by Gary Peterson
Poorly aligned incentives in U.S. dialysis care
In the U.S., we are committed to a market approach in healthcare. Market incentives should balance patient needs, improved patient outcomes, physician financial goals, corporate financial incentives, and taxpayer/lawmakers’ intent. When these are aligned correctly, continuous improvement is a natural outcome.
Properly aligned incentives have led to best-in-the-world care in the U.S. in several fields of medicine, but not in dialysis care. I have written several times in recent years about one misaligned incentive, the Medicare Secondary Payor (MSP) period, which results in dialysis care corporations making little or no profit from any dialysis patient who survives longer than 33 months. It alone, however, does not explain these disturbing questions about dialysis care which continue to perplex industry professionals:
- Why has dialysis care lagged so far behind other fields of medicine in improving patient outcomes?
- In terms of dialysis care outcomes, why has the U.S. lagged behind other first-world countries?
- In terms of patient outcomes, why has a non-profit company ─ despite taking all patients ─ consistently outperformed the largest for-profit companies in the U.S.?
- Why would virtually no nephrologists accept the U.S. standard of dialysis care for themselves or their own family members?
- Why are there such dismal rehabilitation and employment rates among U.S. dialysis patients?
- Why is hemodiafiltration widely utilized in Europe, but essentially unknown in U.S. as a renal replacement therapy?
- Why is there virtually no emphasis on psychonephrology, despite rampant depression among U.S. dialysis patients?
- Why have dialysis care business leaders failed to solve these problems?
One must ask if there is a common thread running through the above-listed questions. Is there a misaligned incentive ─ one that is rarely questioned ─ that could play a major role in causing these problems?
I believe there is: physician ownership of dialysis facilities in the U.S.
It is time to connect the dots.
Consequences of physician ownership
Ordinarily, governments prevent physicians from referring patients to clinics or services that the physicians own. This is done primarily to prevent overutilization of medical services. As an example, if a doctor owns a stake in a lab, it is likely that he/she will order more lab tests than are necessary or normal.
In terms of U.S. Medicare patients, the Stark law prevents physicians from making referrals to clinics that they own. An exception was made long ago for dialysis facilities and nephrologists. It seemed there was little chance of abuse as the government limited the number of dialysis treatments per week and paid a set amount for a ‘bundle’ of services per treatment. It appears, however, that this exception to the Stark law has backfired on patients, Medicare, nephrologists, and legislators in unforeseen ways.
The worst unforeseen effect of physician ownership is that nephrologists would overutilize the cheapest and fastest dialysis treatments despite patient needs. In order to reduce treatment costs and increase their profits, thousands of decisions ─ large and small ─ where made by many nephrologists and their business partners concerning treatment costs and facility operations. Over the decades, U.S. dialysis facilities phased out nurses as primary treatment caregivers and instead utilized low-paid technicians. Virtually all patients were funneled into cheap, fast, in-center dialysis treatments. Short treatment times and long recovery times became the norm. Quality dialysis care was reduced to technical parameters and their relationship to two patient outcomes: ‘not dead’ and ‘not in the hospital.’ Patient-to-social worker ratios and patient-to-dietician ratios soared. Home and nocturnal dialysis virtually died out. Patient psychosocial needs were increasingly dismissed. The last major conference on dialysis patient psychological needs was held in 2000. Life outcomes were ignored. A minority of clinics had shifts starting after 5 p.m. so unemployment/disability became the norm. Unlike cardiology and pulmonary medicine, no renal rehabilitation or employment programs exist. Patients became enslaved to a life called dialysis.
Making cutbacks from optimal levels of dialysis care allowed clinic owners’ incomes to increase despite stagnant reimbursements. These increased profits led more investors and more nephrologists to build even more new dialysis centers. Seeing this proliferation of new dialysis centers, the U.S. government saw no reason to increase Medicare payments for dialysis treatments for more than twenty years. This stagnant reimbursement rate, in turn, caused clinic owners to make even further cuts to reduce costs and preserve profits. Large dialysis provider companies grew easily and steadily by buying majority shares in dialysis clinics through junk-bond financing. They then implemented aggressive cost-cutting policies that drove up profits for themselves and their nephrologists. These companies found far too many nephrologists willing to cede major decisions about patient care to businesspeople who ‘raced to the bottom’ in setting standards of care. Many of these nephrologists also overprescribed ESAs and lab tests, forcing Medicare to reign in these practices and costs with an ‘extended payment bundle’ a few years ago.
Physician ownership led to a deterioration of medical ethics and care that has continued for decades. The entire system of care was altered to support cheap, fast, unphysiological dialysis. Even the nephrologists and non-profit companies that believed in longer or higher quality dialysis care were forced to make cutbacks in order to deal with stagnant reimbursement rates that did not keep up with inflation. As a result, U.S. nephrologists led in establishing standards of care that were centered on minimal dialysis treatments. Instead of advocating for rehabilitation or improved patient life outcomes, many U.S. nephrology leaders are known instead for advocating for increased corporate revenues.
When financial incentives are not aligned, a perverse system of medical care, economics, and morality can take hold that will increasingly become institutionalized over time. The meaning and purpose of patients’ lives can become secondary to the profit requirements of an insular medical/economic system. Patients are treated as less an equals. Virtually no nephrologists would accept for themselves the care that over 85% of their patients receive. Dialysis patient advocacy organizations exist in this economy primarily to increase reimbursement rates for corporations by using scare tactics. After forty years of government funding, despite the efforts of many dedicated nurses and technicians, only a small percentage of dialysis patients are able to thrive. Like the antebellum American South, those in power tout the specious benefits of the system while ignoring or rationalizing its obvious moral failures.
U.S. nephrology must change
As physicians and custodians of public trust, nephrologists cannot have it both ways. If patients are to be treated morally and as equals, nephrologists must consider the impact of cheap, minimal dialysis treatments on their patient’s lives. They cannot enjoy profits from ownership shares in dialysis clinics while those same clinics provide care that they would never accept for their own family members. Nephrologists cannot insist that patient rehabilitation and employment are outside the scope of their practice when they and their business partners make so many profit-driven decisions that make renal rehabilitation and employment nearly impossible.
There is no argument that nephrologist ownership of dialysis facilities has driven down dialysis treatment costs for the government. This model can be attractive for other governments trying to provide dialysis treatments to its citizens. U.S. dialysis companies are actively exporting variations to other countries. Along with its flawed morality, however, this model creates additional societal costs outside of medicine. If rewards are given to caregivers solely for limiting dialysis care costs, more disabled dialysis patients will be created who also require additional government services and support. Currently, less than 10% of working-age dialysis patients in the U.S. are employed. This also creates billions in ‘lost opportunity costs’ in the U.S. economy. This model has also driven no major breakthroughs in technology or in the use of hemodiafiltration. Properly aligned financial incentives could address all of these issues.
Renal replacement therapy began fifty years ago with the hope that patients would live as normal lives as possible. In the 21st century, most patients want to thrive and be contributing members of society despite having a chronic medical condition. Such a ‘whole patient’ approach should be the norm after fifty years. Unfortunately, U.S. nephrologists continue to seek a ‘grand unified theory’ of treatment parameters and biochemical markers that will justify the cheap, fast dialysis that is provided in the thousands of clinics in which they own or have financial interests. U.S. for-profit dialysis companies only appear interested in pursuing options for patients that increase their revenues. By continuing to focus only on mortality and hospitalizations, U.S. nephrologists are engaging in self-defeating medicine. By failing to acknowledge that patients require a system of care that addresses both their medical and psychosocial needs, nephrologists are also failing to sustain or strengthen their patients’ will to survive.
Patient action is needed
When the meaning and purpose of people’s lives are subverted and diminished by a perverse economic system, these people and their advocates need to formulate a ‘Bill of Rights’ to serve as a foundation for their actions going forward. No dialysis patient ‘Bill of Rights’ exists that includes the patients’ right to receive physiological treatments or to have their psychosocial needs addressed as a basis of care. Such a document might have prevented the excesses caused by physician ownership of dialysis facilities in the U.S. and could prevent these problems from being spread to other countries. With nearly all professional and patient organizations committed to maintaining the existing U.S. profit system, it is unlikely that any meaningful document could originate from these groups. As nephrologists receive little or no training in psychosocial issues, patients are the experts. Patients should also not expect nephrologists to act against their own financial interests.
It is time for U.S. patients to connect the dots and take control of their destiny. The U.S. Congress controls the balance, as well as the construction, of many of the financial incentives in dialysis care. No entity has reviewed the effectiveness or the consequences of these incentives in decades. After formulating a new ‘Bill of Rights, patients should demand that Congress hold hearings to examine today's perverse financial incentives. They should also demand changes that can drive significant improvements in their overall care and psychosocial wellbeing. Perhaps then, the U.S. can lead in dialysis care.