DaVita, Inc.; Analysis of Agreement Containing Consent Orders To Aid Public Comment, 56455-56458 [2011-23305]

Download as PDF 56455 Federal Register / Vol. 76, No. 177 / Tuesday, September 13, 2011 / Notices INSTITUTIONS IN LIQUIDATION [In alphabetical order] FDIC Ref. No. Bank name City 10393 .......................... 10394 .......................... CreekSide Bank ............................................. Patriot Bank of Georgia ................................. Woodstock ...................................................... Cumming ........................................................ [FR Doc. 2011–23345 Filed 9–12–11; 8:45 am] BILLING CODE 6714–01–P FEDERAL RESERVE SYSTEM mstockstill on DSK4VPTVN1PROD with NOTICES Formations of, Acquisitions by, and Mergers of Bank Holding Companies The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) (BHC Act), Regulation Y (12 CFR part 225), and all other applicable statutes and regulations to become a bank holding company and/or to acquire the assets or the ownership of, control of, or the power to vote shares of a bank or bank holding company and all of the banks and nonbanking companies owned by the bank holding company, including the companies listed below. The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The application also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 4 of the BHC Act (12 U.S.C. 1843). Unless otherwise noted, nonbanking activities will be conducted throughout the United States. Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than October 7, 2011. A. Federal Reserve Bank of Atlanta (Chapelle Davis, Assistant Vice President) 1000 Peachtree Street, N.E., Atlanta, Georgia 30309: 1. Trade Street Holdings, LLC, Trade Street BFHI Holdings, LLC, both in Aventura, Florida, and Florida Carpenters Regional Council Pension Fund, Hialeah, Florida; to become bank holding companies by acquiring 52.41 percent of the voting shares of Broward Financial Holdings, Inc., and its VerDate Mar<15>2010 19:22 Sep 12, 2011 Jkt 223001 subsidiary, Broward Bank of Commerce, both in Fort Lauderdale, Florida. B. Federal Reserve Bank of Kansas City (Dennis Denney, Assistant Vice President) 1 Memorial Drive, Kansas City, Missouri 64198–0001: 1. Equity Bancshares, Inc., Wichita, Kansas; to acquire 100 percent of the voting shares of the University National Bank of Lawrence, Lawrence, Kansas. C. Federal Reserve Bank of Dallas (E. Ann Worthy, Vice President) 2200 North Pearl Street, Dallas, Texas 75201– 2272: 1. Integrity Bancshares, Inc., Houston Texas; to become a bank holding company by acquiring 100 percent of the voting shares of Integrity Bank, SSB, Houston, Texas. Board of Governors of the Federal Reserve System, September 8, 2011. Robert deV. Frierson, Deputy Secretary of the Board. State GA GA Date closed 9/2/2011 9/2/2011 with the standards of section 4 of the BHC Act. Unless otherwise noted, comments regarding the applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than September 28, 2011. A. Federal Reserve Bank of New York (Ivan Hurwitz, Vice President) 33 Liberty Street, New York, New York 10045–0001: 1. Investors Bancorp, MHC and Investors Bancorp, Inc., both of Short Hills, New Jersey; to acquire BFS Bancorp, MHC, Brooklyn Federal Bancorp, Inc., and Brooklyn Federal Savings Bank, all in Brooklyn, New York, and thereby engage in operating a savings association pursuant to section 225.28(b)(4)(ii) of Regulation Y. [FR Doc. 2011–23321 Filed 9–12–11; 8:45 am] Board of Governors of the Federal Reserve System, September 8, 2011. Robert deV. Frierson, Deputy Secretary of the Board. BILLING CODE 6210–01–P [FR Doc. 2011–23322 Filed 9–12–11; 8:45 am] BILLING CODE 6210–01–P FEDERAL RESERVE SYSTEM Notice of Proposals To Engage in Permissible Nonbanking Activities or To Acquire Companies that are Engaged in Permissible Nonbanking Activities The companies listed in this notice have given notice under section 4 of the Bank Holding Company Act (12 U.S.C. 1843) (BHC Act) and Regulation Y(12 CFR part 225), to engage de novo, or to acquire or control voting securities or assets of a company, including the companies listed below, that engages either directly or through a subsidiary or other company, in a nonbanking activity that is listed in § 225.28 of Regulation Y (12 CFR 225.28), or that the Board has determined by Order to be closely related to banking and permissible for bank holding companies. Unless otherwise noted, these activities will be conducted throughout the United States. Each notice is available for inspection at the Federal Reserve Bank indicated. The notice also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the question whether the proposal complies PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 FEDERAL TRADE COMMISSION [File No. 111 0103] DaVita, Inc.; Analysis of Agreement Containing Consent Orders To Aid Public Comment Federal Trade Commission. Proposed Consent Agreement. AGENCY: ACTION: The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices or 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. SUMMARY: Comments must be received on or before October 5, 2011. ADDRESSES: Interested parties may file a comment online or on paper, by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Write ‘‘DaVita, Inc., File No. 111 0103’’ on your comment, and file your DATES: E:\FR\FM\13SEN1.SGM 13SEN1 mstockstill on DSK4VPTVN1PROD with NOTICES 56456 Federal Register / Vol. 76, No. 177 / Tuesday, September 13, 2011 / Notices comment online at https:// ftcpublic.commentworks.com/ftc/ davitaconsent, by following the instructions on the Web-based form. If you prefer to file your comment on paper, mail or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Room H–113 (Annex D), 600 Pennsylvania Avenue, NW., Washington, DC 20580. FOR FURTHER INFORMATION CONTACT: Lisa D. DeMarchi Sleigh (202–326–2535), FTC, Bureau of Competition, 600 Pennsylvania Avenue, NW., Washington, DC 20580. SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and § 2.34 the Commission Rules of Practice, 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 September 2, 2011), on the World Wide Web, at http:// www.ftc.gov/os/actions.shtm. A paper copy can be obtained from the FTC Public Reference Room, Room 130–H, 600 Pennsylvania Avenue, NW., Washington, DC 20580, either in person or by calling (202) 326–2222. You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before October 5, 2011. Write ‘‘DaVita, Inc., File No. 111 0103’’ 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 VerDate Mar<15>2010 19:22 Sep 12, 2011 Jkt 223001 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 obtained from any person and which is privileged or confidential,’’ as provided 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. 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/ davitaconsent 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 ‘‘DaVita, Inc., File No. 111 0103’’ on your comment and on the envelope, and mail or deliver it to the following address: Federal Trade Commission, Office of the Secretary, Room H–113 (Annex D), 600 Pennsylvania Avenue, NW., Washington, DC 20580. 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 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). PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 consider all timely and responsive public comments that it receives on or before October 5, 2011. 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 Orders (‘‘Consent Agreement’’) from DaVita Inc. (‘‘DaVita’’). The purpose of the Consent Agreement is to remedy the anticompetitive effects resulting from DaVita’s purchase of CDSI I Holding Company, Inc. (‘‘DSI’’). Under the terms of the Consent Agreement, DaVita is required to divest 28 dialysis clinics and terminate one management contract in 22 markets across the United States. 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 or make it final. Pursuant to an agreement dated February 4, 2011, DaVita proposes to acquire DSI for approximately $689 million. 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 lessening competition for the provision of outpatient dialysis services in 22 markets. The Parties Headquartered in Denver, Colorado, DaVita is the second largest provider of outpatient dialysis services in the United States. DaVita operates 1,612 outpatient dialysis clinics in 42 states and the District of Columbia at which approximately 125,000 end stage renal disease (‘‘ESRD’’) patients receive treatment. In 2010 DaVita’s revenues were approximately $7.63 billion. DSI, headquartered in Nashville, Tennessee, is a privately held company and the fifth largest provider of outpatient dialysis services in the United States. DSI operates 106 dialysis centers, providing dialysis services to approximately 8,000 patients in 23 states. E:\FR\FM\13SEN1.SGM 13SEN1 mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 76, No. 177 / Tuesday, September 13, 2011 / Notices Outpatient Dialysis Services Outpatient dialysis services is the appropriate relevant product market in which to assess the effects of the proposed transaction. For patients suffering from 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 treatments 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, many ESRD patients have no alternative to ongoing dialysis treatments. The relevant geographic markets for the provision of dialysis services are local in nature. They are limited by the distance ESRD patients are willing and/ or able to travel to receive dialysis treatments. Most ESRD patients are quite ill and suffer from multiple health problems. As such, it is difficult for ESRD patients to travel long distances for dialysis treatment. Generally, ESRD patients are unwilling and/or unable to travel further than 30 miles or 30 minutes to receive dialysis treatments, depending on traffic patterns, local geography, and the patient’s proximity to the nearest center. As a result, competition among dialysis clinics occurs at a local level, corresponding to metropolitan areas or subsets thereof. Entry into the outpatient dialysis services markets addressed by the Consent Agreement on a level sufficient to deter or counteract the likely anticompetitive effects of the proposed transaction is not likely to occur in a timely manner. 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 essential to the success of a clinic because they are the primary source of referrals. The lack of available nephrologists with an established referral stream is a significant barrier to entry into each of the relevant markets. Beyond that, entry is also inhibited where certain attributes (such as a rapidly growing ESRD population, a favorable regulatory environment, average or below nursing and labor costs, and a low penetration of managed care) are not present, as is the case in VerDate Mar<15>2010 19:22 Sep 12, 2011 Jkt 223001 many of the geographic markets identified in the Commission’s complaint. Each of the geographic markets addressed by the Consent Agreement is highly concentrated. The proposed acquisition represents a merger to monopoly in one market and would cause the number of providers to drop from three to two in fifteen other markets. Additionally, concentration increases significantly in the remaining six markets addressed by the Consent Agreement. In each of these markets, the post-acquisition HHI level exceeds 3,500, and the change in HHI is more than 170. The high post-acquisition concentration levels, along with the elimination of DaVita and DSI’s head-tohead competition in these markets, indicates that the combined firm would be able to exercise unilateral market power. The evidence shows that health insurance companies and other private payors who pay for dialysis services used by their members benefit from direct competition between DaVita and DSI when negotiating rates charged by dialysis providers. As a result, the proposed combination likely would result in higher prices and diminished service and quality for outpatient dialysis services in many geographic markets. The Consent Agreement The Consent Agreement effectively remedies the proposed acquisition’s anticompetitive effects in 22 markets where both DaVita and DSI operate dialysis clinics by requiring DaVita to divest—prior to acquiring DSI—29 outpatient dialysis clinics to Dialysis Newco, Inc., a corporation formed by Frazier Healthcare and New Enterprise Associates (‘‘Frazier/NEA’’). As part of these divestitures, DaVita is required to obtain the agreement of the medical directors affiliated with the divested clinics to continue providing physician services after the transfer of ownership to Frazier/NEA. Similarly, the Consent Agreement requires DaVita to obtain the consent of all lessors necessary to assign the leases for the real property associated with the divested clinics to Frazier/NEA. These provisions ensure that Frazier/NEA 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 Frazier/NEA with the opportunity to interview and hire employees affiliated with the divested clinics and prevents DaVita from PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 56457 offering these employees incentives to decline Frazier/NEA’s offer of employment. This will ensure that Frazier/NEA has access to patient care and supervisory staff who are familiar with the clinics’ patients and the local physicians. Second, the Consent Agreement prevents DaVita from contracting with the medical directors (or their practice groups) affiliated with the divested clinics for three years. This provides Frazier/NEA with sufficient time to build goodwill and a working relationship with its medical directors before DaVita can attempt to capitalize on its prior relationships in soliciting their services. Third, to ensure continuity of patient care and records as Frazier/NEA implements its quality care, billing, and supply systems, the Consent Agreement allows DaVita to provide transition services for a period of 12 months. Firewalls and confidentiality agreements have been established to ensure that competitively sensitive information is not exchanged. Fourth, the Consent Agreement requires DaVita to provide Frazier/NEA with a license to use DSI’s policies, procedures, and medical protocols, as well as the option to obtain DaVita’s medical protocols, which will further enhance Frazier/NEA’s ability to provide continuity of care to patients. Finally, the Consent Agreement requires DaVita to provide prior notice to the Commission of its planned acquisitions of dialysis clinics located in the 22 markets addressed by the Consent Agreement. This provision ensures that subsequent acquisitions do not adversely impact competition in the markets at issue and undermine the remedial goals of the proposed order. The Commission is satisfied that Frazier/NEA is a qualified acquirer of the divested assets. Dialysis Newco, Inc. is a newly-formed company whose management has experience operating, acquiring, integrating, and developing outpatient dialysis clinics. The company has received a substantial equity investment from Frazier, a firm with a dedicated focus on healthcare, and NEA, the world’s largest venture capital firm with over $10.5 billion under management. The Commission has appointed Richard Shermer of R. Shermer & Co. as an Interim Monitor to oversee the transition service agreements, and the implementation of, and compliance with, the Consent Agreement. Mr. Shermer assists client companies undergoing regulator-mandated ownership transitions, including experience with transitions of outpatient dialysis clinics. E:\FR\FM\13SEN1.SGM 13SEN1 56458 Federal Register / Vol. 76, No. 177 / Tuesday, September 13, 2011 / Notices 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. By direction of the Commission. Donald S. Clark Secretary. [FR Doc. 2011–23305 Filed 9–12–11; 8:45 am] BILLING CODE 6750–01–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Office of the Assistant Secretary for Planning and Evaluation; Meeting of the Advisory Council on Alzheimer’s Research, Care, and Services This notice announces public meetings of the Advisory Council on Alzheimer’s Research, Care, and Services (Advisory Council). Notice of these meetings is given under the Federal Advisory Committee Act (5 U.S.C. App. 2, section 10(a)(1) and (a)(2)). The Advisory Council on Alzheimer’s Research, Care, and Services will provide advice on how to prevent or reduce the burden of Alzheimer’s disease and related dementias on people with the disease and their caregivers. Representatives from the Department of Health and Human Services (HHS) will present inventories of Federal activities related to Alzheimer’s disease and related dementias in three areas: research, clinical care, and long-term services and support. The representatives will also identify gaps and opportunities in these areas. The Advisory Council will discuss the inventories, gaps, and opportunities, and make recommendations to the Secretary for priority areas and actions for a national plan to address Alzheimer’s disease and related dementias. Meeting Date: September 27, 2011, 9:30 a.m. to 4 p.m. ADDRESSES: The meeting will be held at Administration on Aging headquarters at 1 Massachusetts Ave., NW., Washington, DC, 20001, Room 5604/ 5403. Comments: Time is allocated on the agenda to hear public comments at the end of the meeting. In lieu of oral comments, formal written comments may be submitted for the record to mstockstill on DSK4VPTVN1PROD with NOTICES VerDate Mar<15>2010 19:22 Sep 12, 2011 Jkt 223001 DEPARTMENT OF HEALTH AND HUMAN SERVICES FOR FURTHER INFORMATION CONTACT: Proposed Data Collections Submitted for Public Comment and Recommendations Helen Lamont (202) 690–7996, helen.lamont@hhs.gov Note: Although the meeting is open to the public, procedures governing security and the entrance to Federal buildings may change without notice. Those wishing to attend the meeting must call or e-mail Dr. Lamont by Thursday September 22, 2011, so that their name may be put on a list of expected attendees and forwarded to the security officers at the Administration on Aging. Space is limited to 40 participants. Topics of the Meeting: The Advisory Council will hear presentations and provide feedback on inventories of Federal activities to address Alzheimer’s disease and related dementias, gaps that can be addressed, and opportunities for collaboration. The Advisory Council is specifically charged with discussing and making recommendations to the Secretary on priorities for a national plan to address Alzheimer’s disease and related dementias. Procedure and Agenda: This meeting is open to the public. Representatives of HHS will present the inventories of Federal activities related to Alzheimer’s disease and related dementias to the Advisory Council. The representatives will also identify gaps and opportunities in these areas. After each presentation, the Advisory Council will openly discuss the inventory and the findings. Interested persons may observe the discussion, but the Advisory Council will not hear public comments during this time. The Advisory Council will allow an open public session for any attendee to address issues specific to the inventories or topics that should be addressed by a national plan. SUPPLEMENTARY INFORMATION: Assistant Secretary for Planning and Evaluation, HHS. ACTION: Notice of meeting. AGENCY: SUMMARY: Helen Lamont, OASPE, 200 Independence Ave., SW., Washington, DC 20201, Room 424E. Those submitting written comments should identify themselves and any relevant organizational affiliations. Authority: 42 U.S.C. 11225; Section 2(e)(3) of the National Alzheimer’s Project Act. The panel is governed by provisions of Public Law 92–463, as amended (5 U.S.C. Appendix 2), which sets forth standards for the formation and use of advisory committees. Dated: September 8, 2011. Sherry Glied, Assistant Secretary for Planning and Evaluation. [FR Doc. 2011–23465 Filed 9–9–11; 11:15 am] BILLING CODE 4150–05–P PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 Centers for Disease Control and Prevention [60Day–11–0666] In compliance with the requirement of Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 for opportunity for public comment on proposed data collection projects, the Centers for Disease Control and Prevention (CDC) will publish periodic summaries of proposed projects. To request more information on the proposed projects or to obtain a copy of the data collection plans and instruments, call 404–639–5960 and send comments to Daniel Holcomb, CDC Reports Clearance Officer, 1600 Clifton Road, MS–D74, Atlanta, GA 30333 or send an e-mail to omb@cdc.gov. Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency’s estimate of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Written comments should be received within 60 days of this notice. Proposed Project National Healthcare Safety Network (NHSN) (OMB No. 0920–0666) exp. 05/ 31/2014—Revision—National Center for Emerging and Zoonotic Infectious Diseases (NCEZID), Centers for Disease Control and Prevention (CDC). Background and Brief Description The National Healthcare Safety Network (NHSN) is a system designed to accumulate, exchange, and integrate relevant information and resources among private and public stakeholders to support local and national efforts to protect patients and promote healthcare safety. Specifically, the data is used to determine the magnitude of various healthcare-associated adverse events and trends in the rates of these events among patients and healthcare workers with similar risks. The data will be used to detect changes in the epidemiology of E:\FR\FM\13SEN1.SGM 13SEN1

Agencies

[Federal Register Volume 76, Number 177 (Tuesday, September 13, 2011)]
[Notices]
[Pages 56455-56458]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-23305]


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FEDERAL TRADE COMMISSION

[File No. 111 0103]


DaVita, Inc.; Analysis of Agreement Containing Consent Orders 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 or deceptive acts or 
practices or 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 October 5, 2011.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``DaVita, Inc., File No. 
111 0103'' on your comment, and file your

[[Page 56456]]

comment online at https://ftcpublic.commentworks.com/ftc/davitaconsent, 
by following the instructions on the Web-based form. If you prefer to 
file your comment on paper, mail or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Room H-113 (Annex D), 600 Pennsylvania Avenue, NW., Washington, DC 
20580.

FOR FURTHER INFORMATION CONTACT: Lisa D. DeMarchi Sleigh (202-326-
2535), FTC, Bureau of Competition, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 the 
Commission Rules of Practice, 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 September 2, 2011), on the World Wide Web, at http://www.ftc.gov/os/actions.shtm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before October 5, 2011. 
Write ``DaVita, Inc., File No. 111 0103'' 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 obtained from any person and which is privileged or 
confidential,'' as provided 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/davitaconsent 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 ``DaVita, Inc., File No. 
111 0103'' on your comment and on the envelope, and mail or deliver it 
to the following address: Federal Trade Commission, Office of the 
Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. 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 October 5, 2011. 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 Orders (``Consent 
Agreement'') from DaVita Inc. (``DaVita''). The purpose of the Consent 
Agreement is to remedy the anticompetitive effects resulting from 
DaVita's purchase of CDSI I Holding Company, Inc. (``DSI''). Under the 
terms of the Consent Agreement, DaVita is required to divest 28 
dialysis clinics and terminate one management contract in 22 markets 
across the United States.
    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 or make it final.
    Pursuant to an agreement dated February 4, 2011, DaVita proposes to 
acquire DSI for approximately $689 million. 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 
lessening competition for the provision of outpatient dialysis services 
in 22 markets.

The Parties

    Headquartered in Denver, Colorado, DaVita is the second largest 
provider of outpatient dialysis services in the United States. DaVita 
operates 1,612 outpatient dialysis clinics in 42 states and the 
District of Columbia at which approximately 125,000 end stage renal 
disease (``ESRD'') patients receive treatment. In 2010 DaVita's 
revenues were approximately $7.63 billion.
    DSI, headquartered in Nashville, Tennessee, is a privately held 
company and the fifth largest provider of outpatient dialysis services 
in the United States. DSI operates 106 dialysis centers, providing 
dialysis services to approximately 8,000 patients in 23 states.

[[Page 56457]]

Outpatient Dialysis Services

    Outpatient dialysis services is the appropriate relevant product 
market in which to assess the effects of the proposed transaction. For 
patients suffering from 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 
treatments 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, many ESRD patients have no alternative to 
ongoing dialysis treatments.
    The relevant geographic markets for the provision of dialysis 
services are local in nature. They are limited by the distance ESRD 
patients are willing and/or able to travel to receive dialysis 
treatments. Most ESRD patients are quite ill and suffer from multiple 
health problems. As such, it is difficult for ESRD patients to travel 
long distances for dialysis treatment. Generally, ESRD patients are 
unwilling and/or unable to travel further than 30 miles or 30 minutes 
to receive dialysis treatments, depending on traffic patterns, local 
geography, and the patient's proximity to the nearest center. As a 
result, competition among dialysis clinics occurs at a local level, 
corresponding to metropolitan areas or subsets thereof.
    Entry into the outpatient dialysis services markets addressed by 
the Consent Agreement on a level sufficient to deter or counteract the 
likely anticompetitive effects of the proposed transaction is not 
likely to occur in a timely manner. 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 essential to the success of a clinic 
because they are the primary source of referrals. The lack of available 
nephrologists with an established referral stream is a significant 
barrier to entry into each of the relevant markets. Beyond that, entry 
is also inhibited where certain attributes (such as a rapidly growing 
ESRD population, a favorable regulatory environment, average or below 
nursing and labor costs, and a low penetration of managed care) are not 
present, as is the case in many of the geographic markets identified in 
the Commission's complaint.
    Each of the geographic markets addressed by the Consent Agreement 
is highly concentrated. The proposed acquisition represents a merger to 
monopoly in one market and would cause the number of providers to drop 
from three to two in fifteen other markets. Additionally, concentration 
increases significantly in the remaining six markets addressed by the 
Consent Agreement. In each of these markets, the post-acquisition HHI 
level exceeds 3,500, and the change in HHI is more than 170. The high 
post-acquisition concentration levels, along with the elimination of 
DaVita and DSI's head-to-head competition in these markets, indicates 
that the combined firm would be able to exercise unilateral market 
power. The evidence shows that health insurance companies and other 
private payors who pay for dialysis services used by their members 
benefit from direct competition between DaVita and DSI when negotiating 
rates charged by dialysis providers. As a result, the proposed 
combination likely would result in higher prices and diminished service 
and quality for outpatient dialysis services in many geographic 
markets.

The Consent Agreement

    The Consent Agreement effectively remedies the proposed 
acquisition's anticompetitive effects in 22 markets where both DaVita 
and DSI operate dialysis clinics by requiring DaVita to divest--prior 
to acquiring DSI--29 outpatient dialysis clinics to Dialysis Newco, 
Inc., a corporation formed by Frazier Healthcare and New Enterprise 
Associates (``Frazier/NEA'').
    As part of these divestitures, DaVita is required to obtain the 
agreement of the medical directors affiliated with the divested clinics 
to continue providing physician services after the transfer of 
ownership to Frazier/NEA. Similarly, the Consent Agreement requires 
DaVita to obtain the consent of all lessors necessary to assign the 
leases for the real property associated with the divested clinics to 
Frazier/NEA. These provisions ensure that Frazier/NEA 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 Frazier/NEA with the opportunity to 
interview and hire employees affiliated with the divested clinics and 
prevents DaVita from offering these employees incentives to decline 
Frazier/NEA's offer of employment. This will ensure that Frazier/NEA 
has access to patient care and supervisory staff who are familiar with 
the clinics' patients and the local physicians. Second, the Consent 
Agreement prevents DaVita from contracting with the medical directors 
(or their practice groups) affiliated with the divested clinics for 
three years. This provides Frazier/NEA with sufficient time to build 
goodwill and a working relationship with its medical directors before 
DaVita can attempt to capitalize on its prior relationships in 
soliciting their services. Third, to ensure continuity of patient care 
and records as Frazier/NEA implements its quality care, billing, and 
supply systems, the Consent Agreement allows DaVita to provide 
transition services for a period of 12 months. Firewalls and 
confidentiality agreements have been established to ensure that 
competitively sensitive information is not exchanged. Fourth, the 
Consent Agreement requires DaVita to provide Frazier/NEA with a license 
to use DSI's policies, procedures, and medical protocols, as well as 
the option to obtain DaVita's medical protocols, which will further 
enhance Frazier/NEA's ability to provide continuity of care to 
patients. Finally, the Consent Agreement requires DaVita to provide 
prior notice to the Commission of its planned acquisitions of dialysis 
clinics located in the 22 markets addressed by the Consent Agreement. 
This provision ensures that subsequent acquisitions do not adversely 
impact competition in the markets at issue and undermine the remedial 
goals of the proposed order.
    The Commission is satisfied that Frazier/NEA is a qualified 
acquirer of the divested assets. Dialysis Newco, Inc. is a newly-formed 
company whose management has experience operating, acquiring, 
integrating, and developing outpatient dialysis clinics. The company 
has received a substantial equity investment from Frazier, a firm with 
a dedicated focus on healthcare, and NEA, the world's largest venture 
capital firm with over $10.5 billion under management.
    The Commission has appointed Richard Shermer of R. Shermer & Co. as 
an Interim Monitor to oversee the transition service agreements, and 
the implementation of, and compliance with, the Consent Agreement. Mr. 
Shermer assists client companies undergoing regulator-mandated 
ownership transitions, including experience with transitions of 
outpatient dialysis clinics.

[[Page 56458]]

    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.

    By direction of the Commission.
Donald S. Clark
Secretary.
[FR Doc. 2011-23305 Filed 9-12-11; 8:45 am]
BILLING CODE 6750-01-P