Perspective: What Will the Fresenius Merger Mean for Kidney Care?

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Fresenius Medical Care announced in March that it was forming a separate company as part of a three-way merger with InterWell Health and Cricket Health. Through the merger, the largest dialysis provider in the United States will combine with two value-based care companies: a physician organization of more than 1600 nephrologists and a technology start-up. The start-up, Cricket Health, created a patient platform, care-support program, and machine-learning program aimed at identifying kidney disease and predicting disease progression.

“We see value-based care as the future of health care, and this new company will make a dramatic difference for thousands of people,”

Fresenius Medical Care announced in March that it was forming a separate company as part of a three-way merger with InterWell Health and Cricket Health. Through the merger, the largest dialysis provider in the United States will combine with two value-based care companies: a physician organization of more than 1600 nephrologists and a technology start-up. The start-up, Cricket Health, created a patient platform, care-support program, and machine-learning program aimed at identifying kidney disease and predicting disease progression.

“We see value-based care as the future of health care, and this new company will make a dramatic difference for thousands of people,” said David Pollack, president, Integrated Care Group, Fresenius Medical Care North America, in a statement to Kidney News. “The new InterWell Health expects to improve patients’ quality of life through reduced hospital admissions and readmissions, slower disease progression, increased transplant referrals and rates, accelerated transition to home dialysis, and improved health equity. Over the past 5 years, our value-based care programs have reduced hospital admissions by 34%, and planned starts to dialysis in those programs are twice the national average. By leveraging the new InterWell Health's technological innovations and its leading network of nephrologists, we expect to improve on these outcomes in the future.”

What will this merger mean for nephrology practices and people with chronic kidney disease (CKD)?

It's been almost 3 years since the federal government launched the Advancing American Kidney Health initiative with the goals of reducing the risk of kidney failure, improving access and quality of person-centered treatment, and increasing transplant access.

As part of these efforts, the Centers for Medicare & Medicaid Services (CMS) launched the voluntary nephrologist-centric Kidney Care Choices model, which includes the Kidney Care First and Comprehensive Kidney Care Contracting options in which dialysis facilities, nephrologists, and other health care providers form accountable care organizations to manage care for beneficiaries with advanced CKD and end stage kidney disease.

With that context and news of the merger, Kidney News asked three nephrologists who are tuned into the nephrology marketplace to share their thoughts.

Katie Kwon, MD

Nephrologist in private practice at Lake Michigan Nephrology and vice president of clinical affairs at Panoramic Health (formerly Global Nephrology Solutions). Panoramic Health is a physician-led, value-based kidney care organization with 600 providers in 15 states.

I was not all that surprised to hear about the merger, and I fully expect there to be more mergers in this space. It's been really active in the last 18 months or so and really revving up in the last 6 months as these companies try to get nephrologists on board and participating with the new value-based care payment models.

I thought there were some interesting takeaways from this merger. One of them was how vitally important data analytics and population management are to be successful with these new models. I thought that's what Cricket brought to the merger. It had really invested in not just an electronic medical record (EMR) that does billing—which is what all our EMRs have been for so long—but also in taking all the data that have been going into these EMRs and using them to predict who is at risk for bad outcomes and who needs these targeted interventions. That's really, really important to be able to do, and it's extremely expensive.

I think we’re seeing with these models that there are enormous market pressures to get one's hands on those analytics, but it's going to have to be large scale. That's why I think there will be more mergers happening, because programming those analytics is so expensive to get right that it's out of reach for medium-sized companies, much less for small practices.

There has been some concern that as dialysis companies establish their own value-based care arms, they may try to “gatekeep” a little bit the patients already undergoing dialysis in their units. So, I think that's an area that hopefully CMS will be watching really closely, because dialysis units are going to be a big part of success in improving their outcomes. And, dialysis is so time consuming that the best place to interact with those patients usually is at their dialysis unit. So, I hope that it will be made crystal clear by the people administering these programs that dialysis patients need to be able to access their value-based care benefits in a company-neutral way and that dialysis companies allow other programs to interact with their programs in their dialysis units. That will be something interesting to watch.

I am hopeful that nephrologists, who were put at the center of these models to drive care, would remain there. I hope as they partner with these different practices that they recognize their expertise has value, their patient panel has value, and they should be partnering with companies that provide them tools but allow them to continue to get their patients what they need. And then, nephrologists should reap the rewards of driving better outcomes for these patients.

Eugene Lin, MD, MS

Assistant professor of medicine at the University of Southern California and a health services researcher with a focus on economic policies pertaining to nephrology.

I think this is an interesting move because it speaks to where Fresenius wants to be competitive. Before this, the market was mostly start-up companies. It's a high-risk, high-reward sort of game with start-ups, but when you see an established player take a leap, that says a lot about where the market is going. I think Fresenius thinks the future is in care coordination and home dialysis and not just with its status quo business strategy of in-center hemodialysis.

We’ll have to see if this changes Fresenius’ business model in practice. My hope is that it expands the market with respect to more patient choice.

Medicare and private payers are recognizing that dialysis is expensive, so they’re looking for alternatives to what kidney care has traditionally focused on, which is in-center dialysis. We know that, in general, payers have been interested in more coordinated care and accountable care organizations. There has been increasing interest to reduce costs and improve outcomes given how costly this population is and how outcomes are not particularly great.

One can be very cynical about all of this and say Fresenius is just responding to market incentives. But isn't that what people want? Isn't that the point of public policy? Fresenius is recognizing that it's important for the company to adapt. Most people would say that it's a good thing when providers change to improve care.

One of the criticisms of payment models has been that incentives are geared toward dialysis, and there aren't that many incentives for CKD care. I think that's right. The industry is going to build around the market that's created for it. What we have today is a product of two decades-plus of a lot of money going into dialysis care and not a lot of money going into CKD care and transplantation.

The government and payers are realizing that if you want to see the market head to another place, you need to put money there. Providers aren't going to do it out of the goodness of their hearts. Even if providers wanted to do it, if they can't survive financially, it's not going to materialize. So, if we want to see people broadly caring about CKD care, we will likely need broader reforms that move money there.

Suzanne Watnick, MD

Chief medical officer at Northwest Kidney Centers and professor of medicine at the University of Washington in Seattle.

My initial thought was, “Wow, that's going to be a big partnership, and I wonder how it's going to shake up the environment.” But at the same time, I thought, “Oh, that makes sense, given that we want to move to a more patient-centered care environment.”

Overall, my long view is that value-based care is really the way things are going. So, on the one hand I thought this merger is a great way to provide more holistic care to people.

A major concern is how the community moves forward. Hopefully, independent groups will continue to have a voice for the patients they serve.

The pandemic has been so awful for our community. If we look at Medicare data, our patients have had six times more hospitalizations in comparison to other Medicare beneficiaries—and a substantially higher mortality rate.

One of the silver linings of the pandemic for our patients is that the community has really come together in bigger ways than they have before. For example, there's more conversation now among all the chief medical officers around the country. We share ideas, such as how to improve quality, how to improve safety, and how to improve a culture of safety.

It's that context where I think that partnerships are accelerating. There are some big players in the field that are coming together. That has led to some groups scrambling to make deals to make sure that future strategy is going to be implementable with the resources that a group has.

If we look at 2019 to 2021, we definitely saw an increase in home dialysis rates. We don't have finalized numbers yet, but I can relay that in our dialysis organization, we increased over 10% year on year, both in 2020 and 2021, which is amazing even in the setting of staffing shortages and being a small nonprofit with narrow margins.

So, going back to this partnership of Fresenius with InterWell and Cricket, Cricket has always advertised that it can get much higher percentages of patients at home, and Cricket has shown results, even if it's not with large numbers yet. So, it's not surprising that Fresenius would want to partner with Cricket.

If one of Fresenius's goals is to increase numbers of patients going home and then to bring in InterWell so that it has the partnerships to be able to work with patients and their care teams, it makes sense.

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