Part 5: How can we increase home dialysis utilization?
Some potential solutions to overcome home dialysis' biggest obstacles
Let’s jump into the discussion about improving home dialysis utilization. If you haven’t, I recommend reading Part 4 to better understand the business and operational side!
Historical context[1]
As discussed, CMS reimburses for dialysis using a ‘bundled’ rate (i.e., $257.90 in 2022), meaning providers receive the same payment regardless how much pharmaceuticals, supplies, etc. are used. Before 2011, CMS allowed dialysis providers to bill for certain elements of treatment separately, and some separately billable medications (most notably erythropoiesis-stimulating agents, or ESAs) were especially profitable. Moving to a bundled payment removed the incentive to use separately billable medications as a revenue stream and instead created an incentive to reduce utilization of these medications.
As it turns out, home dialysis patients generally received lower doses of ESAs, so home dialysis went from losing providers money since its patients were less likely to require ESAs to becoming more economical since it reduced ESA utilization. As a result, home dialysis utilization (i.e., (PD Patients + HHD Patients) / Total Dialysis Patients) has been 10%+ since 2011 and was 13.86% in 2020.
Chart 1: Home dialysis utilization since 2004[2]
Looking towards the future, some executives think 40-50% utilization for home dialysis is feasible while experts think 25-35% is more realistic[3]. Either way, we have far to go.
Obstacles
To me, home dialysis obstacles fall into one of two categories: 1) systemic and 2) fixable. Systemic obstacles are barriers faced due to the nature of incumbents and/or existing policies. Addressing systemic obstacles is often out of the businessperson’s control. Fixable obstacles are more defined in-scope and could realistically be solved with new solutions.
Systemic Obstacle 1: The Brick & Mortar Business Model
Dialysis providers’ brick-and-mortar business model leads to a fixed cost structure where costs (staff, overhead, etc.) do not change based on patient volume. Thus, the additional cost incurred for a single dialysis treatment, also known as the marginal cost, is only the supplies.
As alluded to in Part 4, some DaVita and Fresenius clinics have stood up “home dialysis units” (HDUs) with nurses and other staff solely focused on home dialysis. Like the brick-and-mortar business, since HDU staff is full-time and salaried, there is no marginal labor cost of managing a home dialysis patient.
However, not all clinics have enough home dialysis patients to justify HDUs and/or enough capital to employ staff wholly dedicated to home dialysis. Without HDUs, marginal labor cost is incurred as the time spent performing home dialysis-related activities comes at the expense of time in the clinic.
Chart 2: In-clinic vs. home dialysis cost driver breakdown
In these instances, I view the marginal labor cost as the lost revenue from removing the nurse from the clinic. Assuming a nurse-to-patient staffing ratio of 1:8 (as proposed in this 2018 article), for every hour outside the clinic, a nurse misses 8 patient hours. Thus, if a nurse spends 30 hours training a single home dialysis patient (i.e., 10 sessions for 3 hours each as Part 4 described), they miss 240 patient hours total, equating to $20K+ in lost revenue assuming the clinic can’t replace the nurse (Row H below).
Chart 3: Home dialysis marginal cost vs. marginal benefit
Ultimately, I believe the brick-and-mortar business model makes home dialysis more challenging due to this lost revenue on the margin and is further compounded by the fact that providers also need to pay back their investments in physical clinics.
Systemic Obstacle 2: Unfavorable Policies
Nurse-Led Trainings: The interpretation is that nurses must deliver all aspects of home dialysis training despite other staff (e.g., technicians) having the necessary skills[4]. To understand the economic implications, I performed the same analysis as above, but assumed training was performed by a dialysis technician with a staffing ratio of 1:3 (also proposed in the 2018 article). Note that marginal benefit (Row I) increases since the technician-performed training reduces home dialysis variable cost by ~$5 (see calculation here).
Chart 4: Marginal cost of nurse vs. dialysis technician
Business-wise, based on Row J, though it fails to generate a positive net benefit in this scenario, allowing non-nurse staff to perform training does substantially reduce marginal costs. However, despite the savings, some groups believe this approach comprises care.
TPNIES: This payment (discussed in Part 4) aims to incentivize the use of innovative equipment for both in-clinic and home dialysis. However, CMS has been very strict about the equipment eligible for TPNIES. All three products under consideration for 2023 were denied[5], and to-date, a PD machine has not been approved.
The payment also does not provide adequate incentive to invest in new equipment. Row I below illustrates how the incremental benefit provided by TPNIES for using more innovative, expensive equipment fails to offset the incremental costs of said equipment over its useful life.
Chart 5: TPNIES cost-benefit analysis
Fixable Obstacle 1: Nephrologist Education
Some believe academic programs do not adequately train or test nephrologists on home dialysis benefits, and as a result, nephrologists do not prescribe home dialysis nor educate patients on home dialysis to the extent they could/should. Fresenius claimed to observe that only 30-40% of nephrologists “develop substantive and practical experience with home dialysis modalities during their fellowship training”[6]. Thus, getting more nephrologists to steer patients to home dialysis requires overcoming a historical reluctance to do so on top of a lack of understanding of its benefits.
Fixable Obstacle 2: Patient Adoption
I found the following to be biggest impediments to patient adoption of home dialysis:
Education: Patients may not know home dialysis is an option, may not understand its benefits, or may find it overwhelming. Medicare covers “pre-dialysis education” but only 2% of patients utilize the benefit[7].
Time: Patients reject the idea once they hear it requires dialyzing six nights a week compared to three sessions per week in the clinic.
Training: Patients may lack the time and motivation required to be properly trained for home dialysis (i.e., 30+ hours). Trainings could also be far from the patients’ home.
Doubt: Patients may question their own and/or their caregivers’ ability to learn, manage, troubleshoot, etc. the dialysis process without professional support.
Social Element: For many, going to the clinic is an opportunity to socialize or commiserate with other ESRD patients.
Infrastructure: Patients may lack capital required to meet infrastructure requirements (e.g., costs of increased water usage) or their homes may lack access to water supply and/or space for storing dialysis equipment and supplies[8].
Caregiver: Patients may not have a caregiver that can provide ongoing support during training and dialyzing.
Fixable Obstacle 3: Operational Requirements
Part 4 outlined dialysis providers’ home dialysis responsibilities. Many are unique to home dialysis and do not gain efficiencies from being offered alongside in-clinic dialysis, but recur frequently enough that providers could justify carving out HDUs to execute these activities. However, without an HDU built natively to support home dialysis, clinics attempting to deliver home dialysis are stuck trying to execute activities that the systems and processes of their in-clinic business were not built to support.
Chart 6: Operational activities unique to home dialysis
Solutions
Solution 1: Policy Changes
Reform Existing Policies:
Non-Nurse Led Trainings: There is an opportunity to make home dialysis less costly to dialysis providers without HDUs by letting dialysis technicians or equipment manufacturers run trainings, thereby keeping nurses in the clinic. The nurse would still sign off on patients’ “readiness” but need not be present for the entire training process. Chart 4 illustrates how the economics are imperfect, so I view this more as an incremental step forward.
More Flexible & Profitable TPNIES: More home dialysis equipment (e.g., PD cycler, monitoring system, etc.) needs to become eligible for TPNIES and at the very least, the calculation methodology should be adjusted so that the incremental benefit per-treatment of a new machine outweighs its per-treatment cost.
Consider New Policies:
Alternative Payment Models: The ESRD Treatment Choices (ETC) Model is attempting to increase utilization by providing additional payment/penalty based on home dialysis utilization relative to benchmarks. The ETC Model is a 6.5-year mandatory program where CMMI randomly selected 30% of clinics to participate. Maybe it’s working? In Q1 2022, home dialysis utilization for newly diagnosed ESRD patients with ETC model dialysis providers was 14.82% compared to 14.19% for non-ETC providers[9]!
I am also interested in new payment models addressing fixable obstacles more directly:
Include a quality bonus-esque payment to dialysis providers for educating a certain number of nephrologists and patients above a benchmark amount
Pay referring nephrologists a PMPM for every patient they steer to and keep on home dialysis. Another nephrologist, likely the clinic’s medical director, would need to formally approve the patient for home dialysis to avoid manipulation of the policy
Make payers reimburse patients for infrastructure costs like equipment install, water, electricity, etc. or other costs needed to modify the home for dialysis (HHD in particular). Some infrastructure costs are covered in other countries (e.g., Germany, New Zealand)[10]
Solution 2: Education Programs
We need to invest in better educating both nephrologists and patients on home dialysis.
Nephrologists: Fresenius has begun to do this[11], launching a Physician Home Dialysis Champion Program to educate nephrologists. The American Society of Nephrology is also pushing for greater emphasis on home dialysis during fellowships.
Patients: Patients receiving ESRD diagnoses after hospital stays (Type 2 patients from Part 2) may be placed into transitional care units (TCUs) in clinics where they undergo a specialized training program about transplantation access, dialysis modalities, etc. Fresenius has led TCU adoption and claims 60% of its TCU patients went on home dialysis[12].
Scaling home dialysis champion programs and/or TCUs may help but getting dialysis providers to make these investments remains challenging. That is why I believe we need to compensate them for the outcome (Alternative Payment Model #1 above) and make it easier to offer home dialysis (Solution 3 below)!
Solution 3: Home Dialysis Enablement
Building an HDU requires investing in new people, processes, and capabilities, and justifying this investment is challenging since home dialysis demand is unpredictable. I believe there is an opportunity to de-risk the investment by offering tools dialysis providers can buy (rather than build from scratch) to set-up and scale an HDU more cheaply and efficiently. For example, what if there was a platform that, out-of-the-box, could handle all home dialysis-related administrative tasks, set-up remote patient monitoring infrastructure, and manage/track supplies and equipment inventory? Enablement solutions like this also increase the likelihood a non-traditional dialysis provider, such as a long-term care or rehabilitation facility, enters the space.
Parting shot
Overall, I view home dialysis utilization as both a policy and business issue. Someday, I hope competitive forces will naturally increase home dialysis utilization, but until then, increasing utilization may depend on policymakers’ willingness to strategically spend more on ESRD and new businesses’ ability to help make home dialysis easier for clinics of all sizes to deliver.
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Links to: Sources | Graphics (PPT) | Analysis (Excel)
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