Podcast Summary
The Flaws and Costs of ESRD Treatment Options in the US Healthcare System: ESRD treatment in the US is limited and expensive, with most patients resorting to costly dialysis. Diabetes is the leading cause of ESRD, affecting almost 500,000 Americans, and costing Medicare over $30 billion annually.
The U.S. healthcare system is severely flawed with patients footing the bill for end-stage renal disease (ESRD) treatment. ESRD treatment options, such as transplants, are scarce and not everyone is a candidate for them. The majority of patients have to resort to dialysis, which costs around $100,000 a year per patient. Medicare spends over $30 billion for ESRD treatment, comprising 6 to 7 percent of its overall budget and almost 1 percent of the entire federal budget. ESRD is the final stage of chronic kidney disease, and it affects nearly 500,000 Americans today. Patients receive dialysis four times a week for multiple hours, making it hard to do anything else. The leading cause of kidney disease is diabetes, and diabetic patients account for about 30 percent of people worldwide with ESRD.
Exploiting Healthcare Rules: The Profitable Dialysis Industry: The dialysis industry prioritizes profit over patient care by taking advantage of healthcare regulations, leading to potential harm for patients.
The dialysis industry is a prime example of how exploiting the rules of the healthcare system can be more lucrative than improving patient outcomes.
How Dialysis Became Covered by Medicare: Medicare coverage for dialysis patients in the US started after a moving moment in Congress. Dialysis companies such as DaVita and Fresenius dominate the market and make profits from commercially-insured patients.
The Medicare coverage for dialysis patients in the US is a result of a powerful moment in 1972 when a patient was dialysed on the floor of the House of Representatives, and it transformed the Medicare program. However, private insurance picks up the first 30 months of the bill, after which Medicare coverage takes over. Medicare pays a much lower rate to the big dialysis chains as compared to the private insurance companies, resulting in companies generating profit from a narrow sliver of commercially-insured patients. Two large firms DaVita and Fresenius dominate the lucrative dialysis market, and their profits are driven by a mandate to make as much money as possible.
The Dominance of Dialysis Companies and Its Impact on Prices and Antitrust Concerns.: The dialysis market is primarily controlled by DaVita and Fresenius, leading to high prices that are not subject to antitrust regulations. This consolidation trend increases costs and the loyalty of patients makes clinics an attractive investment target.
The dialysis market has become dominated by two major companies, DaVita and Fresenius, due to 30 years of consolidation and acquisition. This has led to market power and bargaining power with commercial insurance companies, resulting in prices that can be four times higher than the Medicare price. Antitrust concerns are not triggered due to the relatively low revenue of individual dialysis clinics. This consolidation trend is seen throughout the healthcare industry and can be attributed to the high administrative costs. The loyalty of dialysis patients makes dialysis clinics an attractive investment target.
The Impact of For-Profit Chains on the Dialysis Industry: For-profit chains have brought changes to the dialysis industry, such as higher drug doses and better nurse quality, but also added data requirements for independent nephrologists. Running healthcare like a business may have drawbacks.
For-profit chains like DaVita and Fresenius have majorly transformed the dialysis industry by acquiring independent operators that were run as non-profits. Economists have found that these acquisitions led to significant increases in drug doses for patients, particularly for erythropoietin (EPO), and a shift towards higher quality nurses. However, the emphasis on growth and scale inspired by charismatic CEOs like Kent Thiry has also added burdensome data requirements for independent nephrologists. While standardizing care and cutting waste can lead to better outcomes at a lower cost, it may not be wise to run a healthcare system like a Taco Bell where the stakes are much higher.
The Complications of For-Profit Dialysis: For-profit dialysis companies prioritize technology over nursing care and can increase the risk of infections and decrease the chances of patients receiving transplants. Financial incentives play a role, but the situation is more complex than keeping patients as customers.
For-profit dialysis chains emphasize more techs than nurses and have more patients per employee and machine. However, this can increase the risk of blood infections and decrease the likelihood of patients getting on the transplant waitlist or actually receiving a transplant. Despite these potential downsides, DaVita and Fresenius, the two largest chains in the industry, deny actively discouraging patients from seeking transplants. While financial incentives may drive some decisions, the nuances of the dialysis industry make it more complicated than simply wanting to keep patients as customers forever.
The Healthcare Industry's Focus on Profit Over Patient Care: The U.S. healthcare industry prioritizes treatment over prevention, leading to companies like DaVita and Fresenius prioritizing profits over patient care. Reform is needed to shift towards preventative measures and prioritizing patient care.
The healthcare industry in the U.S. has become market-driven with a focus on treatment rather than prevention. This is evidenced by the dominance of two firms, DaVita and Fresenius, in the dialysis industry who prioritize profits over patient care. Although DaVita presents itself as a company that cares, independent research suggests otherwise. The industry's financial incentives don't always align with ethical considerations, leading to a conflict of interest. The need for reform is evident, as the U.S. spends more on healthcare than any other country but has an unhealthy population. The focus needs to shift towards preventive measures and prioritizing patient care over profits.
The Need for a New Payment System in Dialysis Industry: Due to slow growth in Medicare reimbursement and increasing expenses, dialysis companies have resorted to increasing drug doses for higher profits. This has not improved patient outcomes. The industry needs a new payment system that prioritizes patient care while accounting for increasing costs.
The dialysis industry has seen consolidation due to slow growth in Medicare reimbursement and increasing expenses. This has led to higher profits for companies but worse outcomes for patients. Creativity, often in the form of increasing drug doses, has been used to increase profits. However, the increased doses have not resulted in improved patient outcomes, but rather driven by the profit margins on each individual dose. The industry needs a new payment system that properly accounts for increasing costs and offers opportunities for growth without sacrificing patient care. Despite the financial pressures, dialysis companies exist to care for those who need it, just as trauma centers exist to care for patients during emergencies.
Dialysis Industry's Dark History of Profit-Driven Practices: Medicare's payment system change reduced excessive drug dosing by 50%, but fines and settlements only punish corporations economically. Short-sellers like Jim Chanos are crucial in exposing fraud, while the American Kidney Fund's involvement with dialysis chains raises concerns over prioritizing profit over patient care.
The dialysis industry has a history of shady practices in pursuit of profit, including excessive drug dosing and illegal kickbacks to doctors. Medicare's change in payment system resulted in a 50% decrease in doses given. Despite fines and settlements, corporate wrongdoing is often only penalized economically without jail time. Short-sellers, like Jim Chanos, are real-time financial detectives, incentivized to ferret out fraud. The American Kidney Fund's relationship with dialysis chains raised suspicions of encouraging patients to switch to private policies for better care and convenience, potentially prioritizing profit over patient well-being.
Dialysis Companies Funding Charity to Raise Insurance Premiums: Dialysis companies are funding charities to enroll patients in commercial insurance policies, charging insurers more than Medicare rates and driving up private policy rates. This practice raises concerns about the motive behind these donations and restricts affordable healthcare for people with end-stage renal disease.
The American Kidney Fund was receiving majority of its funds from the largest dialysis companies - Fresenius and DaVita. The charity would use this money to enroll patients in commercial insurance policies, which would charge the insurers two to four times more than the going Medicare reimbursement rate. This scheme is raising premiums for everybody in the marketplaces created by the Affordable Care Act, and dialysis in California was driving up private policy rates dramatically. The Affordable Care Act is responsible for restricting insurers from using pre-existing conditions to charge higher premiums, making it difficult for people with end-stage renal disease to get affordable healthcare. Despite the efforts of some insurers to fight back, the arrangement appears to be unsettling and raises concerns about the motive behind these donations.
Private Insurance for Dialysis Patients and Controversies Surrounding the American Kidney Fund (AKF): Private insurance may seem cheaper, but the AKF has been accused of using a loophole to benefit major dialysis companies. Patients with private insurance may have to pay high copays for additional medical treatments, which the AKF provides through non-profits, but allegations have been made of selective support.
Private insurance for dialysis patients can cost less than Medicare coverage, but the American Kidney Fund (AKF) has used a loophole in Obamacare to funnel money through non-profits to the benefit of dialysis companies like Fresenius and DaVita. These companies charge the private insurers up to four times the Medicare rate for dialysis sessions. While patients may have 20% copays for medical treatments that go beyond dialysis, the AKF provides supplemental insurance through non-profits to cover these additional costs. However, allegations have been made that the AKF only buys insurance plans for patients going to clinics owned by the two major dialysis companies. The AKF says it is merely supporting patients and not in the business of subsidizing anyone.
The Dark Side of Dialysis Industry: Self-Funded Insurance Schemes: The dialysis industry's self-funded insurance scheme has been accused of driving up health insurance costs. Despite legislation and ballot propositions, the industry's financial power has thwarted efforts to address the issue.
The dialysis industry, particularly K.F. funders, DaVita, and Fresenius, has been accused of employing a self-funded private insurance scheme that drives up costs for everyone who buys health insurance. Legislation has been introduced in California to address the issue, but the American Kidney Fund has sued them for it. Ultimately, the bill was signed by the governor, but is now stalled in court due to the lawsuit and Covid. There have been efforts to address the problem through California ballot propositions, but they have failed due to the industry's willingness to spend whatever it takes to defeat them.
The Risk of Proposition 23 on Dialysis Patients and DaVita's Controversial Practices: Proposition 23 posed a threat to the lives of dialysis patients and was opposed by medical organizations. However, DaVita, despite spending millions in the campaign, has a history of unethical practices that raise concerns about the quality of care for patients.
Proposition 23 in California would have resulted in the closure of dialysis facilities, leading to patients dying or receiving suboptimal care. Outside medical organizations agreed that this was a scary proposition. However, DaVita, a dialysis provider, spent over $65 million to defeat the proposition. Despite this, the company has a history of unethical practices, including providing illegal kickbacks to doctors and unnecessary disposal of drugs. As a member of the organization, it is difficult for Giullian to comment on these past incidents. However, as a physician, he did question whether the care his patients received at DaVita was suboptimal compared to other facilities.
The Dialysis Industry and the US Government's Quest for Better Patient Outcomes: The US dialysis industry prioritizes profit over patient outcomes, exploiting loopholes in government incentives. Home-based dialysis offers better outcomes and quality of life, and the Trump administration aimed to improve it—but the US still lags behind other countries.
The dialysis industry is better at maximizing profits than patient outcomes and exploits loopholes in the federal government's incentives. The economist blames the system rather than the industry for exploiting incentives. The Trump administration implemented initiatives to encourage kidney disease prevention, early detection, and donation. They also aimed to increase home-based dialysis, which results in better outcomes and quality of life for patients. However, the US lags behind other countries in this area. Moving towards more home-based dialysis could greatly improve patient care in the US.
Addressing the gap in home dialysis for chronic kidney disease patients in the US.: The US has been lagging behind in providing home dialysis for chronic kidney disease. The introduction of new payment models aims to incentivize more providers to get patients on at-home dialysis, encouraging a shift towards value-based care.
The U.S. lags behind other countries in offering home dialysis for chronic kidney disease patients due to the financial incentives for dialysis centers to keep patients in clinics. Health and Human Services Secretary Alex Azar has introduced new payment models to incentivize at-home dialysis, including a voluntary model that rewards providers for getting more patients on home dialysis, and a program that allows big healthcare groups to manage the total cost of care for patients. These changes mark a shift towards value-based care, where providers are paid based on patient outcomes rather than just performing procedures.
Shifting Resources Upstream in Kidney Care and the Challenges of Healthcare Reform: Focusing on early stage kidney dysfunction can improve patient outcomes and prevent costly end-stage renal disease. Fee-for-service payment models may incentivize lower quality care. The Biden administration's pause on new kidney-care payment models highlights the need for ongoing healthcare reform evaluation.
Shifting resources upstream in kidney care can potentially be more effective in preventing end-stage renal disease and improving patient outcomes. Companies that specialize in kidney care can thrive by focusing on patients in early stages of kidney dysfunction. Incentives matter in healthcare and fee-for-service payment models can lead to lower quality of care and rushed patient throughput. The Trump administration's executive order on new kidney-care payment models has been frozen by the Biden administration, leading to the need for further evaluation of healthcare reforms. The story of end-stage renal disease highlights why healthcare in the US is expensive.
