Prior Fiscal: $6.06 Billion
Percentage Change: +5.1%
No. of Employees: 290,000 (total)
Global Headquarters: Bad Homburg, Germany
Stephan Sturm, Chairman of the Management Board,
Fresenius SE & Co. KGaA
Rachel Empey, CFO, Fresenius SE & Co. KGaA
Francesco De Meo, CEO, Fresenius Helios
Mats Henriksson, CEO, Fresenius Kabi
Rice Powell, CEO, Fresenius Medical Care
Ernst Wastler, CEO, Fresenius Vamed
Mike Asselta, President, Fresenius Kidney Care
Mark Costanzo, President, Fresenius Renal Therapies Group
David Pollack, President, Integrated Care Group, Fresenius Medical Care
Jeff Snodgrass, President, Azura Vascular Care, Fresenius Medical Care
Joe Turk, President, Home and Critical Care Therapies, Fresenius Medical Care
After months of feeling progressively run down and changing his workout and diet to no avail, 50-year-old personal trainer Sovereign “Sov” Valentine finally drove himself to a hospital in the small town of Plains, Mont. He was diagnosed with kidney failure and received a dialysis session, and was instructed to follow up with outpatient dialysis three times a week.
The nearest dialysis center was a Fresenius Kidney Care clinic 70 miles away. Adding to the trouble, a few days after treatments began, the Valentines were informed Fresenius was out of network. Their insurer, Allegiance, only covered about $16,000, resulting in a near $525,000 bill. (According to NPR, this tops the cost of a kidney transplant).
These exorbitant prices are a result of what health economists call a “duopoly” in the dialysis care market. Fresenius and DaVita are the dominant U.S. dialysis care providers, so they can demand extreme prices for their treatment. Thanks to a 1973 law, end-stage renal care patients like Sov can enroll in Medicare before 65—after a 90-day waiting period. Patients are especially vulnerable during that time.
When Sov’s wife Jessica opened the first bill, she cried. “It was far worse than what I had imagined would be the worst-case scenario,” she told NPR.
Dialysis centers claim they make little to no profit on Medicare rates (which make up the majority of their customers thanks to the 1973 law) to justify high charges to commercially insured patients. But Sov’s sessions amounted to an extraordinary nearly $14,000 each.
The Valentines quickly took their debacle to the press. Less than a week after NPR, Kaiser Health News, and CBS This Morning shared Sov’s story, a Fresenius rep told his wife, Dr. Jessica Valentine, the company would waive the unpaid bill. They were instead treated as in-network patients, only responsible for a $5,000 deductible that Sov had already hit for the year.
Fresenius spokesman Brad Puffer said the Valentines should have been considered in-network patients from the start.
“In the future, we pledge to better identify situations where we believe the insurer has incorrectly classified one of our facilities as being out of network,” he promised in a statement. “This will allow us to address the matter directly with the insurer in the first instance, without them placing the patient in the middle.”
Dialysis companies have indeed remained profitable. Fresenius’ medical device revenue—which consists mainly of dialysis products, transfusion technology, and related accessories—jumped 5.1 percent to $6.37 billion in fiscal 2019. Fresenius Medical Care, the company’s chronic kidney failure product and service provider, had health product sales that rose 10 percent thanks to clinical network expansion, new product launches in China, and the acquisition of NxStage Medical.
Fresenius’ Medical Care unit closed the $2 billion deal for the home dialysis device maker after a year and a half of negotiations last February, following an extended end-date due to last January’s government shutdown. The combined company will accelerate its move toward home treatments by leveraging manufacturing, supply chain, and marketing competencies in a less labor- and capital-intensive environment.
“By combining NxStage’s capabilities with our broad product and service offering, we can help patients to live even more independently,” Bill Valle, CEO of Fresenius Medical Care North America, said in a statement. “In addition to broadening our product portfolio, this acquisition positions Fresenius Medical Care to benefit from the growing trend toward home-based therapies.”
Profits were tempered somewhat when Fresenius Medical Care paid nearly $232 million in penalties last March to resolve conduct in countries outside the U.S. that might violate the Foreign Corrupt Practices Act that it had voluntarily shared in 2012. Fresenius also agreed to engage an independent compliance monitor for two years.
The Medical Care business released the 4008A dialysis machine last January. Its main target was emerging markets—it was mainly deployed in India with other countries across the Asia-Pacific region that followed. The 4008A includes safety and handling standards like essential cleaning functions and battery backup. It was designed to be robust and easily handled for use in demanding infrastructure and remote locations. The machine also uses ultrapure dialysis fluid.
The company won two FDA breakthrough device designations last year. The first came in March, for computer-assisted ultrafiltration software to improve fluid management during hemodialysis and personalized treatments. The software is designed to work with newer Fresenius Medical Care dialysis machines using the company’s CLiC device, which enables relative blood volume monitoring.
The second was for a hemodialysis system to prevent blood clotting without use of blood thinners in October. The dialyzer and bloodlines manufacturing process will include the antothrombogenic additive Endexo, a polymer made of surface modifying molecules that inhibit protein and platelet adsorption, to reduce clot risk and boost hemocompatibility.
The firm made two investments in cutting-edge companies last year. The first, announced in July, was BioIntelliSense, a Denver-based company developing a medical grade data services platform for continuous remote health monitoring, predictive analytics, and algorithmic clinical insights. Fresenius and BioIntelliSense hope to create clinical pathways to alert clinicians to the need for early intervention.
The second was a 60 million euros investment to independent affiliate Unicyte AG. Unicyte planned to use the funds mainly to begin clinical trials of its first product candidates this year and establish a manufacturing process. Unicyte has created a set of technology platforms of human liver stem cells (HLSCs), HLSC-derived islets, and nano-extracellular vesicles (nEVs). nEVs are stem cell-derived particles that support cell communication.
“Regenerative medicine could provide highly innovative therapies to chronic kidney disease patients and is becoming increasingly important for our industry,” Rice Powell, Fresenius Medical Care CEO, told the press. “Driving regenerative therapies not only addresses the U.S. administration’s initiative to improve the prevention of end-stage renal disease, but can help us to significantly slow the progression of kidney disease and make the most innovative therapies available to our patients.”
A new global medical office was established to head up work in clinical science and coordinate knowledge across clinics last March. Frank Maddux, a Fresenius employee since 2009 and previous executive vice president and North American chief medical officer, was named as its global chief medical officer at that time. Robert Kossmann was also appointed chief medical officer for North America.
Medical Care also made its previous subsidiary Frenova Renal Research global last July. Frenova offers services for clinical development of medicines and medical products for kidney research. Previously limited to North America, Frenova was linked with corresponding services of Medical Care’s Europe, Middle East and Africa (EMEA) and Latin America regions. The company can now draw on a network of over 550 researchers in over 350 locations.
Fresenius Kabi specializes in therapy and care for chronically and critically ill patients. Kabi’s medical device and transfusion technology business grew 11 percent mainly due to the European launch of the ProNeo portfolio. This product line includes transnasal feeding tubes and accessories for enteral nutrition in neonatal and pediatric wards. The Amicus Blue cell separator for extracorporeal photopheresis was also released in Europe last year. Infusion therapy proceeds grew 3 percent thanks to further infusion solutions business in the U.S.