Eastern Maine Medical Center to sell dialysis clinics to national chain

Posted April 24, 2012, at 7:32 p.m.

BANGOR, Maine — Eastern Maine Medical Center plans to sell its three outpatient dialysis clinics to one of the country’s largest for-profit dialysis companies.

The hospital has signed a letter of intent with Colorado-based DaVita Inc. to transfer ownership of its kidney dialysis clinics in Bangor, Ellsworth and Lincoln, EMMC President and CEO Deborah Carey Johnson said Tuesday. The deal is expected to close early this summer after a state review process.

DaVita, which operates more than 1,800 clinics in 43 states, is facing legal challenges on several fronts.

In a criminal investigation, a federal grand jury in Denver is looking into the company’s financial relationships with kidney doctors. Prosecutors recently subpoenaed some of the company’s executives and board members.

Company officials are cooperating in the Denver investigation and are “comfortable and confident with our business practices,” spokesman Bill Myers said Tuesday in an email.

DaVita is also the subject of a whistleblower lawsuit alleging the company intentionally wasted an anemia drug to collect millions of dollars in extra Medicare payments.

The company has denied the allegations. The Justice Department investigated the whistle blowers’ claims and declined to join the suit. The plaintiffs, a former nurse and doctor for DaVita, subsequently filed an amended complaint. Last month, a federal judge in Atlanta advanced the case by refusing DaVita’s request to dismiss the claims.

DaVita’s latest legal obstacle involves a subpoena from the U.S. Department of Health and Human Services over Medicaid payments it received for dialysis drugs in New York. The company said in an October news release that it would work with investigators and looked forward to resolving the inquiry.

“Our track record of compliance with local and federal agencies over our nearly 12-year history is exceptionally well established and documented,” Myers said.

Investigations, subpoenas and audits are common in health care, and alone do not indicate wrongdoing, he said.

None of the claims against the company has been substantiated and no penalties have resulted, said Johnson of EMMC.

“Any lawsuit is a concern, of course, but we are still very reassured that this is the right direction for our patients and the program,” she said.

The EMMC acquisition marks DaVita’s first foray into Maine.

“When we interviewed [DaVita], they were able to satisfy us the best that they are a very high performer in this area, that they have the expertise, the scale and the focus to provide the same proven dialysis care for our patients as they’ve done elsewhere,” Johnson said.

Dialysis is a procedure that involves filtering the blood in patients who have diseased kidneys to replicate the functions of healthy kidneys.

Neither the company nor EMMC disclosed the sale price for the three clinics.

As a nonprofit hospital operating a dialysis program, EMMC is a member of a dying breed. More than 80 percent of the nation’s 5,000 dialysis clinics are now for-profit, according to an analysis of the industry by journalism nonprofit ProPublica.

Nearly two-thirds of all clinics in the country are run by DaVita and competitor Fresenius Medical Care, which operates 10 clinics in Maine.

Financial incentives in the Medicare payment system encouraged for-profit operators to get into the dialysis game, ProPublica reported.

At EMMC’s three outpatient dialysis clinics, nearly 90 percent of the 225 patients rely on Medicare.

Today, government-provided insurance plans make up the bulk of DaVita’s business, but private insurance plans that pay more for dialysis treatments are crucial to profitability, according to the company’s annual report filed in February.

A Fortune 500 company, DaVita reported $7 billion in revenues last year.

Strict regulations and the highly specialized nature of dialysis programs also lend them to the expertise and purchasing power of large companies, Johnson said.

DaVita says its clinical outcomes have improved for 11 years in a row. Ninety-six percent of its patients would recommend the company and 97 percent of affiliated physicians say DaVita meets or exceeds their expectations as a clinical partner, Myers said.

EMMC’s three dialysis clinics employ 66 people. The hospital’s physicians will continue to provide medical care and direction at the clinics under Davita, and the company has made job offers to all of the other staff, Johnson said.

“Our intention would be to have the transaction be as seamless as possible for patients,” she said. “We’re hopeful that the majority of our staff will work for Davita and remain at the centers.”

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