DaVita, which estimates it has just 27 percent of the Chicago market for dialysis treatments, also has tried to expand here by building new centers, but its plans often have been stymied. Just Wednesday, the Illinois Health Facilities and Services Review Board voted 4-4 to block a joint venture between DaVita and Mount Sinai Hospital to create a 16-station clinic in Lawndale on Chicago's West Side. Five votes are needed for passage, but board Chairman Dale Galassie was absent.
A DaVita spokesman said the company was “extremely disappointed” by the vote because the neighborhood needs the facility, and DaVita plans to re-file the application immediately.
DaVita has grown to 1,800 clinics around the country primarily through acquisitions, said Ben Andrew, a research analyst for Chicago-based William Blair & Co. LLC. Establishing a new clinic requires costly studies to show state regulators that a need exists. Then, when the clinic opens, it often loses money until it establishes a network of nephrologists who refer their patients.
“By using capital to buy a ready-made clinic, you avoid all of that,” Mr. Andrew said.
DaVita's rival, the U.S. subsidiary of Fresenius Medical Care AG, dominates the Chicago area with 50 percent of the local market, according to an estimate DaVita submitted earlier this year to the facilities board, which regulates new medical projects to prevent duplicating services.
The board also must approve the Resurrection deal, which is expected to close no later than April, according to an application DaVita filed with the state.
Hospitals often are eager to sell their dialysis operations to concentrate on acute care services that come with higher profit margins, said Matt Weight, a senior research analyst with Minneapolis-based investment firm Feltl & Co.
A Presence spokesman said in an email that that the health care network wants to sell the facility to “concentrate our limited resources on core hospital services, while ensuring that dialysis services would still be available in the community.”
In other business, the state Health Facilities and Services Review Board voted:
• 6-2 against a $4 million, 12-station dialysis clinic by Fresenius in Plainfield at 24020 Riverwalk Court;
• 8-0 to approve a $846,000 project to expand by four stations Fresenius's existing 13-station clinic at 4943 W. Belmont Ave.;
Fresenius deferred a $3 million, 12-station dialysis clinic in Libertyville at 900 Technology Drive to address concerns the board raised.