which applied in June for what's called a certificate of need — was still evaluating how it will proceed.

“All I can say is we're disappointed,” Kramer said. “We filed (for) the certificate of need and most certainly did it in good faith and with earnestness.”

Kramer wouldn't comment on specifics of Kimbell's decision or say whether the company planned to make arguments before BISHCA in January.

Kimbell's decision pleased activists with the Vermont Workers' Center and Vermont Federation of Nurses & Health Professionals, who opposed the sale.

Peg Franzen, president of the workers' center, said selling the dialysis centers to a for-profit corporation would take the state in the opposite direction considering the health care reform law Vermont passed this year that calls for much greater state control.

“We're really excited and feel that the administration and BISHCA is doing the right thing and keeping us moving in the direction we set out on with Act 48 — moving us to a single-payer system and making health care a public good,” Franzen said. “We feel that health care should not be a commodity and ... Fresenius would be beholden to their shareholders,” Franzen added. “The business of a private company is to make money, and it's not to really take care of patients or a community's health.”

thatcher.moats @timesargus.com thatcher.moats@rutlandherald.com