[Federal Register Volume 81, Number 4 (Thursday, January 7, 2016)]
[Notices]
[Pages 775-778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00038]
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FEDERAL TRADE COMMISSION
[File No. 151-0215]
Rangers Renal Holdings LP; Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair methods of competition.
The attached Analysis to Aid Public Comment describes both the
allegations in the draft complaint and the terms of the consent order--
embodied in the consent agreement--that would settle these allegations.
DATES: Comments must be received on or before January 29, 2016.
ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/rangersrenalconsent online or on paper,
by following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``Rangers Renal Holding,
LP; US Renal Care, Inc.; Dialysis Parent, LLC; and Dialysis HoldCo,
LLC.,--Consent Agreement; File No. 151-0215'' on your comment and file
your comment online at https://ftcpublic.commentworks.com/ftc/rangersrenalconsent by following the instructions on the web-based
form. If you prefer to file your comment on paper, write ``Rangers
Renal Holding, LP; US Renal Care, Inc.; Dialysis Parent, LLC; and
Dialysis HoldCo, LLC.,--Consent Agreement; File No. 151-0215'' on your
comment and on the envelope, and mail your comment to the following
address: Federal Trade Commission, Office of the Secretary, 600
Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580,
or deliver your comment to the
[[Page 776]]
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Lisa De Marchi Sleigh, (202-326-2535),
Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC
20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement, and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
from the FTC Home Page (for December 30, 2015), on the World Wide Web,
at http://www.ftc.gov/os/actions.shtm.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before January 29,
2016. Write ``Rangers Renal Holding, LP; US Renal Care, Inc.; Dialysis
Parent, LLC; and Dialysis HoldCo, LLC.,--Consent Agreement; File No.
151-0215'' on your comment. Your comment--including your name and your
state--will be placed on the public record of this proceeding,
including, to the extent practicable, on the public Commission Web
site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of
discretion, the Commission tries to remove individuals' home contact
information from comments before placing them on the Commission Web
site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
which . . . is privileged or confidential,'' as discussed in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept
confidential only if the FTC General Counsel, in his or her sole
discretion, grants your request in accordance with the law and the
public interest.
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\1\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/rangersrenalconsent by following the instructions on the web-based
form. If this Notice appears at http://www.regulations.gov/#!home, you
also may file a comment through that Web site.
If you file your comment on paper, write ``Rangers Renal Holding,
LP; US Renal Care, Inc.; Dialysis Parent, LLC; and Dialysis HoldCo,
LLC.,--Consent Agreement; File No. 151-0215'' on your comment and on
the envelope, and mail your comment to the following address: Federal
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW.,
Suite CC-5610 (Annex D), Washington, DC 20580, or deliver your comment
to the following address: Federal Trade Commission, Office of the
Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite
5610 (Annex D), Washington, DC 20024. If possible, submit your paper
comment to the Commission by courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before January 29, 2016. You can find more
information, including routine uses permitted by the Privacy Act, in
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing Consent Order to Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an Agreement Containing Consent Order (``Consent
Agreement'') from Rangers Renal Holdings LP (``Rangers Holdings''), the
parent of US Renal Care, Inc. (``USRC''), and Dialysis Holdco, LLC
(``Dialysis Holdco''), the parent of Dialysis Newco, Inc. d/b/a DSI
Renal (``DSI''). The purpose of the Consent Agreement is to remedy the
anticompetitive effects resulting from Rangers Holdings' purchase of
Dialysis Parent, LLC (``Dialysis Parent''). Dialysis Parent is the
parent of Dialysis Holdco. Under the terms of the Consent Agreement,
USRC is required to divest DSI's three dialysis clinics in Laredo,
Texas.
The Consent Agreement has been placed on the public record for 30
days to solicit comments from interested persons. Comments received
during this period will become part of the public record. After 30
days, the Commission will again review the Consent Agreement and the
comments received, and will decide whether it should withdraw from the
Consent Agreement, modify it, or make final the Decision and Order
(``Order'').
The Transaction
Pursuant to an agreement dated August 21, 2015, Rangers Holdings
proposes to acquire all of the outstanding membership interest in
Dialysis Holdco from Dialysis Parent in a transaction valued at
approximately $640 million. Dialysis Parent is currently the sole owner
of all membership interests in Dialysis Holdco. The Commission 's
Complaint alleges that the proposed acquisition, if consummated, would
violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and
Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.
45, by substantially lessening competition in one market--Laredo,
Texas--for the provision of outpatient dialysis services.
The Parties
Privately owned and headquartered in Plano, Texas, USRC is the
third-largest provider of outpatient dialysis services in the United
States. USRC operates more than 200 outpatient dialysis clinics in 20
states and treats approximately 15,500 patients.
[[Page 777]]
DSI, headquartered in Nashville, Tennessee, is a privately held
company and the sixth-largest provider of outpatient dialysis services
in the United States. DSI operates 100 dialysis centers, providing
dialysis services to approximately 7,500 patients in 22 states.
The Relevant Product and Structure of the Markets
Outpatient dialysis services is the relevant product market in
which to assess the effects of the proposed transaction. For patients
suffering from End Stage Renal Disease (``ESRD''), dialysis treatments
are a life-sustaining therapy that replaces the function of the kidneys
by removing toxins and excess fluid from the blood. Most ESRD patients
receive dialysis treatment three times per week in sessions lasting
between three and five hours. Kidney transplantation is the only
alternative to dialysis for ESRD patients. However, the wait-time for
donor kidneys--during which ESRD patients must receive dialysis
treatments--can exceed five years. Additionally, many ESRD patients are
not viable transplant candidates. As a result, ESRD patients have no
alternative to dialysis treatments. ESRD patients who are not
hospitalized must obtain dialysis treatments from outpatient dialysis
clinics.
Dialysis services are provided in local geographic markets limited
by the distance ESRD patients are able to travel to receive treatments.
ESRD patients are often very ill and suffer from multiple health
problems, making travel further than 30 miles or 30 minutes very
difficult. As a result, competition among dialysis clinics occurs at a
local level, corresponding to metropolitan areas or subsets thereof.
The exact contours of each market vary depending on traffic patterns,
local geography, and the patient's proximity to the nearest center.
Entry
Entry into the outpatient dialysis services markets identified in
the Commission's Complaint is not likely to occur in a timely manner at
a level sufficient to deter or counteract the likely anticompetitive
effects of the proposed transaction. The primary barrier to entry is
the difficulty associated with locating nephrologists with established
patient pools to serve as medical directors. By law, each dialysis
clinic must have a nephrologist medical director. As a practical
matter, medical directors are also essential to the success of a clinic
because they are the primary source of referrals. In the relevant
geographic market, there are few unencumbered nephrologists and few
outside nephrologists willing to move into the area. These obstacles
make entry in the affected market more challenging and less likely to
avert the anticompetitive effects of the transaction.
Effects of Acquisition
The geographic market identified in the Complaint is highly
concentrated. The proposed acquisition would cause the number of
providers to drop from three to two in this market leaving USRC with a
dominant position in Laredo, Texas. The post-acquisition HHI for this
market exceeds 4000, and the change in HHI is more than 1200. The
evidence shows that health insurance companies and other private payers
who pay for dialysis services used by their members benefit from direct
competition between USRC and DSI when negotiating rates charged by
dialysis providers in this market. The high post-acquisition
concentration level, along with the elimination of USRC's and DSI's
head-to-head competition suggest the proposed combination likely would
result in higher prices for outpatient dialysis services in this
geographic market. In addition, the evidence shows that market
participants compete for patients on a number of quality measures--
including quality of facilities, wait times, operating hours, and
location. Given the high post-acquisition concentration level, the
proposed combination would likely result in diminished service and
quality for patients in Laredo, Texas.
The Consent Agreement
The Consent Agreement remedies the proposed acquisition's
anticompetitive effects in the Laredo, Texas market by requiring USRC
to divest DSI's three outpatient dialysis clinics to Satellite
Healthcare Inc. (``Satellite'').
As part of these divestitures, USRC is required to obtain the
agreement of the medical director affiliated with the divested clinics
to continue providing physician services after the transfer of
ownership to the buyer. Similarly, the Consent Agreement requires USRC
to obtain the consent of all lessors necessary to assign the leases for
the real property associated with the divested clinics to the buyer.
These provisions ensure that the buyer will have the assets necessary
to operate the divested clinics in a competitive manner.
The Consent Agreement contains several additional provisions
designed to ensure that the divestitures are successful. First, the
Consent Agreement provides the buyer with the opportunity to interview
and hire employees affiliated with the divested clinics and prevents
USRC from offering these employees incentives to decline the buyer's
offer of employment. This will ensure that the buyer has access to
patient care and supervisory staff who are familiar with the clinics'
patients and the local physicians. Second, the Consent Agreement
prevents USRC from contracting with the medical director affiliated
with the divested clinics for three years. This provides the buyer with
sufficient time to build goodwill and a working relationship with its
medical director before USRC can attempt to capitalize on DSI's prior
relationship in soliciting his services. Third, to ensure continuity of
patient care and records as the buyer implements its quality care,
billing, and supply systems, the Consent Agreement requires USRC to
provide transition services for a period up to 12 months. Firewalls and
confidentiality agreements have been established to ensure that
competitively sensitive information is not exchanged. Fourth, the
Consent Agreement requires USRC to provide the buyer with a license to
use USRC's policies, procedures, and medical protocols, as well as the
option to obtain USRC's medical protocols, which will further enhance
the buyer's ability to continue to care for patients in the clinics
that will be divested. The Consent Agreement requires USRC to provide
notice to the Commission prior to any acquisitions of dialysis clinics
in the market addressed by the Consent Agreement in order to ensure
that subsequent acquisitions do not adversely impact competition in
that market or undermine the remedial goals of the proposed order.
Finally, the Consent Agreement allows the Commission to appoint a
monitor to oversee USRC's compliance with the Consent Agreement.
The Commission is satisfied that Satellite is a qualified acquirer
of the divested assets. Satellite is currently a significant operator
of dialysis clinics, operating over 70 outpatient and home dialysis
clinics since 1973.
The purpose of this analysis is to facilitate public comment on the
Consent Agreement, and it is not intended to constitute an official
interpretation of the proposed Decision and Order or the Order to
Maintain Assets, or to modify their terms in any way.
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By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-00038 Filed 1-6-16; 8:45 am]
BILLING CODE 6750-01-P