Dialysis Industry Consolidation Continues

Monopolies a Growing Concern in Small Markets

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Small dialysis chains and independent dialysis facilities continue to disappear, increasing the risk of monopolies, particularly in small markets, according to an abstract presented at Kidney Week 2019.

The dialysis industry has become increasingly consolidated over the past 15 years, with 2 major dialysis chains now controlling 85% of the market, said the abstract’s lead author, Caroline Sloan, MD, a general internist and chief resident at Duke University. About 300 small dialysis chains and independent facilities disappeared between 2006 and 2016 either through closure or acquisition by larger firms, according to the analysis. The number of such small or independent facilities decreased from 1353 to 1034, while the number of large dialysis facilities or facilities associated with large chains increased from 3216 to 5419 during that same period.

“There’s about a 1 to 2% rate of acquisition per year and about 1% closure rate per year for these smaller facilities,” Sloan said.

Those facilities at greatest risk of acquisition were not-for-profit, smaller in size, or located in markets with fewer hospitals or where there were already few choices for dialysis care. Sloan explained that in markets already dominated by a single large dialysis provider, it may be hard for small facilities to stay open.

Kevin Erickson, MD, MS, assistant professor of medicine at Baylor University, said the findings provide an update on an ongoing trend in the field and suggest there may be a shift in where acquisitions are occurring with small markets becoming a new target.

“These are potentially markets where patients already have limited choice,” Erickson said. “The potential effects of an acquisition on the set of choices available to patients and how the providers can change care delivery and pricing is potentially larger when you’re already starting with fewer choices.”

Additionally, in consolidated markets dialysis providers might offer fewer amenities or reduced quality of care, Erickson noted. There has also been recent evidence that patients who get care at larger, for-profit facilities are less likely to get transplants or may be more likely to be hospitalized, Sloan noted. Although her data didn’t look at patient outcomes, Sloan expressed concern about the potential effects of this ongoing consolidation on patient outcomes.

Another potential concern is the effect of consolidation on the cost of care.

“There’s a risk of price increases for private insurers,” Erickson said. He noted that cost may be offset by potential savings through economies of scale or more bargaining leverage at large facilities, but more study is needed to fully understand the effects of consolidation in the industry. In the meantime, he said policymakers need to consider the potential costs and benefits of policies that may lead to more consolidation.

Sloan suggested policymakers should consider taking steps to maintain patient choice.

“Were urging policymakers to try to maintain competition, especially in the markets that are the most monopolistic,” she said.

“Consolidation in the Dialysis Industry in the Era of Health Reform, 2006–2013” Oral Abstract 058