More business, more competition for Everett kidney dialysis center

Published 1:30 am Wednesday, October 18, 2017

Surging demand for kidney dialysis has put Harold Kelly in a bit of a bind.

On one hand, business is booming. Puget Sound Kidney Centers, the Everett-based nonprofit Kelly leads as president and CEO, has grown from one treatment center to six since he took the reins in 2000. A seventh center is planned soon for Lakewood in Pierce County.

On the other hand, the surge is attracting sharks. Large, for-profit competitors — most notably Colorado-based DaVita Inc. and German conglomerate Fresenius Medical Care — are sweeping into the state as they vie for shares of the $19 billion U.S. kidney dialysis pie.

Kelly refers to them as “market pressures.” He’s responding the best way he knows: by doubling down on quality and service.

“I thought marketing for dialysis was kind of icky,” Kelly said. “If you need kidney dialysis, we’re the first place you’d want to be. If you don’t, we’re the last.”

When his mother underwent dialysis, Kelly hated the clinical atmosphere of her treatment center.

He vowed to differentiate Puget Sound Kidney Center from the start, designing centers with natural woods, natural light, and atriums.

Each center offers free education classes for kidney patients, as well as social services and nutritional counseling. Funding comes primarily through its foundation, a separate nonprofit established in 2011.

“We spend our money on buildings and patient care,” Kelly said. “I’ve had doctors tell me our centers are like resorts.”

The 18,200-square-foot Lakewood center, set to open in January 2019, is the most expensive yet: more than $9 million. It will start with 24 dialysis treatment stations, then expand to 29.

It also marks the first venture for Puget Sound Kidney Centers outside the north Puget Sound area.

Other centers are located in Anacortes, Everett, Monroe, Mountlake Terrace, Arlington and Oak Harbor.

“We want to continue to answer the call, wherever there is a need for more dialysis centers in other parts of the state,” Kelly said. “We would consider expanding outside the state if there is compelling need.”

Though Washington ranks among the lowest states in the country for kidney failure, with about 775 dialysis patients per million people, kidney disease has been on the rise nation wide.

At the end of 2014, there were 678,383 U.S. dialysis and transplant patients receiving treatment for end-stage kidney disease, a 3.5 percent increase from 2013, according to the latest data from the U.S. Renal Data System.

Hypertension and diabetes are the leading causes of kidney trouble. Patients diagnosed with end-stage kidney disease face two options: a transplant or dialysis.

Dialysis treatment typically lasts four to five hours, three or four days a week. It costs more than $80k a year.

Until a few years ago, Puget Sound Kidney Centers and NW Kidney Centers, a King County nonprofit, were the only options for local dialysis patients.

DaVita arrived in 2009, followed shortly by Fresenius. DaVita has since purchased The Everett Clinic.

Together, the two for-profit companies control about 70 percent of the U.S. kidney dialysis market, with 3,900 dialysis treatment locations nation wide.

Doctors are prohibited from steering patients toward one type of center over another, but as the market consolidates, there are worries some physicians will feel subtle pressure — especially if their workplace is owned by a health care provider that also owns dialysis centers.

“Our region is changing,” said Dr. Suhail Ahmad, a retired Seattle nephrologist who tracks the quality of dialysis care. There is nothing wrong with profit, but vertical integration is troubling.

“When larger units begin buying smaller units, it reduces competition,” Ahmad said. “If you reduce competition, there’s not much incentive to control quality.”

This is where PSKC aims to carve a niche.

“We are a proud nonprofit,” Kelly said. “Seeing my mother receive dialysis has always motivated me to make sure every patient is treated like someone’s mom, dad, son, daughter, brother, or sister.

“PSKC’s focus is on providing the highest quality patient care possible, not the market. Our quality will dictate our long-term survival. Of that, I am sure.”