State rules make it harder to open dialysis centers in Hawaii

On a Friday morning in mid-June, a series of representatives from two national dialysis companies spoke for more than two hours in a virtual Hawaii Department of Health hearing to argue the need for a new center. dialysis center in Kahului, Maui.

US Renal Care argued that the growing prevalence of end-stage kidney disease in Hawaii warrants approval of their application to open a new center, one of a series of new clinics they are opening across the country. ‘State.

Fresenius, which operates Liberty Dialysis, argued that a new center would take patients away from their existing Maui Lani dialysis clinic. This clinic channels its profits to rural dialysis clinics, so any change in its profitability could potentially threaten existing care for rural patients.

Fresenius is one of only two companies currently offering dialysis in Maui. The second is Kaiser, who did not object to US Renal Care’s request. US Renal Care is aggressively seeking to open new clinics across the state, hoping to double its dialysis centers in Hawaii by 2023.

For those involved, the Zoom audience followed a familiar cadence. Similar arguments have been made time and time again in numerous hearings, a key part of Hawaii’s health care regulations that for decades required state approval before new large health care facilities of health can be built.

US Renal Care Beretania Dialysis.
US Renal Care has aggressively entered the dialysis market in Hawaii despite longtime dominance by Fresenius, which operates Liberty Dialysis. Cory Lum/Civil Beat/2022

It’s a process called a “certificate of need” that’s common in the eastern United States. Infrastructure.

Federal policies fueled the widespread adoption of certificate of need requirements in the 1970s. But since the federal government ended its financial incentives in the 1980s, fewer states have kept them. . Hawaii is one of six western states to have such laws.

Rep. Ryan Yamane led an unsuccessful campaign to exempt dialysis centers from Hawaii’s certificate of need requirements last year. He said at the time he hoped it would improve access for patients.

“I was hearing a lot of complaints about the lack of these resources in our communities,” he said, including from a patient who couldn’t find a dialysis appointment until 11 p.m. “I thought we had a very good chance of passing the measure.”

Lots of hoops

Yamane was right to be optimistic. The measure made it through the final period of legislative negotiations and was actually slated for a final vote, when it was suddenly sent back to the conference — Hawaii’s legislative language for effectively killed.

Part of the reason was opposition from dialysis companies like Fresenius and US Renal Care. Pliny Arenas, who oversees Hawaiian Centers for Kidney Care in the United States, said he supports the certificate of need requirements because they help ensure only legitimate businesses enter the kidney care space. health.

Opening a dialysis center is not easy and requires a lot of resources, he said. Without current regulations, dialysis clinics could open, attract patients, then suddenly close because they are unprepared or unresourced for the long term.

But there is also a downside, the current system delaying the opening of new centers and facilitating the rise of monopolies and oligopolies.

The recent hearing was US Renal Care’s effort to enter the Maui dialysis market – its second attempt since its Wailuku application failed to overcome opposition from Fresenius last year. The state is expected to decide whether or not to approve Kahului’s new request by mid-July.

At a minimum, the warrant of need certificate adds several months to the process of opening a new dialysis center: 30 days for the State to examine the request, 30 days to schedule a hearing, 30 more for a decision. definitive. Sometimes the process adds years.

In 2020, US Renal Care attempted to open a clinic in Hilo, but was denied after Fresenius objected to the request.

In its ruling, the Department of Health cited Fresenius’ testimony as saying that in the face of the shortage of healthcare personnel on the island of Hawaii, the proposed clinic “would further dilute Hilo’s healthcare personnel resources and have a direct impact on the quality of health services for the entire population”. community.” In other words, because there aren’t enough health care workers in Hilo, it doesn’t make sense to open another health facility.

This reasoning came as a shock to US Renal Care, which again applied to address workforce concerns and won approval. But now the Hilo clinic that was supposed to open last summer won’t be operational until 2023.

Sometimes getting state approval is only part of the battle. When Kaiser got the green light to open its rainbow dialysis center in Maui, Fresenius sued to prevent opening of the Center.

The state’s recent approval of a new dialysis center – a joint venture between Satellite Healthcare, Queens and HMSA – prompted another legal action by Fresenius, this time against the state seeking to overturn the decision. Neither lawsuit was successful.

Kalani Pagan receives dialysis during a 5 week training on how to use the machines as RN Linda Tsui RN watches.  The process takes just under 3 hours.
Home dialysis is becoming a more popular option in Hawaii. Cory Lum/Civil Beat/2022

Health care access

The Maui app that sits before the National Health Planning and Development Agency, which is attached to the Department of Health, is yet another fight.

Jennifer Ontai, attorney for Fresenius, testified that the request should be denied because the patient’s growth is not expected for center dialysis. Instead, patients are expected to flock to home dialysis, which is becoming increasingly popular in Hawaii. She also touched on the issue of access.

“The state’s plan explicitly distinguishes between access and convenience,” Ontai said. “Therefore, the argument that more stations will be more convenient for some residents should not be considered a benefit when assessing whether the proposal actually improves accessibility.”

However, for many patients, this convenience is an important part of improving their lives despite the long hours spent filtering their blood.

“It will be ideal for all rural residents of Maui County,” Maui resident John Pahawai said of the proposed center. He has been on dialysis for 18 years.

When her father lived in Haiku in the 1980s, he drove 45 minutes to Wailuku for dialysis. When her mother was on dialysis in the 2000s, she took the same long drive. A Kahului center wouldn’t have cut that commute much, but Pahawai said the new center is something Maui residents like him have wanted for 25 years.

“When you have rural areas where you don’t have a lot of health care, you don’t want to create a lot of additional barriers to entry, especially when they’re not needed.” —Timothy Halliday

The question of whether certificate of need policies are beneficial for patients has been studied extensively, but several studies suggest that the answers are still unclear. A 2020 analysis looked at 90 need certificate program studies. The researchers’ results were mixed.

“Our cost-effectiveness analysis estimates that the costs of CON laws somewhat outweigh their benefits, although our estimates are quite uncertain,” they wrote. “The literature has not yet come to a definitive conclusion about how CON laws affect health expenditures, outcomes, or access to care.”

Timothy Halliday, a health economist at the University of Hawaii, says evidence he’s seen indicates that limiting competition in dialysis markets can make patients more likely to get transplants.

“The existing evidence for dialysis facilities shows that when you have market concentration – which you have in spades in the dialysis market in Hawaii and elsewhere – everything bad about monopolies happens,” said he declared. “Prices go up, quantities go down and quality deteriorates.”

Limit competition

More states appear to agree and are moving away from the requirement, with support from guidelines issued by the Federal Trade Commission under the Trump administration.

So far, Hawaii isn’t going in that direction — and in fact, there might be a desire to go in the opposite direction. The year before Yamane’s bill died, another proposal was briefly considered: a bill to give existing hospitals and dialysis centers the “right of first refusal” if a competitor wanted to open a new center where they operate. The measure did not last long.

But there are other options than getting rid of the need certificate requirement altogether.

The Report of the National Conference of State Legislatures that states like Maine and Oregon have exempted rural hospitals from the certification requirement, in recognition of the need for more services in rural areas. Washington also made the switch in 2020.

Georgia got rid of application fees for rural health care providers. The southern state also does not allow contestants to object to Certificate of Need applications, a law in effect since 2019.

Halliday thinks such a reform makes sense.

“When you have rural areas where you don’t have a lot of health care, you don’t want to create a lot of additional barriers to entry, especially when they’re not needed,” the economist said. the HU.

He said certificate of need laws make sense for certain facilities with specialized equipment, but competitors should have no say in determining them.

“It’s ridiculous that an incumbent has leverage over who enters their market,” he said. “These decisions should be made by an objective board, not captured by people making money in this market.”

This story was produced with the support of USC Annenberg Center for Health Journalism2022 Impact Fund for Health Equity and Health Systems Reports, and Dr. Mary Therese Perez Hattori, Civil Beat supporter.

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