Education

Deal could expand University of Iowa dialysis services

Venture wouldn't change locations for the current patients

Suresh Gunasekaran, chief executive officer of the University of Iowa Hospitals and Clinics, smiles Dec. 3, 2018, as he listens to a question during an interview. (The Gazette)
Suresh Gunasekaran, chief executive officer of the University of Iowa Hospitals and Clinics, smiles Dec. 3, 2018, as he listens to a question during an interview. (The Gazette)

COUNCIL BLUFFS — After years of contemplating a move to outsource its dialysis operations, University of Iowa Health Care is closer to enacting big changes to its 44-year-old program that would include partnering with a company to run and expand the treatment services.

The Board of Regents, meeting this week in Council Bluffs, on Wednesday approved a UIHC transfer of $25 million to UI Health System — which the institution created to support clinical, academic and research programs — for two new opportunities.

One of those involves creating a joint venture to provide dialysis services to UIHC outpatients and inpatients. In considering a partnership with Innovative Renal Care — a new national dialysis company — UIHC hopes to grow its dialysis offerings, increase the efficiency of its current operation, improve its services and ramp up revenue, UIHC Chief Executive Officer Suresh Gunasekaran told regents Wednesday.

“What we really like about their approach is that several members of their senior leadership team come from academic medical centers, so they understand the value of treating all patient populations,” Gunasekaran said.

Although a collaboration deal isn’t guaranteed, Gunasekaran said a partnership wouldn’t alter where its 200-some patients go for the 30,000 annual dialysis treatments they receive.

Debuting its first dialysis facility in 1975, UIHC today operates five adult outpatient facilities and one pediatric program in Iowa City, Grinnell, Muscatine, North Liberty and Washington. Its programming includes hemodialysis, home dialysis, inpatient dialysis and research.

By collaborating with Innovative Renal Care, the university would expect to increase its capacity “to more nimbly implement new dialysis care models and modalities across a wider geographic breadth, while maintaining a strong connection to the academic center.”

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The partnership could mean not only growth in patient services but also in physical space. And it could lead to more hiring, expanding on the current 15 adult nephrologists, nine pediatric nephrologists and three nurse practitioners it currently employees.

If the university moves forward, Gunasekaran said, the new joint venture would offer “at-will employment to all active clinical employees of the UI dialysis programs.” The venture would keep total compensation for all transitioning employees — including base salary, wages and benefits — on par with current levels. Where it couldn’t in terms of retirement offerings, Gunasekaran said, employees would be “made whole.”

But staffers have concerns, said union chapter President Cathy Glasson. She said colleagues take issue with the idea of outsourcing public services to private companies.

“The ultimate problem is that the employees who are directly affected by this change were not at the table while these decisions were being discussed,” Glasson said.

It hurt morale and prompted some workers to quit and then ask to be rehired in another area of the hospital rather than “risking significant and unknown employment with an unknown and for-profit dialysis company,” she said.

Gunasekaran said he’s heard those concerns and is working with staff to answer questions.

“There is a lot of fear of the unknown — especially because the process is taking so long,” he said. “We’ve had a lot of staff meetings. We’ve had a lot of communication. But still people are very concerned.”

Under terms of the proposed arrangement, UIHC would sell its dialysis assets to the newly-created joint venture, which would be half owned by UI Health System and half owned by the company. The joint venture would pay $9 million to UIHC and UI Health System — $4.5 million in cash to UIHC and the other half in equity to UI Health System.

Officials told regents that a conservative estimate of the financial impact boosts its operating margin by $600,000 annually. That margin now typically hovers between the break-even point and a loss of $300,000.

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Five-year financial projections are expected to improve with projected volume increases of 4 percent a year.

The goal of the partnership is to expand existing services and hours, grow the current home dialysis program, extend the UIHC’s geographical footprint and explore new partnership opportunities with independent dialysis clinics, nephrologists and community hospitals.

Because negotiations are ongoing, Gunasekaran said he can’t yet say what portion of the transferred $25 million will go toward the dialysis partnership and what portion will go toward another new proposed collaboration — establishing an inpatient rehabilitation hospital to serve communities around Johnson County.

Hospital officials provided few details about that proposed partnership with Encompass Health to provide “vitally needed services to address currently under met needs.”

“It begs the question, and the answer is yes, we are looking at adding capacity,” UI President Bruce Harreld said.

Comments: (319) 339-3158; vanessa.miller@thegazette.com

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