Fresenius Teams with HCACO - Analyst Blog

World's largest dialysis company Fresenius Medical Care (FMS) revealed an agreement with Heritage California ACO (“HCACO”), an Accountable Care Organization affiliated to Heritage Provider Network, to provide composite health management for HCACO enrollees suffering from End Stage Renal Disease. The understanding is along the lines of a population health program under which Fresenius Medical Care will strive to enhance outcomes and curtail cost of care.

Dialysis sustains life by removing surplus fluids and cleansing waste material from the blood stream when a patient’s kidneys stop functioning.

The population health initiative is tailored after the 5-year model project conducted by Fresenius Health Partners (subsidiary of Fresenius Medical Care) on Medicare enrollees supported by dialysis. The project, completed in December 2010, was conducted with Centers for Medicare & Medicaid Services (“CMS”). Benefits from the project include lower health care costs, reduced mortality and a fall in hospitalizations.

Heritage California ACO has an affiliation with the Heritage Provider Network group of entities.  Heritage Provider Network provides health care to more than 700,000 persons. It operates in eight counties of California, New York and Arizona. 

Fresenius is the largest provider of products and services for patients undergoing dialysis treatment. The company’s principal competitor in the U.S. is DaVita Inc. (DVA), which provides dialysis services for patients suffering from chronic kidney failure or end stage renal disease. Fresenius also competes with Baxter International (BAX) in certain niches such as peritoneal dialysis products.

The company continues to register strong operating results in the North American as well as overseas markets. The integration of acquisitions is also expected to be accretive to Fresenius’ earnings in the near term. However, the contagion of lingering economic problems in Europe remains a matter of concern.

The stock carries a Zacks Rank #3 (Hold). Cyberonics Inc. (CYBX) carries a Zacks Rank #1 (Strong Buy) and is expected to do well.

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