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Launching a Successful Nursing Home Dialysis Program

Curt Anliker Chief Operating Officer

McGuireWoods | 2 CONFIDENTIAL

An Under-Served, Significant Market

• 430,000 ESRD patients in U.S. • 5,500 Home dialysis patients in U.S. (2011 USRDS)

• We estimate 12% of ESRD reside in skilled nursing

facilities

51,000 Patients $2.0+ Billion market

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Benefits of Nursing Home Dialysis

Stakeholder Benefits

Patient Survival Convenience & lifestyle Consistency of meds, meals & therapy

Nursing Home Marketing tool & census builder Acuity drives in overall reimbursement Eliminate transportation costs & logistics Daily dialysis can therapy minutes

Payors Cost (fewer meds & hospitalizations) Zero transportation costs

Physician Improved care for patients & their families Potential source of new patients

Hospitals Ability to discharge patients Discharge destination becoming a more data-driven event. Quality home dialysis is a factor. Think ACOs.

ESRD Provider Growth opportunity in a slow-growth industry

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There is One Loser

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There is One Loser

Transportation Companies

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Basic Business Model & Requirements

• ESRD Provider certified for Home Hemodialysis Training & Support

• Skilled nursing facility considered patient’s home - even the resident on a 100-day Part A rehabilitation stay

• Billed as home dialysis • Coordination agreement b/t ESRD Provider and SNF

outline the responsibilities and the economic terms • Ensuring caregiver staffing costs are covered is the key to

a program’s financial viability • Understand both your Fiscal Intermediary and your state’s

Medicaid policy for reimbursement of additional treatments

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Regulatory Environment

• ESRD Conditions of Coverage (CMS 2008)

• 2004 Survey Guidance Letters – S&C 04-24 (March 19, 2004) – S&C 04-37 (July 8, 2004) – Issued to State Survey Agencies – Defined the relationship b/t the ESRD provider and the SNF – Defined the staffing requirements

• States retain right to impose more stringent regulations than the CMS’ Conditions of Coverage or Guidance Letters

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The Go / No Go Decision to Launch

• Quantify the market need with market analysis

• Is your ESRD provider certified for Home Dialysis? If not, what investment is required?

• What is the reimbursement policy of both your fiscal intermediary (Medicare) and your state (Medicaid) vis á vis > 3 treatments per week?

• Are there any additional state regulations?

• Don’t underestimate the sales, management requirement & resources, and the added level of operational complexity

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The Go / No Go Decision to Launch

• Clarify your business objective 1. Add the service as an incremental offering for patient-

centered modality?

A Noble Goal

The Right Thing To Do

Go For It

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The Go / No Go Decision to Launch

• Clarify Your Business Objective 1. Add the service as an incremental offering for patient-

centered modality?

A Noble Goal

The Right Thing To Do

Go For It

2. Create a business with a standalone enterprise value?

Go Big or Go Home

Multiple SNF locations

50-100 patients minimum

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Viable Operational Models

NxStage Daily Dialysis

Conventional Thrice Weekly

Bedside

YES

NO

Den

YES

YES

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Which Business Model To Use?

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Which Business Model To Use?

It Depends

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Which Business Model To Use?

It Depends

Factors Include: • SNF empty bed capacity • SNF footprint • State regulatory environment • Staffing availability • ESRD Provider resources

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Program Responsibilities

ESRD Provider SNF

Patient caregivers OR Patient caregivers

Caregiver Training & Skills Verification Physical space build-out (Treatment & storage)

Dialysis equipment & supplies Dialysis chairs

Dialysis related drugs Digital scale

Medical oversight (Med Director & Qualified Home Training RN)

On-site licensed RN (trained by ESRD provider)

Labs Medical waste disposal

Regular in-servicing of SNF staff Cleaning & utilities

Social worker & dietician Medication administration

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Other Operational Considerations

• Remember, the ESRD provider is a guest in the SNF • Align goals with the SNF and be aware of the potential

tension of operating within their facility • Exceptional communication needed for effective

coordination of care • Continual in-servicing is required due to high staff

turnover in SNFs • On-site QAPI meetings • Bio-medical staff support • Nephrologist credentialing: open or closed unit?

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Given the most recent 10 years of focused effort serving this niche market, compelling clinical outcome data is starting to emerge.

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Recent Data Studies Demonstrate Proven Patient Benefits for Nursing Home Dialysis

• Affiliated Dialysis Centers recent data releases: – Annual Dialysis Conference (Atlanta - Feb 2014) – National Kidney Foundation (Las Vegas - April 2014)

• Analyzed outcomes of nearly 4,000 patients over 6 years • P < .001

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Recent Data Studies Demonstrate Proven Patient Benefits for Nursing Home Dialysis

• Affiliated Dialysis Centers recent data releases: – Annual Dialysis Conference (Atlanta - Feb 2014) – National Kidney Foundation (Las Vegas - April 2014)

• Analyzed outcomes of nearly 4,000 patients over 6 years • P < .001 • Key results released to date:

1. Clinical outcomes at 3 months were consistent with the trend and quality of care to the general ESRD population

2. Daily dialysis improves mortality rate. Median survival increases from 30 months to 50 months.

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Nursing Home Patients – Mortality Comparisons

Source 3 month

6 month

12 month

USRDS 50% 26% 14%

Tamura et al 39% 13%

Affiliated Dialysis 86% 80% 71%

Nursing Home ESRD Patient Survival Probability - Incident

USRDS 2010 Annual Data Report Tamura et al NEJM 2009

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Daily Dialysis Shows Improved Survival Rates

Patients on Daily Dialysis vs. Conventional Demonstrated: 1. Improved health status 1. Lower monthly mortality rates 1. Significantly longer median survival

(50 mo vs. 30 mo)

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Summary

• Nursing home dialysis is a growing segment and patients are worthy to be served by quality home dialysis programs

• The nursing home dialysis niche plays perfectly into the developing ACO model of care and the need for cost controls in our national health care system

• Affiliated Dialysis is committed to serving, promoting, and educating the industry on this critical service

• Access our website for additional information, including our recent data study press releases

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Questions?

www.affiliateddialysis.com

Curt Anliker Chief Operating Officer