How did a lifesaving medical breakthrough become a for-profit enterprise that threatens many of the people it’s meant to save?
Six decades ago, visionary doctors achieved the impossible – the kidney, acknowledged since ancient times to be as essential to life as the heart, became the first human organ to be successfully replaced with a machine.
Yet dialysis corporations that sprung up in the wake of the discovery, ambitious doctor-entrepreneurs and Beltway lobbyists soon turned this medical miracle into a money making
In his new book, How to Make a Killing: Blood, Death and Dollars in American Medicine (Norton, 2023), best-selling author Tom Mueller introduces heroic patients who risk their lives to blow the whistle on how they’ve been mistreated.
Industry insiders put their careers on the line to speak out about the endemic wrongs and
pervasive inequality they’ve witnessed.how
When a New York salesman had himself dialyzed on the floor of the House, Congress
responded by making renal disease the only major Medicare for All condition – opening the
financial floodgates for what Mueller calls “Big Dialysis.”
Mueller explores dialysis as a microcosm of American medicine. And asks – what’s the solution?
“As the Big Dialysis story proves, Medicare for All is not enough,” Mueller told Corporate Crime Reporter in an interview last week. “Once and for all, we need to get the large, for-profit corporations out of medicine.”
“When Medicare started paying for all dialysis treatment, it unleashed an enormous flow of government dollars into dialysis treatment. There were two approaches to treatment. The Seattle school and the Harvard school.”
“They took completely different approaches to treating dialysis. The Seattle school ran their operations on a non-profit basis. The Harvard operation took a different view. They were rigorously for profit. They insisted that doctors have a financial stake in their own facilities. They thought this would provide better care at lower cost.”
“Those were the two approaches – non-profit and for-profit. And needless to say they had
different outcomes. The Harvard school, which radically aligned itself with Reaganomics, rapidly
won the day throughout the healthcare world. And not just for dialysis. But dialysis was the cutting edge test case for inserting private for profit business into medical care. Previously, the
American Medical Association had forbidden for-profit medicine.”
“The ethical code actually stated that the practice of medicine should not be commercialized nor commodified. But after the Supreme Court pronounced such ethical limitations on income illicit, the AMA cut out the language about forbidding for-profit medicine.”
Who dominates the dialysis industry?
“The industry is dominated by two multinationals. Roughly eighty percent of dialysis
patients in the United States are treated by either Fresenius or DaVita. Fresenius is a German based company, and DaVita is headquartered in Denver, Colorado.”
“Over thirty percent of DaVita stock is owned by Warren Buffett. Both firms are the darlings of Wall Street and extraordinarily profitable companies. A few smaller players remain, like the non-profit Northwest Kidney Centers, the direct descendants of the Seattle school. But basically the industry is a duopoly.”
The title of your book is How to Make a Killing – Blood, Death and Dollars in American Medicine. How exactly do these companies make a killing?
“Cherry picking and lemon dropping are two euphemisms which describe the way that some healthcare companies hone in on the most profitable patients. It’s part of what has been called the fast food model of medicine.”
“Managers at such firms provide standardized treatments, minimize costs, and maximize throughput – maximize the number of patients treated. Fast food medicine was popularized by major hospital chains in the 1960s and 70s. And today it’s widely practiced in many areas of medicine.”
“Cutting costs, increasing medication, reducing treatment times, routinizing care into a kind of assembly line usually has a positive effect on a company’s cash flow and stock price. Yet these steps also have predictable effects on patient wellbeing and longevity. And Americans have somehow accepted this notion that we can somehow judge a healthcare company on the basis of its financial performance, rather than how its patients do.”
“It’s a complete cognitive disconnect. You can’t apply a fast food model to healthcare and expect positive outcomes.”
By cherry picking you mean trying to keep the most profitable patients – cherries – and by lemon dropping you mean dropping the patients who are least profitable – lemons. How do they do that?
“First let me say that the major dialysis companies strongly disagree with my analysis. They say they never cherry pick or lemon drop. But my six years of reporting has led me to different conclusions.”
“In dialysis, as in many healthcare areas, privately insured patients are far more profitable than Medicare or Medicaid patients. Companies can charge a lot more for their care – sometimes seven to ten times more than Medicare pays.”
“According to my interviews with patients and caregivers, there is a tendency to roll out the red carpet for privately insured patients. And if there is a choice between a privately insured patient and a Medicare patient getting a chair, it may well be that the privately insured patient will get the chair. That’s what’s meant by cherry picking.”
“On the other hand, if you have a patient who is unprofitable and questions their care, many patients and patient advocates have told me that patients can be threatened with a denial of care at their clinics – or actually denied care. Many report being subsequently blackballed at other nearby facilities.”
And you did reach out to the major companies. And you sent them excerpts from your book. And DaVita actually wrote you back a long and detailed denial.
“Yes, they went point by point on many of the allegations I was making, and said that they were false. That involuntary discharges, for example, were very infrequent, and were necessary due to bad patient behavior.”
“But my book paints a different picture. It presents the results of my six years of conversations with patients, dialysis workers, senior nephrologists, and others in a position to know. I state this case in my book.”
“Remember, the dialysis clinic can be a tension-filled environment. You have a lot of sick people who are getting long needles inserted into their arms. According to my reporting, many clinics are chronically short-staffed, and managed by metrics that are more about money than about patient health. In this kind of environment, any patient who isn’t a passive recipient of care – a widget on an assembly line – may come into conflict with clinic staff. They may be branded a ‘problem patient.’”
My family doctor sees dozens of patients a week. And he has a rule that any patient disrespecting his staff is given a warning – then if they do it again, they are kicked out of the practice. And he has kicked patients out of the practice.
So that’s legit. But you seem to be saying that something different is happening in the dialysis industry?
“I’m sure there are a few dialysis patients who are genuinely dangerous. Dangerous patients can and should be excluded from their clinics. But I haven’t encountered a verified case of this.”
“And the cases of involuntary discharge that I encountered in my reporting did not appear to be the fault of the patient. It’s safe to say that when financial incentives point toward focusing on the more lucrative patients, especially in a stressful work environment, interpersonal clashes can arise between patients and caregivers. And that can lead in some cases to involuntary discharge.”
If a patient is pushed out of their local treatment centers, where do they go?
“For patients who are denied care at their neighborhood facility, the only option is treatment on an emergency basis, in a local emergency room, where they typically don’t get treated unless it’s an emergency – unless they’re about to die.”
“So instead of getting three treatments a week for three plus hours or more, they get one treatment every seven days – at which point they really are on the precipice of death. I have sat with dialysis patients in emergency rooms, for hours and hours, waiting for their blood work to come back bad enough for them to be treated.”
“Robert Bear, a senior Canadian nephrologist with a lot of experience in the United States, once told me that for many patients, dialysis in an emergency room is a death sentence of six to twelve months.”
Are there any countries that do dialysis better than we do?
“Virtually every country does it better than we do it. And that’s the irony. We spend an enormous amount of healthcare dollars on dialysis, and the outcomes are extremely poor. Raymond Hakim, the former chief medical officer at Fresenius, and another distinguished nephrologist Robert Foley, published a paper in 2009, in the Journal of the American Society of Nephrology – one of the top journals in the field.”
The title of this paper was – Why is the Mortality of Dialysis Patients in the United States Much Higher Than the Rest of the World?”
“So the leaders in the field are aware of this. They are speaking out about it.”
“Personally, I find this situation very un-American. I find it very hard to stomach a situation where we are spending much more money than the rest of the world, yet the resulting outcomes are vastly worse than outcomes in other parts of the world.”
How much money are we spending?
“Each treatment can cost $250 under Medicare to ten times or more than that with private insurance. In round figures, we are talking about $50 billion dollars a year, or seven percent of all Medicare dollars – to treat a population that’s only one percent of the Medicare population.”
It has to be an embarrassment to single payer activists. Here we have a Medicare for All program that is failing. What does it say that when we try Medicare for All, it’s a mess?
“I don’t see it’s an embarrassment. It’s just being done badly and dominated by the profit motive rather than patient care. One of my interviewees, distinguished MD and healthcare policy analyst Steffie Woolhandler, told me, ‘Patient harm in a for- profit healthcare setting is highly predictable. There is not one indicator that does not suggest that we are harming patients by allowing for-profit dialysis, nursing homes, and other care. Every time that we can identify some way in which the profits of the providers could possibly get in the way of the well-being of the patients, the for-profit companies have done that.’”
“I certainly wouldn’t conclude from this that Medicare for All is a bad idea,” Mueller says. “Quite the reverse. The for-profit corporations have inserted themselves between the taxpayer and the patient. And that means that our healthcare costs a lot more than everywhere else, where those same companies are not allowed in the system. It’s not an indictment of Medicare for All. We just need to do Medicare for All right – and get the profit motive out of the equation.”
“In the book, I profile a number of economists led by Professor Ryan McDevitt at Duke. They have a dialysis data set that is second to none. And he told me that when he started studying the dialysis industry, he felt that the so-called ‘fast food’ model for dialysis was a good model – a sensible way to reduce costs and improve quality. ‘We thought we were going to find, quite frankly, that the big dialysis chains offered better care at a lower cost,’ he told me.”
“Instead, according to his research, the exact opposite was the case. When a major corporation took over a smaller facility, some very predictable things happened that were not good for patients.”
“One of the final things he said to me in my interview, speaking of himself and his co-researchers, was: ‘We started off being interested in this industry as economists. But as we did more research and peeled back the layers, we were outraged now as citizens and as human beings, at what’s going on in dialysis.’”
“Ultimately, as in any industry, a duopoly of the kind we have in dialysis that doesn’t allow for free choice isn’t good for patients. And it differs markedly from the way dialysis is practiced in other parts of the world, where, by the way, patient outcomes are significantly better.”
“I think McDevitt and Woolhandler and others I interviewed are right. America as a nation needs to confront the fact that the pure for-profit approach to healthcare produces predictable problems.”
“The for-profit, free-market mantra we’ve been taught for decades has been largely disproved in healthcare, if what you’re after is quality care at a fair price.”
[For the complete q/a format Interview with Tom Mueller, see 37 Corporate Crime Reporter 32(12), August 7, 2023, print edition only.]