Federal regulators are blocking part of a plan to consolidate ownership of 24 dialysis clinics in Hawaii because less competition could lead to higher prices and reduced patient care.
The Federal Trade Commission announced Tuesday that it will prevent one company from owning 24 clinics statewide, under a proposed settlement and order in which eight clinics on Oahu will be sold to a competitor.
“The proposed order announced today is the latest action taken by the FTC to ensure that consumers continue to have access to a range of choices in a competitive health care marketplace,” the agency said in a statement.
The settlement affects a $2 billion deal announced in August involving 260 Liberty Dialysis clinics across the nation being sold to Fresenius Medical Care AG & Co.
Hawaii would have been affected the most by anti-competitive effects of the sale, the FTC settlement indicates.
The FTC settlement requires Fresenius to sell 60 clinics in 19 states. The eight clinics in Hawaii are the most in any state.
Hawaii has a relatively high incidence of kidney disease. One in 7 people statewide have chronic kidney disease, compared with 1 in 9 nationally.
There are 2,900 Hawaii residents currently on dialysis, and more than 156,000 Hawaii residents have chronic kidney disease that can lead to dialysis or kidney transplants, according to the National Kidney Foundation of Hawaii.
CHANGING HANDS
Eight Fresenius Medical Care clinics on Oahu are slated for new ownership:
>> Aloha Clinic, 1520 Liliha St.
>> Kapahulu Clinic, 750 Palani Ave.
>> Pearlridge Clinic, 98-1005 Moanalua Road
>> Honolulu Clinic, 226 N. Kuakini St.
>> Kapolei Clinic, 555 Farrington Highway
>> Koolau Clinic, 47-388 Hui Iwa St.
>> Wahiawa Clinic, 850 Kilani Ave.
>> Windward Clinic, 45-480 Kaneohe Bay Drive
Source: Federal Trade Commission
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Under the FTC settlement, Fresenius will sell the eight clinics, which it had before the deal with Liberty was announced, plus one new clinic it planned to open in Waipahu.
The nine assets will be sold to Dialysis Newco Inc., a Tennessee company also known as DSI that was formed last year by venture capital firms Frazier Healthcare and New Enterprise Associates to buy dialysis clinics in Tennessee that pertained to a similar FTC decision to preserve competition.
Representatives of DSI, Fresenius and Liberty could not be reached for comment Tuesday.
Liberty, based in Washington, is the nation’s third-largest provider of outpatient dialysis services. The company took over the dialysis business of St. Francis Healthcare System of Hawaii in 2006. Liberty’s 16 Hawaii clinics have about 300 employees.
When the acquisition by Fresenius was announced in August, Liberty anticipated no impact on its clinics or services. Fresenius, a German-based company that is the largest dialysis provider in the world, did note at the time that it anticipated some facilities might have to be divested.
The FTC settlement requires the sale of the Hawaii clinics within 90 days of a final order.
Agency commissioners voted 4-0 to approve the proposed order. The public will be able to comment on the proposed order until March 29, after which the FTC will decide whether to make it final.
Under the proposed order, Fresenius may be required to provide transition services to the clinics being sold for up to 12 months, and must assure the doctors currently working at the clinics will remain after the clinics are sold.
Other terms include giving the new buyer the chance to interview and hire employees affiliated with the clinics it is buying, and preventing Fresenius from offering these employees incentives to decline offers to work with the new buyer.
Fresenius also would be prevented from contracting with the medical directors of the divested clinics for three years.
