Dialysis Privatization

The Best Healthcare Money Can Buy

  • Why it matters

    Why it matters

    • Physicians fear the growing number of international companies buying German dialysis firms will threaten their profession and are responding with a defense strategy.
  • Facts


    • Until recently, more than 2,000 dialysis practices and two nonprofits dominated the German dialysis healthcare landscape.
    • Since 2013, purchases by international companies in the industry have increased.
    • Due to uncertainty in the industry, in the past 20 years many doctors have chosen to become salaried than to establish their own practice.
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A dialysis machine source Fresenius

Dialysis machines act as an artificial kidney. Source: Fresenius



In Germany, the market for dialysis is changing – and it’s causing concern among thousands of doctors across the country.

Multinational companies are moving into the market and while the deal sizes may not be dramatic, there are significant implications for the care of kidney failure in Germany. Doctors fear that the new companies will buy up practices, pushing out independent nephrologists.

Until recently, Germany’s dialysis market was relatively stable, worth €2 billion, and dominated by 2,000 practicing nephrologists and two nonprofit organizations.

Now, though, more and more international companies are operating dialysis companies in the German market. There’s so much new competition that independent nephrologists are being forced to band together to fend off the attack.

There are plenty of examples of this new internationalization of the profession. Recently DaVita, a private dialysis company from the United States, bought several dialysis centers in Lower Saxony, raising its number of centers from five to 40.

“Uncertainty about the future in the market is large.”

Thomas Weinrich, Director at the Association of German Kidney Centers

A few weeks ago, the Germany-based multinational Fresenius Medical Care and its subsidiary Nephrocare received the green light from the cartel authorities to buy four dialysis centers south of Hamburg, a move that brought their total to 48 centers.

Last month, competitors B. Braun bought Dialyse-Trainings-Zentren, or DTZ, in Bavaria and doubled the number of their facilities in Germany to 30. The Swedish group Diaverum, involved in the private equity firm Bridgepoint, is also in talks to expand on its 20 locations through acquisitions.

“We offer both products and treatments for patients on dialysis and have the right, as comprehensively as possible, to contribute in all markets to better care for patients. This is also true for our home market in Germany,” said Dominik Wehner, Fresenius Medical Care’s chief executive for the European, Middle East and African regions.

In practice, that means changes to the way the medical care centers work: The companies’ medical care centers are a kind of outpatient group practice, like a limited liability company with salaried doctors.

For many practicing nephrologists, these purchases of major operators by corporations feels like an attack on their profession. They worry these expanding companies with their economies of scale could push independent nephrologists out of the market.

“We are trying to prevent the individual practices from selling to big business,” said Peter Kranzbuhler, counsel at the Association of German Kidney Centers.

In response, the association founded Dialaid, a company to help dialysis practice owners find successors or nephrologists looking to purchase a practice.

Mr. Kranzbühler, who is also chief executive of Dialaid, wouldn’t exclude the purchase of practices to prevent the entry of corporate dialysis companies, he told Handelsblatt.

In Germany, there are about 50,000 patients who depend on dialysis throughout the year because their own kidneys no longer work. The annual cost per patient is estimated at about €40,000.

Acquisitions across the industry have increased since 2013. At the time, compensation for nephrologists was significantly reduced. Just their material costs allowance was reduced by 23 percent. “This hit many practices hard,” said physician Thomas Weinrich, director at the Association of German Kidney Centers. Further cuts may be ahead.

“There’s a lot of uncertainty about the market’s future. Nobody is investing a lot of money buying a practice, if it isn’t clear whether it can stay afloat,” Mr. Weinrich said.

Currently, shares of private dialysis providers in the German market are estimated at around 10 percent, twice as much as five years ago.

Lawyer Oliver Klöck of the law firm Taylor Wessing assumes that the proportion of dialysis chains will continue to grow in the future. That’s because the recently adopted Supply Enhancement Act allows a medical care center to operate with only one specialty subject area instead of previously needing at least two.

“This simplifies the creation of [medical care centers] and the transformation of medical practices into [centers], because no other specialization needs to be added,” said Mr. Klöck, who counts DaVita among his clients.

Because many established nephrologists are close to retirement age, they’re looking for their successors. But many young doctors are no longer interested in their own practice. They don’t want to borrow heavily and be on-call around the clock and instead would rather work as employees. In the last 20 years, the number of salaried physicians has increased five-fold in the outpatient setting, according to current medical industry statistics.


Checking dialysis machines are working source Fresenius
Checking up on the dialysis machines. Source: Fresenius


This makes it harder for doctors who want to sell their practice to find a successor. That’s what makes dialysis companies, who are interested in buying the practices, seem like an attractive solution.

The larger companies do not want to be perceived as invaders in this scenario.  “We see the doctors as our most important partners,” said Ulf Völkel, chief executive of DaVita Germany. “We provide the capital for investment, and our doctors are involved as a partner or as salaried physicians in all major decisions,” he added.

Arne Werthmann, who is in charge of the dialysis centers of the family group B. Braun, also sees the model as advantageous for physicians: “In our centers, we give relief to the doctors and nurses, by enabling them to focus on what is really important: the patient care. This means that we take care of all the administration, including management, procurement, payroll or recruitment.”

For manufacturers of dialysis machines and related products, such as Fresenius Medical Care and B. Braun, expanding into the area of ​​dialysis services is part of their growth strategy. In contrast to the manufacturers themselves, DaVita and Diaverum focus exclusively on dialysis services and consciously position themselves as product-independent.

The large, nonprofit Kuratorium für Dialyse (KfH), an association of nephrologists, does not see a problem with the growing private competition in the dialysis market, according to its chief executive Dieter Bach. A diversity in operators could give the market new energy, he said.

Mr. Bach sees the development as an incentive to position itself as a nonprofit provider of more than just dialysis, with more counseling, for example, about how patients can live better lives and handle the economic challenges of their illness.


Maike Telgheder covers the health economy, pharmaceutical companies and chemistry for the paper. To contact the author:  telgheder@handelsblatt.com.

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