Velphoro (sucroferric oxyhydroxide) is a novel, non-absorbable iron-based phosphate binder with high binding potency. A starting dose of three pills a day is approved for use in chronic kidney disease patients on dialysis. In two years of real-world data, treatment with Velphoro increased the number of dialysis patients able to reach recommended levels of serum phosphorus with half the number of pills (four to five) compared to the most common phosphate binder (eight to nine pills per day).

Indication

Velphoro® (sucroferric oxyhydroxide) is a phosphate binder indicated for the control of serum phosphorus levels in patients with chronic kidney disease on dialysis.

Important Safety Information

• Velphoro chewable tablets must be taken with meals. Velphoro should be chewed or crushed. Do not swallow whole. Tell your healthcare provider about all the medicines you take, including prescription and nonprescription medicines, vitamins, and other supplements. Velphoro can interact with other medicines.
• Tell your healthcare provider if you have any of the following: Peritonitis (an infection) during peritoneal dialysis, significant gastric or liver disorder, recent major gastrointestinal (GI) surgery, a history of hemochromatosis or other disease that results in iron build-up in the body. People with these conditions were not included in clinical studies with Velphoro, and your healthcare provider will monitor your iron levels while you are taking Velphoro.
• Velphoro can cause side effects. The most common side effects are discolored feces, diarrhea, and nausea. Tell your healthcare provider if you have any side effect that bothers you or that does not go away. To report negative side effects associated with taking Velphoro, contact Fresenius Medical Care North America (FMCNA) AT 1-800-323-5188. You are encouraged to report negative side effects of prescription drugs to the FDA at 1-800-FDA-1088 or visit www.fda.gov/medwatch.
• Before taking Velphoro, tell your doctor if you are pregnant, plan to become pregnant, or breast-feeding.

For More Information about Velphoro, Please See Full Prescribing Information

By Robert J Kossmann, MD

What is due diligence?  Simply stated, due diligence is the examination and review of a business by the buyer before the business is purchased.  During the due diligence phase of a dialysis clinic acquisition, the buyer will perform a detailed review in the following areas: financial, clinical, operational, corporate structure, litigation and human resources.  Depending on the due diligence results, the purchase price may be adjusted downward.

Before we get into the issues that may impact the purchase price, let’s discuss the various items that fall under each of the due diligence categories mentioned above.  Below is a summary list highlighting the more significant items.

Financial – financial statements, tax returns, revenue reports, payroll registers and related party transactions.

Clinical – state surveys, policy and procedures manuals, medical staff by-laws, QA minutes and patient outcome data.

Operational – staffing ratios, operational metrics and stats, vendor and payor agreements, lease agreements and permits and licenses.

Corporate Structure – certificates of organization, by-laws and listing of shareholders, directors and officers.

Legal – complaints filed and any pending or threatened litigation.

Human Resources – organizational chart, census and employee benefits and policies.

Although this is not an all-inclusive list, it should give the seller a better understanding of what is requested and reviewed by the buyer during due diligence.  Now let’s move on to the more important issue.  What if the buyer says they need to reduce the purchase price? The seller’s perspective is “Why is My Purchase Price Being Reduced? We Agreed on a Price and Now You Want to Pay Me Less.”  The purchase price is discussed in the Letter of Intent (LOI) but remember that this price is based upon satisfactory due diligence results.

There are certain things Sellers can do to prevent Due Diligence from reducing their purchase price.

• Prepare Financial Statements on an Accrual Basis: many clinics have financials prepared on a cash basis. As such, not all clinic expenses are captured and properly recorded in accordance with Generally Accepted Accounting Principles (GAAP).
• Record Bad Debt Expense for Medicare Patients with No Co-Insurance: Medicare only pays 80% of the allowable reimbursement.  Bad debt needs to be recorded for the uncollectible 20%.
• Record a Reserve for Paid Time Off (PTO): clinic personnel have paid time off for vacation, holidays, illness and personal days. PTO should be recorded on a monthly basis and reconciled at year end for any earned but unused hours that carryforward to the following calendar year.
• Comply with Quality Incentive Programs (QIP): compliance with the QIP needs to be closely monitored because CMS will reduce payments to clinics who are not meeting the established quality metrics thus decreasing clinic cash inflows.
• Review Volume Commitments: volume commitments should be reviewed with vendors on an annual basis. Any shortfalls should be recorded as a liability on the financial statements.

Clearly, for the sale to take place, both parties need to feel that it is a fair deal.  The moral of this story is that if you want to get paid what a buyer originally offers you, then make sure financial information is in order from the get go.

The next step in the process is to determine any anomalies within your state regulations.  For example, does your state have any nursing or staffing ratio requirements or does your state require a certificate of need?  Once you have answered these questions, then you can project the profitability and cash flow by adding all necessary operating expenses and capital expenditures.  All expenses such as labor, supplies, drugs, ancillaries and administrative costs would be part of the projection. Additionally, all capital outlays for construction, finish, equipment, water systems and other fixtures would be included in the cash flow component of the projection.

Management of the facility will be critical in order to operate an efficient and effective clinic.  Management of the facility includes hiring and retention of employees, maximization of labor efficiency, preferred vendor pricing for all drugs and supplies, adequate quality assurance controls and procedures and maximization of reimbursement and proper maintenance of all facility assets.

A successful clinic will be a valuable asset that provides periodic and constant cash flow distributions maximizing return on investment and, if so desired, a realized gain on investment in the future.

Pure Life Renal joint ventures with physicians and treats them as true partners providing autonomy, clinical independence and a full spectrum of management services by a highly knowledgeable and experienced leadership team.

If you would be interested in discussing this opportunity, please contact Sandra Geraci at (330) 230-2667 or by email at sgeraci@plrenal.com