Issue: June 2018
April 23, 2018
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Fresenius sells hospital practice business, adjusts 2018 outlook

Issue: June 2018
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Fresenius Medical Care has signed a definitive agreement to sell its controlling interest in Sound Inpatient Physicians Holdings LLC to Summit Partners for $2.15 billion. In a separate announcement, the Germany-based company announced it would adjust its 2018 outlook due to change in reimbursement for kidney drugs for patients.

 

 

Sound offered Fresenius experience in value-based care

In 2014, Fresenius bought controlling interest in Sound, which had been in business since 2001 Sound is a physician organization providing services through emergency medicine, critical care, hospital medicine, transitional care and advisory services.

“In the previous years we have gained insight and successfully applied the knowledge on efficient patient coordination and on value-based programs in our unit called Fresenius Health Partners where we run the ESCOs, our own Medicare Advantage plan and various sub-capitated arrangements. This was an important milestone in the execution of our Care Coordination strategy,” Rice Powell, CEO of Fresenius Medical Care, said in a press release. “As we are now very well positioned in the U.S. to ensure high quality outcomes for our dialysis patients in a health care system that is moving toward value-based care, we are enabled to divest Sound and release the invested capital for further focused growth investments to add value for our shareholders.”

Sound used Fresenius capital to acquire Cogent Healthcare Inc. in November 2014, adding 650 providers who delivered hospitalist and intensivist services to more than 80 hospitals throughout the United States. Combined, the expanded Sound Physicians organization served more than 180 hospitals in 35 states with more than 1,750 providers including physicians and advanced care practitioners. In 2017, Sound generated revenues around $1.5 billion and had 3,500 employees.

“The acquisition by Summit provides Sound with the opportunity to expand its existing service lines in a rapidly changing market and tap into new areas. This is a great chance for Sound’s employees to be part of this next development step,” said Bill Valle, CEO of Fresenius Medical Care North America.

Closing of the transaction is anticipated late in 2018, Fresenius said.

 

Kidney drug reimbursement chang es 20 18 outlook

A day after announcing the Sound sale, Fresenius reported that it expects to change its 2018 financial outlook due to adjusted revenue growth from calcimimetic drugs.

The company said in a press release that it is now targeting revenue growth at a 5% to 7% increase for the year instead of 8% mainly due to recent reduction in dosing of calcimimetic drugs. It did reconfirm reported net income growth target of 13% to 15% in 2018.

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“First quarter results are impacted by a shift of calcimimetic drugs from our pharmacy business into the dialysis service business in the U.S.,” Powell said. “Due to a faster than expected reduction in dosing of those drugs in the controlled clinic environment, we are experiencing a headwind on revenue growth for fiscal 2018.”

The company said the addition of Parsabiv as an injectable calcimimetic drug in the U.S. triggered the move of the corresponding reimbursement for Medicare patients from Part D to Part B. This resulted in a revenue decline in the company´s pharmacy business and a lower than assumed revenue increase in the dialysis service business driven by lower than expected dosing of calcimimetic drugs. “It is imperative that drugs are delivered in an efficient and effective manner in Fresenius Medical Care’s controlled clinic environment to the patients who benefit from the use of those drugs. The company actively manages all classes of medications focusing on the quality outcomes for patients and the overall cost to the respective health care system,” the company said.

References: https://www.freseniusmedicalcare.com/en/news/details/title/fresenius-medical-care-optimizes-its-us-care-coordination-portfolio-and-sells-sound-inpatient-physicians-holdings-for-215-billion/

https://soundphysicians.com/press/sound-physicians-acquires-cogent-healthcare/

https://www.freseniusmedicalcare.com/en/news/details/title/fresenius-medical-care-confirms-net-income-growth-target-adjusts-2018-revenue-growth-target-and-releases-preliminary-q1-figures/