For-profit dialysis proposal draws opposition in NY

For-profit dialysis proposal draws opposition
Publicly traded firms, now banned from running medical centers, are looking to move into New York

By ALAN WECHSLER, Business writer

First published: Wednesday, June 20, 2007

TROY -- Advocates of two bills in the state Legislature that would let for-profit dialysis centers into New York say the idea is to meet the needs of a rising population.

But at least one local provider of the treatment for kidney failure says the bills could put him out of business if they're passed.

Wayne Evancoe, chief executive officer of the Rubin Dialysis Centers -- which operates in Troy, Clifton Park and Saratoga Springs -- said it would be unfair to let large for-profit companies set up shop in the state without giving him a few years to get prepared.

"It's a change of the ground rules, and nobody's had a discussion," he said.

Evancoe said his company has been doing business for 20 years with the understanding that Article 28 -- the rules that regulate medical services in New York -- prohibit publicly traded companies from running hospitals or other health care centers.

The bills are being encouraged by the state Department of Health, where officials are concerned about the rising population of end-stage renal failure patients. The disease, often the result of diabetes, requires patients to have their blood treated several times a week by a dialysis machine to remove the toxins that normally are removed by the kidneys.

The number of kidney-failure patients in the state is rising: up from 20,690 in 2001 to 23,073 in 2006, according to the End-Stage Renal Disease Network of New York, a Long Island-based group. But rapidly rising diabetes rates in New York are expected to cause the numbers to increase even more in coming years.

According to the Health Department, 231 dialysis centers currently operate in the state.

The Healthcare Association of New York State, a trade group in East Greenbush that represents hospitals, also opposes the bills.

"Right now, Article 28 prohibits for-profit medicine," said spokesman Bill Van Slyke. "We think opening that door is a slippery slope. There are other ways to allow firms like this to come in and provide those services."

If passed, the bills would benefit companies like Fresenius Medical Care North America Inc. of Waltham, Mass. It's a branch of Fresenius AG of Germany, which had worldwide sales of about $9.3 billion last year, according to Hoovers.com.

Fresenius already operates in the Capital Region through a "representative governance arrangement" that allows a handful of local centers to subcontract to Fresenius. The company did not return a call seeking comment.

Rubin's Evancoe said the changes would allow companies like Fresenius to set up their own centers without local ownership. The company has a competitive advantage not just because of its size, but also because it is vertically integrated -- it makes machines, fluids and other equipment needed for treatment, he said.

A second public company, DaVita Inc. of El Segundo, Calif. also is interested in coming into New York, Evancoe said. Officials from DaVita, which had sales last year of $4.9 billion, did not return calls.

The Rubin centers have 115 employees and about 310 patients. Evancoe said he is not completely opposed to letting the firms into New York. He just wants time to get ready.

"We've invested all this infrastructure based on the protections of Article 28," he said. "If you're going to take that away, give us a five- to eight-year horizon to change our structure."

Alan Wechsler can be reached at 454-5469 or by e-mail at awechsler@timesunion.com.

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