El Camino pulls the plug on dialysis

Hospital closing facilities; private specialty companies take over in kidney services

Two down and one to go. El Camino Hospital recently closed its Oak Pavilion dialysis center and is slated to shut down its last dialysis center -- Rose Garden -- by the beginning of next year, ending over 20 years of outpatient dialysis services.

El Camino Hospital is following the footsteps of many other hospitals that have ditched dialysis for financial reasons. The blood-cleaning procedure, needed by people with a loss in kidney function, has lost the hospital millions of dollars each year.

According to El Camino's annual budget report, the hospital lost $4.7 million in the 2011-12 fiscal year, followed by $6.9 million the next year and $5.8 million in the fiscal year that ended June 30. The budget for the current 2014-15 fiscal year projects a lower, $2.2 million loss before the last outpatient facility finally closes in January.

The losses from dialysis hardly put a dent in the hospital's gross revenue, which increased from $2.3 billion to $2.5 billion in the same time frame. According to hospital spokeswoman Jennifer Thrift, there is a "challenging financial and competitive landscape" in the world of dialysis, and Medicare reimbursements is one of the culprits.

If a Medicare patient has kidney failure and requires dialysis services, the hospital gets a certain dollar amount reimbursed for the procedure. For example, the government might reimburse El Camino Hospital $250 for a single session of hemodialysis. If that doesn't cover the full cost, the hospital has to shoulder some of the bill.

Losing money on Medicare patients isn't unusual for hospitals like El Camino Hospital, which typically receive 86 cents in reimbursement per dollar spent on hospital care for Medicare patients, according to the American Hospital Association. But these low reimbursement rates are significant in the context of dialysis services, because over 80 percent of all dialysis patients are on Medicare.

Bay Area hospitals in particular take a bigger hit for Medicare services, in part because of the high cost of living.

Things looked even more bleak for dialysis when the Centers for Medicare and Medicaid Services (CMS) proposed a 9.4 cut to dialysis funding late last year, meaning even less revenue from those Medicare reimbursements. CMS eventually delayed the cuts, which will be phased in starting in 2016.

The "competitive landscape" that Thrift mentions refers to the handful of companies in the Bay Area that specialize in dialysis and other kidney services, and have an edge over El Camino Hospital in the dialysis market.

Hospital spokeswoman Chris Ernst said these specialty companies, like DaVita Healthcare Partners Inc. and Satellite Healthcare, are able to net more money for the same services because they don't have to deal with the overhead costs associated with being part of a big hospital.

Satellite spokeswoman Kim Hernandez said specialty companies like hers also have to deal with the same, flat dollar amount reimbursed by Medicare, but are able to cut costs and handle the lower payout better than general hospitals like El Camino.

"Because we specialize in (dialysis) we've taken measures to work more efficiently," Hernandez said.

Consequently, El Camino Hospital's dialysis centers are closing at the same time private specialty companies are opening up shop in Mountain View. Satellite Healthcare, a not-for-profit company, opened the doors to its new Mountain View location two months ago. The dialysis center is about a mile north of the recently closed Oak dialysis center, and includes a home dialysis facility.

There are also plans to build a DaVita dialysis center at 412 East El Camino Real -- the location of the long-closed Big Burger Freeze. In a phone conversation, a DaVita spokesman said the company did not want to discuss any information regarding the new facility in Mountain View.

El Camino Hospital will continue to help dialysis patients in its new, joint-venture partnership with Satellite Healthcare. According to Ernst, both El Camino and Satellite will share costs and revenue, with El Camino providing the patient base and Satellite providing the equipment and facilities. "There are many fantastic solutions for dialysis which are convenient and are specialized in dialysis treatment," Ernst said in an email.

Following the closure of Oak last April, the Voice could only find one dialysis center remaining in Mountain View -- the newly-opened Satellite location.

While the closure of three centers may seem like it would leave a big need for dialysis services here in Mountain View, that may not be the case. Two of the sites being closed down weren't in the city to begin with -- they were in San Jose.

A 2012 audit by Harvey M. Rose. Associates found that the two San Jose dialysis centers, along with El Camino's Los Gatos campus, are well beyond the boundaries of the area that El Camino Healthcare District serves. The audit goes on to say that these far-away sites do not operate for the benefit of the district and the people served by the district.

Without traffic, a drive from Mountain View to either of the two San Jose sites would take anywhere from 20 to 30 minutes. Compounded by the fact that most patients need to undergo dialysis three to four times a week, studies show that longer travel time to dialysis centers is linked to increased mortality, lower quality of life and decreased treatment adherence.

Following the closure at Oak Pavilion, El Camino Hospital plans to renovate the first floor of the building to relocate and expand the hospital's cancer center, which is currently in the Melchor Pavilion. Hospital administrators noted a growth in cancer patient volumes and an increasing need for more space than the Melchor Pavilion provides.


Like this comment
Posted by Profit in Medicine
a resident of another community
on Jul 25, 2014 at 1:51 pm

You can see the role of profit in medicine with this change. What's interesting is that the new dialysis centers are springing up on El Camino Real in prime retail land. One is already built, the Satellite Health Center on El Camino near the Phyllis/Calderon intersection, on the Phyllis side. Another is planned just across the street on the site of the former Foster's Freeze and Used Car dealership.

I am at a loss to see how this is supposed to fit in with the idea of increased density along El Camino Real. Won't it cost these centers a lot more rent to use such land for this purpose?

Like this comment
Posted by Maher
a resident of Martens-Carmelita
on Jul 25, 2014 at 2:23 pm

Yup Profit in Medicine, I agree with you.

The idiocy that profit motive improves solutions for public health needs is patently idiotic. Greed replacing not for profit services never works in any venue.

Look what has happened in any other example of this madness.

Like this comment
Posted by Ron
a resident of another community
on Jul 25, 2014 at 3:03 pm

If a service cannot financially support itself, I am curious how you two would suggest it be sustained? Are you going to pay for it?

If a hospital does not have any focus on financial self-sustainability, it leads to dependency on government and poor service. If you disagree with me on that, just look at the VA as a prime example.

There is nothing wrong with this change. If there are dialysis centers springing up all over as you claim, what is the issue? It is spawning new business opportunities and jobs. There is no issue.

Like this comment
Posted by Issues
a resident of another community
on Jul 25, 2014 at 4:11 pm

The issue is that somehow these private for profit clinics that do dialysis can either cut costs or charge more than El Camino did for the same service. Since their rental costs will be much higher, they must have found a way to work the system and to then charge more for that. On the other hand, it could be that El Camino was loading these services with overhead costs which they will still incur even when they do not perform the service. It's all an accounting shell game.

Like this comment
Posted by DrMoskowitz
a resident of Bailey Park
on Jul 26, 2014 at 9:32 am

Why not prevent 90% of kidney failure instead? It's been possible since 2002, when I published how. [Portion removed; don't promote websites for for-profit ventures.] Why you haven't heard yet that dialysis is obsolete might have something to do with its profitability: each dialysis patient brings in $100K a year for the 2-3 years they're alive. That money comes from Medicare, i.e. it comes from us taxpayers. So Americans get to keep on paying for dialysis with our lives and our treasure. Sound familiar?

Like this comment
Posted by YourRealName
a resident of Rengstorff Park
on Jul 27, 2014 at 4:04 am

"Pulls the plug on Dialysis..." was a tacky, not to mention tasteless lead-in.

Sorry, but further commenting on this topic has been closed.

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