By Bill Peckham
The letter (PDF link) NephrOnline posted concerning CROWNweb included cost data collected for the National Renal Administrators Association by Avalera Health. Avalera's report comprises the last four pages of this PDF, it provides good data points for the cost of providing a dialysis treatment in the US. This table gives all the relevant numbers:
A Large Dialysis Organization (LDO) is defined as a provider with over 300 units - there are two companies in this range, FMC and DaVita. A Small Dialysis Organization (SDO) is defined as having fewer than 50 units. The cost of providing a dialysis treatment - not including the cost of medications - is $180 per dialysis treatment for the LDO and $210 per dialysis treatment for the SDO. The LDOs enjoy about a 14% purchasing advantage.
Looking at the above chart you might think the SDOs have a medication purchasing advantage. However, the report makes clear that you must look at the unit cost of medications to understand that the underlying purchasing advantage is the same. The principal medication expense is for erythopoetin
and again the LDOs enjoy a significant purchasing advantage. The reason their total medication costs are higher is that they are providing more units of EPO per treatment.
This data supports my contention that provider size drove the push to expand the dialysis payment bundle and the structural purchasing power disparity is a prime force driving dialysis provider consolidation.
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