Dr. William J. Kolff, who collaborated with Dr. Robert Jarvik to build the first artificial heart, also pioneered the kidney dialysis process. Working in the Netherlands during World War II, Dr. Kolff’s first dialysis machine was, by modern standards, a ghastly contraption. The machine pumped a salt water solution through tubes made of sausage casing to cleanse the blood of kidney patients. The first 15 people who used Dr. Kolff’s artificial kidney died. (They would have died anyway; at the time, End Stage Renal Disease was untreatable and invariably fatal).
By the late 1940s, Dr. Kolff had racked up some successes, even using this rudimentary machine. One patient lived for 7 years on this primitive dialysis treatment. Mount Sinai Hospital in New York soon became the locus for the development of dialysis technologies and processes. For 20 years, dialysis remained a relatively obscure, highly specialized treatment.
The father of dialysis commercialization, Dr. Constantine “Gus” Hampers, started a for-profit dialysis clinic out of his home. Dr. Hampers was not just a Harvard Medical School professor in nephrology; he was also a steely-eyed businessman, who took his company public just three years after it opened and forged the values of profitability and cost cutting into the business’s DNA. (Decades later, Dr. Hampers’ company — National Medical Care (NMC) — would be subsumed by the titanic German corporation, Fresenius.)
The first dialysis treatments were incredibly expensive. Only wealthy patients could afford them. In 1972, Congress modified the Medicare program to extend coverage to patients who needed services to treat their End State Renal Disease.
Historical estimates from the early 1970s suggest that, at that time, nearly a quarter of a million patients needed routine dialysis treatment. Prior to the Medicare coverage law amendment, only around 10,000 people were getting routine dialysis. Thus, this slight alteration to the law effectively increased the pool of prospective dialysis “customers” by more than 20 times.
National Medical Care was there to pounce on this new business opportunity. Dr. Hampers and his company took full advantage of the Medicare subsidy. Flushed with millions in federal dollars, they grew National Medical Care into a giant company.
As NMC and other dialysis companies fought for access to this large and growing patient population, the race for profits led to brutal business tactics. Until 1995, for instance, NMC tied doctors’ compensation packages to clinic costs. The thriftier the clinic, the bigger bonus its doctors would get. Other common spendthrift practices at NMC/Fresenius included:
- Limiting how long patients could go on dialysis — despite clinical evidence suggesting that cutting dialysis treatments short could increase mortality risks;
- Using old and badly maintained technologies;
- Making and selling dialysis equipment that failed to meet federal standards;
- Inappropriately recycling and reusing equipment — and thus exposing some patients and technicians to infection and contamination;
- Increasing reliance on non-medical staff (who are cheaper).
The next post will examine some awful (but real) Fresenius horror stories.
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