University of Iowa Health Care dialysis deal off, per patient letter

Public-private partnership requiring $25 million transfer fails to materialize

University of Iowa Health Care complex, which houses University of Iowa Hospitals and Clinics, is seen in this photo tak
University of Iowa Health Care complex, which houses University of Iowa Hospitals and Clinics, is seen in this photo taken on Friday, April 18, 2014, in Iowa City, Iowa. (The Gazette)

IOWA CITY — University of Iowa Health Care — after spending years pursuing a private partnership for its dialysis services and last month transferring $25 million to make it happen — this week is informing patients the deal fell through.

“We previously shared that University of Iowa Hospitals and Clinics had been seeking a new partner to build a new model in dialysis care,” according to an Oct. 14 letter sent from hospital and dialysis administrators to adult and pediatric patients. “I am writing today to inform you that we have not been able to reach an agreement with the partner we were speaking with and have decided to continue our operations on our own for the time being.”

The letters, obtained by The Gazette, do not provide details about why the plan to partner with a private entity changed, when it changed, and whether the university still is pursuing some form of public-private partnership for its dialysis services.

“You will continue to have the same high-quality dialysis care by the same doctors in the same locations,” according to the letter. “All dialysis appointments will continue as scheduled.”

UI Health Care nearly two years ago issued a public call for proposals from potential partners interested in developing a business relationship with the university to “improve the management of the dialysis program in order to optimize the quality of patient care, improve operating efficiency and maintain financial stability.”

That call cultivated a climate of uncertainty among many staffers who told The Gazette they felt suspended in limbo for years as the administration provided few substantive updates either publicly or internally.

Several dialysis employees told The Gazette they applied for more stable positions within UIHC — positions in other departments for which they were qualified — but were told that while they were top candidates, human resources would not approve their transfer.


UIHC officials have not answered repeated questions from The Gazette about whether dialysis staffers were held in their jobs and prevented from transferring to other hospital positions.

UIHC dialysis patients too voiced concerns, with one traveling to a Board of Regents meeting last year to alert the hospital’s governing board of his concerns with the looming changes and the dearth of information.

Then last month, UIHC brought to regents a request to transfer $25 million to UI Health System — a separate nonprofit organization created to support UI clinical, academic, and research programs — for two opportunities, including a new private partnership for its 52-year-old dialysis program.

Through a joint venture with Innovative Renal Care — a new national dialysis company based in Nashville — UIHC hoped to grow its dialysis offerings, increase its current operational efficiency, improve its services, and ramp up revenue, UIHC Chief Executive Officer Suresh Gunasekaran told regents.

The proposed arrangement would have involved UIHC selling substantially all of its dialysis assets to a new joint venture, half owned by Innovative Renal Care and half owned by UI Health System. That new venture then would have paid $9 million to UIHC and UIHS for dialysis services, including UIHC physician direction and care.

The collaboration wouldn’t have altered where the university’s 200-some patients go for their average 30,000 annual dialysis treatments, according to Gunasekaran.

The UI dialysis program — which was founded in 1967 as one of the first in the Midwest and debuted its first dialysis facility in 1975 — 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. The dialysis program in the 2016-17 budget year provided 32,727 treatments, according to the 2017 request for partner proposals.


UIHC officials told the regents last month they were pursuing the joint venture model to ensure patients retain access to high-quality care and because currently “outpatient dialysis services are not a strategic priority,” according to board documents.

In that dialysis is a “highly competitive market” and is among the most regulated health care services, UIHC reported, “It is difficult for UI Hospitals & Clinics to succeed in dialysis due to the geographically dispersed business model.”

Collaborating with IRC would have allowed it to ensure long-term financial and operational viability, increase capacity, implement new dialysis care models, and expand geographically, according to board documents.

UIHC officials in September told regents that a conservative estimate of the financial impact of the proposed partnership would boost its operating margin by $600,000 a year. That margin now typically hovers between the break-even point and a loss of $300,000.

It also could have led to more hiring, expanding on its current 15 adult nephrologists, nine pediatric nephrologists, and three nurse practitioners.

Although the university didn’t provide specifics related to the impact on current staffers, Gunasekaran said the joint venture would offer “at-will employment to all active clinical employees of the UI dialysis program.” The venture would have maintained salary, wages, and benefits and would have made employees “whole” where it couldn’t.

UIHC officials have not answered questions from The Gazette regarding why its planned collaboration didn’t work out, when that decision was made, and what will happen with the $25 million UIHC transferred to UI Health System, in part, for the dialysis agreement.

Officials haven’t answered questions about how they plan to move forward and whether they will issue another request for partner proposals.


Representing staff member concerns, local SEIU 199 President Cathy Glasson last month told The Gazette they take issue with the idea of outsourcing public services.

“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,” she said, reiterating harm the process caused to employee morale and said it prompted some to quit.

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