This article originally appeared in the November 2011 issue of DOTmed Business News
Experts have labeled 2011 a potential “landmark year” for the dialysis industry -- right on time for its upcoming 50th anniversary next year. “Change” seems to be the main theme, with the swiftly transforming sector putting stressors on providers to cost-effectively improve patient care.
As if this year’s major reimbursement revamp wasn’t enough, a National Institutes of Health study, published in September’s New England Journal of Medicine, found that thrice-weekly dialysis might not be adequate for patients’ health. Addressing this issue by switching patients to every other day dialysis or daily dialysis could mean a multi-billion dollar change. But this change might be exactly what the doctor ordered.
“This study’s results are going to push the nephrology community and patient representatives to explore what is the best modality and frequency of therapy for patients,” says Dr. Michael Kraus , clinical coordinator, division of nephrology, with Indiana University Medical School.
Despite these dramatic modifications, the global dialysis market is alive and forecasted to grow considerably on a global scale — even amidst the current economic meltdown, according to a recent report from research company Koncept Analytics.
A growing problem
Annually, the number of patients requiring dialysis treatment is skyrocketing. In the U.S., this can be attributed to the country’s prevailing obesity epidemic, according to Kraus.
“The two most common causes of ESRD [end-stage renal disease] are hypertension and diabetes,” says Kraus. “These numbers will continue to go up, feeding the growth of ESRD.”
Around 300,000 patients are currently on dialysis in the U.S., with 100,000 new patients reported every year. In the U.K., there are 19,000 dialysis patients with that number forecasted to double in the next 10 years; 18,500 in Canada; and two million worldwide, according to the National Kidney Foundation.
Kraus believes nephrologists will be able to cope with dialysis’ upsurge in demand, but notes those in his field need better training.
“We need to be more cognizant of care models to make sure they continue to allow nephrologists to flourish,” he says.
North America currently dominates dialysis’ hearty market, including two lucrative segments: the dialysis products and services market. However, the share of Asia Pacific in the global dialysis market is likely to rise as China’s and India’s markets emerge.
During the past five years, the dialysis market business has grown 6 percent each year to $67.5 billion. In 2010, the global dialysis equipment market made up $8.6 billion of that amount and is projected to exceed $12 billion by 2017, according to recent reports by research firms GlobalData and Kalorama Information. The bulk of these revenues are derived from equipment providers acquiring smaller regional players in the dialysis care services segment. Global companies occupy a fraction of the dialysis market, with regional companies absorbing the remainder.
Unraveling bundled payments
Since 1983, Medicare has covered all beneficiaries in need of dialysis, spending about $77,000 annually per person. Between 2008 and 2009, dialysis Medicare spending increased 7 percent, totaling $9.2 billion and averaging $27,000 per beneficiary. Currently, 95 percent of dialysis patients are Medicare-covered and the health insurance system is the secondary payer for one-quarter of new dialysis patients insured by an employer group health plan at the time of ESRD diagnosis.
This January, Centers for Medicare and Medicaid Services implemented a prospective payment system to broaden the dialysis payment bundle program -- designed to encourage more efficient and economical care by providers. A quality incentive program will be set up in 2012 and facilities that fail to meet the performance standard will receive up to a 2 percent payment rate reduction, under the Medicare Improvements for Patients and Providers Act. Over 80 percent of dialysis facilities opted for the new system, causing CMS to nix a four-year phase-in approach. Dialysis unit owners, private and public insurance companies, including CMS, are the primary beneficiaries under the new bundled payment system.
While the dialysis industry appears to embrace bundling, certain aspects of the payment methodology are getting flak as providers are receiving the same payment for dialysis services, regardless of whether they provide erythropoiesis-stimulating agents or not. A new proposal by CMS said the lower-level trigger point of 10 to administer ESAs should be eliminated. Some believe this gives dialysis centers extra incentive to under-treat patients and provide less care, and ultimately will lead to more hospitalizations and taxpayers footing unnecessary bills. Because of this, an estimated half of nephrologists are against the new payment system, according to a recent report by research group BioTrend.
“Hopefully the bundling will have little impact on our patients receiving the best quality of therapy they can,” says Kraus.
Patient Jim Smith dialyzes at an RV
stopwith the NxStage System One
Dialysis patient Jim Smith, 63, from Indianola, Wash., tells DOTmed News he has not personally been negatively impacted by the bundling.
“The changes are invisible to patients; it’s tougher on dialysis centers — they get less money and still need to meet requirements,” he says.
This is one of the dialysis industry’s biggest reimbursement changes in decades, according to Jeff Burbank, CEO and founder of NxStage Medical Inc., adding that his company has not been affected.
“The net effect of the bundled payment structure was quite insignificant for us,” says Burbank. “We were very successful with transitioning through this reimbursement change.”
Dialysis treatment access has remained mostly unchanged over the past decade, according to CMS data. This may relate to the 70 percent of patients who do not seek proper education on available treatment options and begin dialysis without consulting a nephrologist, Kraus said.
“Most patients either feel they aren’t adequately trained or aware of the options,” says Kraus. “Physicians may not know how to prescribe the therapy, the availability of the therapy, or may not be willing to refer patients to a therapy they may or may not have in their own institution -- which may be best for the patient, but not best for a physician’s financial picture.”
From 1998 to 2010, at least 96 percent of facilities offered in-center hemodialysis and 46 percent offered peritoneal dialysis. Industry data suggest dialysis facilities are beginning to offer in-center nocturnal HD, including major provider DaVita, Inc., which operated over 115 nocturnal facilities in 2010. In addition, between 2003 and 2010, there was an increase from 12 to 22 percent in facilities offering home HD.
Dialyzing at home has recently gained popularity, shooting from 1,000 to 5,000 users in a short period of time. Because home dialysis treatments are more frequent and patients do not need to leave the house or use hospital space, it is more effective for health care systems and patients, says Kraus. Nearly 78 percent of ESRD patients are clinically and psychosocially eligible for peritoneal dialysis as a home dialysis therapy, according to a Nephrology Dialysis Transplantation study.
Nevertheless, the utilization of home dialysis is still relatively rare. In the U.S., Kraus noted, over 90 percent utilize in-center HD, 7 percent undergo PD and in the past year, home dialysis increased to around three percent of the population.
“Home HD is the new thing and it takes a while for people to broadly adopt the new thing,” says Burbank.
Company and equipment highlights
Rapid consolidations, mixed with broad, innovative product lines have pushed OEMs including Fresenius Medical Care, Baxter International and DaVita to the forefront of the market. A variety of structural changes in the industry have taken place in the last six years: DaVita bought Gambro’s dialysis care division; and Renal Advantage Inc. was bought by Fresenius, who also acquired dialysis manufacturer Hema Metrics Crit-Line system business earlier this year; and in 2009, Baxter bought Edwards CRRT, a continuous renal replacement therapy provider. This year, market share for Fresenius’ Venofer increased among nephrologists utilizing Fresenius units, as did market share for Sanofi-Aventis’ Ferrlecit among nephrologists that work with independent units. Share of AMAG’s Feraheme decreased among nephrologists at small/medium dialysis organizations and independent units – product utilization had previously been the greatest here, according to BioTrend’s report.
Dialysis technology has come a long way in the past 15 years, according to Kraus. He currently uses Gambro’s Phoenix Hemodialysis System; Baxter’s Ultrabag system for PD patients; and the Fresenius Freedom Cycler; but noted NxStage Medical Inc.’s System One, the only portable HD machine (cleared for home use by the Food and Drug Administration), is the most important technological advancement he has seen.
According to Burbank, NxStage’s business has been significantly up in the past year. The OEM’s products can be used in the home, ICUs, CCUs and hospitals.
“We’ve been a fast-growing company, with a 20 percent year-over-year growth rate,” says Burbank.
Smith said he has been using the NxStage System One at home since 2007.
“I live life as a pretty normal person, as opposed to those who are treated in-center; I can carry my machine on my motorcycle, take it river rafting and on road trips,” says Smith, a member of the Northwest Kidney Center’s regional council.
Also jumping on the home dialysis bandwagon is Germany-based Fresenius, who earlier this year announced FDA clearance of its 2008k@home dialysis machine. Additionally, Fresenius responded to the bundled payments by introducing the 2008T – combining the company’s most advanced HD delivery system with Fresenius Clinical Data Exchange. For the first time, caregivers will be provided with chair side access to dialysis treatment and medical information system data to facilitate real-time adjustments to therapy and care plans. The company operates 2,700 dialysis clinics across North America and overseas markets, providing 215,000 patients worldwide with dialysis treatments.
Along with home dialysis, refurbished dialyzers may also gain more attention after an announcement by researchers at May’s National Kidney Foundation Spring Clinical Meetings, stating that refurbished dialyzers had actually proven safer than single-use versions. Research also indicated that they reduce costs and medical waste without negatively impacting patients.
Summer 2010, the Renal Physicians Association and major dialysis companies including DaVita and Fresenius, along with other stakeholders, launched the Vascular Access Initiative to reduce the percentage of patients who start dialysis with central venous catheters (82 percent) by 10 percent annually, along with reducing the patient percentage followed by a nephrologist for more than six months who start dialysis with a CVC (74 percent) by 20 percent annually.
“Catheter usage is associated with high mortality and morbidity,” says Kraus. “Our goal should be to completely remove catheters from our units with the exception of patients who absolutely need them because they have no other vascular access available.”
RPA president Edward Jones said the VAI provides tools to nephrologists to eradicate CVCs in incident dialysis patients. He confirmed the tools have been used, but noted the impact has not yet been analyzed.
“The incident patients with CVCs have gone down, but it’s premature to attribute specifically to the VAI alone,” Jones writes in an e-mail to DOTmed News.
The global dialysis equipment market has seen monumental growth thanks to OEMs’ expanding global presence, along with a stable customer base and government efforts to provide better health care for ESRD sufferers. As the dialysis sector continues to grow and change, physicians, providers, nephrologists, OEMs and dialysis patients themselves need to remain proactive and educated to determine what is best to each individual’s mortality and quality of life.
As Smith says: “Dialysis is not a death sentence; it’s a life sentence.”
DOTmed Registered 2011 Dialysis Companies
Names in boldface are Premium Listings.
steven Raj, medisetia technologies services
Sanwar Agarwal, Jindal Enterprises