More Dialysis Merger News

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Noteworthy mergers continue in the dialysis field. In late 2010, Liberty Dialysis of Mercer Island, Washington, merged with Renal Advantage in Brentwood, Tennessee, to create the number three firm in dialysis. Then in August, Fresenius Medical Care, a global provider of dialysis services and products, agreed to purchase the newly fashioned Liberty Dialysis Holdings for $1.7 billion.

Last November, Renal Advantage and Liberty Dialysis agreed to combine and formed the third largest dialysis provider in the United States after Fresenius and DaVita. The new firm had 5300 employees serving more than 19,000 patients in 260 locations in 32 states. The transactions closed near the year’s end. The terms were not disclosed, but revenues have been estimated in the $1 billion range, according to Bloomberg News.

At that time, Mark Caputo, chief executive officer of Liberty Dialysis, said, “This merger unites two patient-focused, physician-driven, and employee-oriented companies with the autonomy to build their unique brands while taking advantage of the combined financial strength, purchasing power, and systems investment of two leading companies in the dialysis industry.”

That type of power gained the attention of dialysis giant Fresenius, based in Bad Homburg, Germany, which plans to complete the acquisition of Liberty by early 2012 and gain a better position for its North American dialysis services and product sales.

Fresenius further announced that it would acquire American Access Care Holdings for $385 million. That firm, based in Glen Rock, Pennsylvania, dovetails with dialysis business, providing services from vascular clinicians who specialize in fistulas or grafts that allow for a permanent point of access to blood vessels for dialysis.

By eliminating the need for a temporary catheter, the company’s products can lower the risk of infections, which can add costs to care, so the acquisition makes “strategic sense,” said Lisa Clive, an analyst with Sanford C. Bernstein Ltd in a Bloomberg interview.

She also noted that the acquisition makes sense in this climate because it boosts Fresenius’ already considerable economies of scale. The recent application of a bundled rate is easier to absorb in a larger company, Clive said. The dialysis industry is now subject to a completely different incentive because drug costs are rolled into a fixed compensation rate imposed to reduce the overuse of drugs that were previously separately billable.

September 2011 (Vol. 3, Number 9)