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New York Hospitals Set to Move Dialysis Care to Private Chain, Despite Track Record

The New York Times, 2/12/14

By NINA BERNSTEIN FEB. 12, 2014

For 400,000 people across the country with failed kidneys, dialysis care is a matter of life and death. It is also a lucrative business, in part because Medicare pays for such treatment regardless of age.

But as for-profit clinics and chains have grown to control about 85 percent of the dialysis market over the last decade, researchers have documented starkly higher mortality rates in centers owned by for-profits compared with nonprofits.

Now New York State’s Public Health and Health Planning Council is set to vote Thursday on a deal to turn over dialysis at four of the city’s public hospitals to a for-profit franchise called Big Apple Dialysis despite government data showing the company’s centers did not perform as well as the hospitals themselves.

The deal was approved more than a year ago by the city’s Health and Hospital Corporation, the public hospital agency, which says the terms of the contract ensure that quality will remain high, and that shifting dialysis patients to Big Apple, part of a company called Atlantic Dialysis, will save the financially troubled hospital system $150 million over the next nine years. Atlantic, based in Queens, has agreed to pay the city $1.6 million in annual rent and $1.1 million to buy equipment at the 57 dialysis stations that now treat about 1,000 patients at the four city hospitals -- Kings County Hospital, Lincoln Hospital Center, Metropolitan Hospital and Harlem Hospital.

But the contract, which hinges on the planning council approving the company for a “certificate of need,” is now under new critical scrutiny. The New York State Nurses Association and patient advocates are pointing to government data on death rates, adjusted by Medicare for patient mix and severity of illness, that show Atlantic’s operations performed 3 percent worse than the national norm between 2009 and 2012, while the four hospitals, over all, performed 17 percent better than average.

“We believe that selling patients into the commercial dialysis market is in direct conflict with H.H.C.'s public service mission and governing statute,” Carl Ginsburg, a spokesman for the nurse’s union, told the planning council committee that considered the matter on Jan. 30. He urged that the committee give the new city administration a chance to review it.

Both sides agree that part of the expected savings for the hospitals, and for the 20 percent profit margin that the company projects on annual revenue of $15 million, is based on replacing nurses with lower-paid technicians, and increasing the patient capacity of each dialysis unit. Such measures are out of the public hospitals’ reach, officials say, for lack of capital to add about 60 dialysis stations and because they must pay higher fringe benefits.

In an interview Tuesday, Alan Aviles, the outgoing president of the city’s Health and Hospitals Corporation, said there were legitimate concerns about the impact of profit-making models, but he strongly defended the quality of this deal, part of a comprehensive cost-cutting plan adopted by the public hospitals corporation in 2012 to address a $1 billion budget gap.

Mr. Aviles said that Atlantic Dialysis, owned and run by two doctors who previously worked at city hospitals, had a superior track record where it counted: running both acute and chronic dialysis at Elmhurst Hospital since 2006, under the same model called for in the larger contract.

The contract requires oversight and quality assurance by the city hospitals’ own doctors, Mr. Aviles emphasized; it includes a guarantee that unauthorized immigrants will have access to treatment, and it bars the company from transferring the business without consent. There will be no layoffs, because nurses will be transferred to other positions.

“Yes, it is unusual for a public system to contemplate doing this kind of thing,” he said. “But we did it because we had an operator with a track record.”

Although overall, Atlantic had a higher adjusted death rate than the four city hospitals, Medicare data show the company’s center at Elmhurst hospital had a mortality rate that was 23 percent lower than average – outperforming two of the four city hospitals, and all the company’s other centers.

But opponents point out that Medicare-calculated death rates at five of those nine private centers, including Central Brooklyn Dialysis, New York Renal Associates in the Bronx and Ridgewood Dialysis Center in Queens, were much higher over four years than at the city hospitals nearby, and as much as 30 percent above the state and national average.

“The fact is, these people are in it for the money,” said Agnes Abraham, chairwoman of the public hospitals’ council of community advisory boards, who opposes the deal and wants it scrutinized by Mr. Aviles’s successor, Dr. Ramanathan Raju. “Big Apple does not have the same moral obligation to the people of New York City as the Health and Hospitals Corporation.”

Joseph Sala, a vice president at Atlantic Dialysis, said the most recent data show its centers meet or exceed national and state norms. “Our mortality across the board has improved; it continues to improve,” Mr. Sala said, adding that as a local, physician-owned company it is different from the publicly traded chains that have fueled opposition to for-profit dialysis.

The nurses’ union contends that for-profit dialysis results in documented patterns of reduced staffing, less patient education, lower quality needles and tubing, and a history of profitable anemia drugs used at levels that hurt patients – all factors linked to a shorter life expectancy for dialysis patients in the United States.

Dr. Jodumutt Ganesh Bhat, co-owner and medical director of Atlantic and Big Apple, and the company’s lawyer, Howard Fensterman, are both members of the planning council committee that was considering the matter last month, but they left the room, declaring a conflict of interest. Of the remaining 10 members, six abstained from a vote to ratify the state health department recommendation. Instead, they asked for more data and deferred the vote to a special meeting at 9:45 a.m. Thursday, just before it goes to the full council.

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