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. 2021 Nov 5;2(11):e213626.
doi: 10.1001/jamahealthforum.2021.3626. eCollection 2021 Nov.

Trends in Dialysis Industry Consolidation After Medicare Payment Reform, 2006-2016

Caroline E Sloan  1   2   3 , Abby Hoffman  3 , Matthew L Maciejewski  1   2   4 , Cynthia J Coffman  2   5 , Justin G Trogdon  3 , Virginia Wang  1   2   4
Affiliations

Trends in Dialysis Industry Consolidation After Medicare Payment Reform, 2006-2016

Caroline E Sloan et al. JAMA Health Forum. .

Abstract

Importance: The dialysis industry is highly concentrated, with large dialysis organizations now providing dialysis for more than 85% of patients with kidney failure in the United States. In 2011, Medicare introduced a new Prospective Payment System (PPS) for end-stage kidney disease, which bundled payment for dialysis care into 1 payment per patient. Trends in dialysis facility consolidation after the PPS went into effect are unknown.

Objective: To determine whether the introduction of the PPS in 2011 was associated with an acceleration in acquisitions and closures of small dialysis chains (<20 facilities) and independently owned facilities.

Design setting and participants: This retrospective cohort study included all Medicare-certified independent or small chain-affiliated dialysis facilities in the continental US between 2006 and 2016. Data were obtained from Medicare and the US Renal Data System and were analyzed in 2020.

Exposures: The PPS.

Main outcomes and measures: Discrete time hazard models were used to estimate the odds of acquisition and closure before the PPS (2006-2010) vs after the PPS (2011-2016). Analyses controlled for facility, market, and regional demographic characteristics. The average predicted marginal probabilities of acquisition and closure over time were estimated.

Results: The proportion of small chain-affiliated and independently owned facilities declined from 29% (1383 of 4750 facilities) in 2006 to 15% (1038 of 6738) in 2016. Among 13 481 facility-years, 6352 (47%) were for profit, and mean (SD) census was 68 (59) patients. Overall, 3286 (24%) facilities opened during the observation period. The proportion of acquisitions that occurred each year varied from 1.1% (12 of 1065 facilities in 2015) to 7.2% (86 of 1192 facilities in 2012), while closures varied from 0.8% (9 of 1065 facilities in 2015) to 2.2% (28 of 1286 facilities in 2010), making both fairly rare. There was a 3.48 higher odds of acquisition in the post-PPS period compared with the pre-PPS period (95% CI, 1.62-7.47; P = .001). The odds of closure before and after the PPS were not statistically significantly different (odds ratio, 2.03; 95% CI, 0.61-6.73; P = .25). Facilities that opened during the observation period had a 7.2% higher predicted probability of acquisition compared with older facilities (95% CI, 5.4%-9.0%; P < .001).

Conclusions and relevance: In this cohort study of continental US Medicare-certified dialysis facilities, small-chain and independently owned facilities retained a declining share of the dialysis market. Further research should evaluate the effect of continued dialysis market consolidation on patient access, health care utilization, and clinical outcomes.

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Conflict of interest statement

Conflict of Interest Disclosures: Dr Sloan reports grants from the National Institutes of Health (NIH) outside the submitted work. Dr Maciejewski reports grants from NIH and the Department of Veterans Affairs, a contract from the National Committee for Quality Assurance, and ownership of Amgen stock owing to his spouse’s employment outside the submitted work. Dr Coffman reports grants from NIH and the Department of Veterans Affairs during the conduct of the study. Dr Wang reports grants from the National Institute of Diabetes and Digestive and Kidney Diseases, the Department of Veterans Affairs, and the Agency for Healthcare Research and Quality; a contract with the National Committee for Quality Assurance; and honoraria from NIH outside the submitted work. No other disclosures were reported.

Figures

Figure 1.
Figure 1.. Number of Small Chain-Affiliated or Independently Owned Dialysis Facilities in the US, 2006-2016
The total number of unique dialysis facilities increased by 42% over the observation period, from 4750 in 2006 to 6738 in 2016. The absolute number of facilities associated with large dialysis organizations (LDOs) increased from 3367 in 2006 (71% of all facilities) to 5700 in 2016 (85%). The absolute number of at-risk facilities declined from 1383 in 2006 (29% of all facilities) to 1038 in 2016 (15%).
Figure 2.
Figure 2.. Observed Proportion of At-Risk Facilities That Were Acquired or Closed, 2006-2016
The proportion of facilities that were acquired each year varied between 1.1% and 7.2% during the observation period. The proportion of facilities that closed each year varied between 0.8% and 2.2%.
Figure 3.
Figure 3.. Proportion of At-Risk Facilities That Were Acquired and Closed in Each US Hospital Service Area, 2006-2016
Figure 4.
Figure 4.. Adjusted Annual Predicted Probabilities of Acquisition and Closure Before and After Implementation of the Medicare End-Stage Renal Disease Prospective Payment System
Error bars illustrate upper and lower bounds of 95% CIs. The light blue dotted line marks the year in which the Centers for Medicare & Medicaid Services began reimbursing facilities under the Prospective Payment System (2011).
See this image and copyright information in PMC

Comment in

References

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