Fletcher Allen Drops Plan To Sell Outpatient Dialysis Units

12/19/11 5:50PM By John Dillon
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AP/Toby Talbot
Fletcher Allen has given up its plan to sell its outpatient dialysis clinics.
(Host) Vermont's largest hospital has dropped its plan to sell its outpatient dialysis clinics after state regulators said the sale would not improve care or hold down costs.

Fletcher Allen Health Care in Burlington says it may need to charge more for dialysis services now that the sale is cancelled.

VPR's John Dillon has more:

(Dillon) Fletcher Allen's plan to sell off its five outpatient dialysis clinics to a for-profit company ran into strong opposition from the Shumlin administration.

Steve Kimbell is the commissioner of Banking, Insurance, Securities and Health Care Administration. In early December, Kimbell released a detailed, 28-page document recommending that the sale be rejected.

(Kimbell) "There were a lot of reasons that we found why we couldn't grant the application. But primarily it was two things: that it would not reduce costs and it would not improve quality to make this transaction."

(Dillon) Dr. John Brumsted is interim CEO of Fletcher Allen.

He disagrees with many aspects of Kimbell's proposed decision, but says the hospital won't file an appeal.

(Brumsted) "We certainly hope the next step is a meeting between folks at Fletcher Allen and the commissioner and his team, because we all want the same thing. We all want access to high quality dialysis services for Vermonters. And I really believe that in Vermont we solve these types of problems by sitting down and discussing them."

(Dillon) The application to buy the five clinics for $26 million was withdrawn by Bio-Medical Applications, a subsidiary of Fresenius (Freh-Sin-ee-us) Medical Care Holdings.

Kimbell says Fresenius can re-apply at any time since it withdrew the application voluntarily before the state reached a final decision. If the state had formally rejected the Fresenius bid, it would have to wait a year before re-applying.

The commissioner says it is unusual for the state to deny an application from health care providers. The process is called a certificate of need, or CON, review.

(Kimbell) "CON denials are exceedingly rare. We looked back. I think the last one that was denied was more than 10 years ago. I suspect that's partly because most applicants do a lot of spadework ahead of time and if they think it's not going to fly they don't apply."

(Dillon) Brumsted says Fletcher Allen now wants a chance to have that kind of discussion with regulators about the need to raise dialysis charges to cover its costs.

(Brumsted) "For this particular service it's inevitable that the reimbursements are going to have to go up because it's not sustainable in its current structure."

(Dillon) But Brumsted says 90 percent of the reimbursements for the dialysis care program come from the federal Medicare program. So he says while the hospital may be able to increase rates on the remaining 10 percent, that won't solve the underlying revenue problem.

For VPR News, I'm John Dillon in Montpelier


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