Capitol Alert

More than $40 million raised for fight over California dialysis profits and patients

Dialysis clinics and unions have reported collecting more than $40 million for a fight over Proposition 8, a statewide ballot measure that would limit profits for dialysis companies.

The proposition cap dialysis clinic profits at 15 percent and would require the clinics who have higher profit margins to pay rebates to insurance companies or face fines. The clinics would also need to annually report financial information such as costs, revenue and patient charges to the state.

The proposition is heavily backed by Service Employees International Union-United Healthcare Workers West. The union reported more than $17 million to support the proposition, putting in $11 million a week ago in a last-ditch effort to find support for the bill.

SEIU-UHW argues that the proposition would encourage clinics to spend more on investing in services and health care improvements rather than high executive compensation, since revenue spent on health care improvements would not be limited. They say clinics would instead spend money on the salaries and benefits of clinic workers, training, supplies, utilities and patient education.

California’s two largest dialysis corporations, DaVita and Fresenius Medical Care, earned $3.9 billion in profits from dialysis operations in 2016.

The proposition faces intense opposition from dialysis clinics, including Davita and Fresenius, which reported $27 million in total to campaign against the proposition.

The measure’s opponents argue that the bill’s language is too specific, leaving managerial staff salaries out of the group of expenses that could be counted as reasonable spending.

Kathy Fairbanks, a spokeswoman for opponents of the dialysis measure, said that the proposition was just SEIU-UHW’s latest effort to attract dialysis workers, who are largely non-union.

“The initiative is sort of a bargaining chip,” Fairbanks said. “In the past, when they’ve used initiatives to target various hospitals, they’ve put in propositions that would take a strong financial bite out of hospitals and dialysis clinics. It’s is a tool they were using for their organizing efforts, and now it’s an initiative that will put patients in harm’s way.”

Dialysis clinics argue that the measure would dangerously limit access to dialysis care across the state, and that the requirement that dialysis clinics issue rebates if their fees exceed 115 percent of patient care service costs sets an artificially low limit that would force clinic closures.

“The measure will end up forcing dialysis clinics to shut down because it changes the way that private insurance payments are made to the dialysis companies,” Fairbanks said. “It limits what they have to pay for reimbursing dialysis treatments. If you can’t cover your costs, you can’t run a business.”

The union has pushed a number of bills in recent years targeting dialysis companies, which are largely non-union, saying that dialysis companies prioritize profits over patients.

“Our goal here is not to destroy the industry,” SEIU-UHW spokesman Steve Trossman said. “It’s to put a cap on these out of control profits that are way out of proportion to what they should be, and to do something that will push these companies to improve conditions in the clinics. That’s what this is about for us, and we think this initiative will do that. We may need adjusting on the back-end, but the language is set up so those adjustments can be made. “

“This is right out of the fear-monger playbook, ” he added. “Anytime anybody does anything, that’s the first thing they say.”