Predictors of chain acquisition among independent dialysis facilities.

OBJECTIVE

To determine the predictors of chain acquisition among independent dialysis providers.

DATA SOURCES

Retrospective facility-level data combined from CMS Cost Reports, Medical Evidence Forms, Annual Facility Surveys, and claims for 1996-2003.

STUDY DESIGN

Independent dialysis facilities' probability of acquisition by a dialysis chain (overall and by chain size) was estimated using a discrete time hazard rate model, controlling for financial and clinical performance, practice patterns, market factors, and other facility characteristics.

DATA COLLECTION

The sample includes all U.S. freestanding dialysis facilities that report not being chain affiliated for at least 1 year between 1997 and 2003.

PRINCIPAL FINDINGS

Above-average costs and better quality outcomes are significant determinants of dialysis chain acquisition. Facilities in larger markets were more likely to be acquired by a chain. Furthermore, small dialysis chains have different acquisition strategies than large chains.

CONCLUSIONS

Dialysis chains appear to employ a mix of turn-around and cream-skimming strategies. Poor financial health is a predictor of chain acquisition as in other health care sectors, but the increased likelihood of chain acquisition among higher quality facilities is unique to the dialysis industry. Significant differences among predictors of acquisition by small and large chains reinforce the importance of using a richer classification for chain status.