NN&I - June 2010

Business Subscribe to our free eNewsletter at www.nephronline.comJune 2010 Nephrology News & Issues 17On April 30, the U.S. Food and Drug Administration ordered Baxter Inter-national Inc. to recall and destroy all of its Colleague Volumetric Infusion Pumps currently in use in the United States, citing Baxter's "longstanding failure to correct many serious prob-lems with the pumps." The FDA said it believes there may be as many as 200,000 of these pumps currently in use. The FDA is also ordering the company to provide refunds or replace pumps at no cost to customers. Baxter said in a statement that it anticipates, pending FDA approval, to offer to exchange Baxter's Sigma Spectrum infusion pumps for Colleague infusion pumps without Compiled by Thomas Keatingcharge to customers.The company said it will record a pre-tax special charge of $400 to $600 million in the first quarter for the cost of the recall. Shares of Baxter fell to three-year lows May 4, falling $2.11, or 4.4%, to $45.39. During earlier afternoon trad-ing, they fell to $44.84, their lowest price since December 2006. DaVita to buy clinics from University of Chicago The University of Chicago said April 22 that DaVita, Inc. will assume own-ership of three of the university medi-cal center's off-site dialysis centers and its home dialysis program as of Aug 1.The sale will render administrative and financial management to DaVita. The inpatient dialysis program for hospitalized patients with serious kidney disease, will not be involved."For patients, the transition should be seamless," said Kenneth J. Sharigian, interim president of the University of Chicago Medical Center. "Over the long run, it will lead to more efficient management of dialysis services, better facili- ties, and the opportunity to expand the program."One of the Medical Center's three sites required significant renovations, now underway, and its patients have temporarily been moved and split up among two nearby dialysis cen-ters. Leases for the Medical Center's two other off-site facilities will expire within one to two years with no option to renew. The home dialysis program, now located in cramped quarters in the basement of the old Chicago Lying-in Hospital, also needs expand-ed and modernized space, the University said.The university's medical center said it has arranged for its outpatient and home dialysis staff, adminis- trators, dialysis technicians and nursesabout 90 peopleto be able to apply for corresponding jobs at DaVita. The University of Chicago also said it will subsidize their salaries for the first year, if necessary, to equal their salaries at the time of the sale. FDA forces Baxter to recall all Colleague Volumetric Infusion Pumps American Renal sold for about $450m, report saysA recent report released April 20 by the investment company Raymond James estimated the worth of the recent acquisition of American Renal Holdings, the parent company of dialysis provider American Renal Associates, by Centerbridge Partners LP, a private equity firm, to be worth $450 million, or about $78,261 per patient. Raymond James estimated that American Renal was generating $275 million in annual revenues.American Renal and its physician partners own and operate 83 dialy-sis clinics treating more than 5,750 patients across the United States. American Renal told NN&I that the company will not see any changes in operations.In the same report, Raymond James reviewed the recent acquisition of Dialysis Corporation of America by U.S. Renal Care. In that review, the investor group said the $112 million sale was valued at $60,000 per patient, "toward the lower end of historic ac- quisition multiples. "We believe the company's high out-of-network exposure (close to 50% of commercial revenue) can partially explain the discounted revenue and per patient multiples (as this level will likely move lower over time, weighing on the profitability per patient)," the investor group said. Business0610_7.indd 17 5/14/10 2:05:48 PM