Dialysis Providers and the Restraint of Competition

This story almost made it under the radar. Our local Providence Journal provided this exclusive,

Two area dialysis clinic operators — American Renal Associates and Fresenius Medical Care Holdings — have signed consent orders with the Federal Trade Commission settling charges that they unlawfully tried to restrain competition.

According to the FTC, the parties entered into an asset purchase agreement on Aug. 3, 2005, under which ARA proposed to purchase five Rhode Island dialysis clinics from Fresenius. The agreement also required Fresenius to close an additional three clinics — two in Rhode Island and one in Fall River. The parties terminated the asset purchase agreement on March 13, 2006, after FTC staff raised antitrust concerns.

The FTC’s complaint alleges two separate violations of antitrust laws. The commission charges that the agreement between ARA and Fresenius to close three Fresenius clinics was an agreement to eliminate competition in the affected areas of East Providence, North Providence and Fall River. The effect of this elimination of competition would have been an increase in ARA’s ability to raise prices in these areas and to reduce ARA’s incentives to improve service and quality.

Also, commission charged that ARA’s proposed acquisition of two Fresenius clinics in Warwick would substantially reduce competition for outpatient dialysis services in the Warwick/Cranston area.

According to the FTC, agreements to pay a competitor to exit a market, such as the one allegedly negotiated between ARA and Fresenius, are illegal.

Although the report was local, it involved actions by two large commercial provider of dialysis services, Fresenius Medical Care Holdings, part of Fresenius Medical Care, a German firm claiming to be the world's largest provider of services to patients with chronic renal disease, and American Renal Associates, which claims to be one of the largest US dialysis providers. As such, it indicates the goals of the leaders of these organizations, and the means they will utilize to achieve these goals. Fresenius has received much more coverage lately for its efforts to stave off proposed reductions in payments for large doses of epoetin to treat anemia in dialysis patients, even given that such aggressive treatment has not shown to provide any clear benefit to patients.

This story is particularly interesting because it is, to my knowledge, one of the few reports of an anti-trust action against commercial health care service providers in the US, even though the provision of health care services is more and accomplished by corporations that grow ever larger and more powerful. This suggests that one way such organizations may grow large and powerful is by collaborating with others with whom they are ostensibly competing.

On the other hand, this is just one of many stories, found on Health Care Renewal, the other blogs that now act as health care watchdogs, and of course in the news media, of health care organizations bumping up against legal limits in their pursuit of money.

The problem is that these stories are scattered around blogs and the news media, and very rarely in medical and health care journals. I believe that were they better aggregated, physicians and the public alike would realize how much of health care is now driven by the self-interest of the leaders of large health care organizations, and how little is unfortunately driven by the needs of patients and the advancement of science.