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Northwestern med school takes aim at corporate healthcare provider

Northwestern Medical Faculty Foundation has plans to battle for patients against Fresenius Medical Care, the world's largest provider of dialysis treatments.

The affiliate of Northwestern University's medical school is proposing a $9-million dialysis clinic in a new outpatient tower at 259 E. Erie St., Chicago, under construction by Northwestern Memorial Hospital, according to an application filed Dec. 4 with the Illinois Health Facilities and Services Review Board.

The proposal puts the faculty foundation, with annual revenue of $454 million, in competition with Fresenius, which already operates a clinic two blocks away in Northwestern Memorial's Olson Pavilion, 710 N. Fairbanks Court.

In its application, the faculty foundation takes a jab at for-profit dialysis providers such as Fresenius, without mentioning them by name.

In the new facility, patient care “will not be limited by corporate-developed treatment protocols,” the application says.

Northwestern's application was filed nearly three weeks after Fresenius's U.S. subsidiary submitted plans for a new, $4.5 million clinic three blocks away, in an existing 18-story office building at 142 E. Ontario St., according to the company's application to the facilities board, which must review both plans.

Fresenius proposes a clinic with 12 treatment stations, one-third the size of the foundation's proposal.

The faculty foundation is the practice plan for doctors who hold teaching positions with Northwestern University's Feinberg School of Medicine. With more than 730 physicians, it is the second largest group in the Chicago area, according to Crain's annual ranking of physician groups, published April 23. The foundation includes six nephrologists, who focus on kidney disease and will oversee the dialysis treatments, the application says.

The foundation is known for its strong roster of specialists, who typically command higher fees than general practitioners. Yet dialysis is a field where profit margins are tight, but can be magnified by the economies of scale that a large company can offer, like Bad Homburg, Germany-based Fresenius, with annual revenue of $12.8 billion.

Despite the low profit margins, the foundation likely has enough dialysis patients to justify the cost of offering the service, said Jim Morell, a Glenview-based health care management consultant.

If the foundation later decides to exit the dialysis business, it has options, he noted.

“There's … a ready buyers' market by the big chains,” Mr. Morell said. “Or they can just close it down, because it's not that capital-intensive.”

A Fresenius spokeswoman declined to answer questions, but said in a statement that there's a “well-documented need” for additional dialysis in Streeterville.

The company is “confident that the board will view this dialysis facility as a long-term solution” to the problem, the statement said. The company, which is said to be the market leader in dialysis in Chicago, filed a lawsuit this month against the state facilities board, alleging that the board has wrongfully denied its application for new clinics to limit the size of its market share.

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