What the Measure Would Do

Proposition 23 would establish a set of regulations for the staffing and operations of chronic dialysis clinics in the state. Specifically, the measure would require that clinics:

• Staff a minimum of one licensed physician at a clinic while patients are being treated. A clinic could apply to the California Department of Public Health (CDPH) for an exception if there is a shortage of physicians, and use a nurse practitioner or physician’s assistant instead for up to one year.
• Submit reports on dialysis-related infections to the state health department every three months. CDPH would determine which information to should be reported and would be required to post the information on its website.
• Provide a written notice to and obtain consent from the state health department before closing a chronic dialysis clinic.
• Not discriminate against patients in providing care, nor refuse care, based on the source of payment.

The state health department would implement Prop 23 and could issue fines up to $100,000 for violations. The measure also directs the department to increase its licensing fees to cover administrative costs.

The Legislative Analyst’s Office estimates this measure would result in increased costs for private dialysis clinics by several hundred thousand dollars annually, mostly due to the staffing requirement.

The Backstory

Dialysis is a treatment that removes waste and chemicals from the bloodstream, administered to people whose kidneys no longer function properly. In California, about 80,000 patients receive dialysis treatments each month. Although treatment is available at hospitals and even in private homes, most patients are treated at roughly 600 private clinics across the state.

Most private clinics are owned and operated by two companies, DaVita and Fresenius Medical Care, and are licensed by the state. CDPH regulates them according to federal guidelines, which require that each clinic have a board-certified physician on staff to ensure quality of care, train staff and implement clinic policies. Federal regulations do not require that physicians spend any specific amount of time at the clinic. Clinics must also report information on dialysis-related infections to federal agencies.

Patients pay for dialysis treatments through Medicare, Medi-Cal and individual or group (employer or union) health insurance. The Legislative Analyst’s Office estimates that payments for dialysis amount to roughly $3 billion annually in California.  

This measure is the latest in a series of conflicts between Service Employees International Union-United Healthcare Workers West (SEIU-UHW), a labor union, and DaVita and Fresenius Medical Care. SEIU-UHW represents 97,000 healthcare workers across California and for years has been trying to unionize DaVita and Fresenius Medical Care workers. SEIU-UHW has also led legislative efforts to cap profits and otherwise regulate the industry, including Assembly Bill 290, which restricted private dialysis companies’ reimbursements for treatment. In 2018, a campaign led by SEIU-UHW West placed Proposition 8 on the ballot, which would have required that dialysis clinics refund patients or their insurers for any profits above 115% of the cost of direct patient care. The Prop 8 campaign was the most expensive that year. SEIU spent close to $19 million and the opponents (DaVita, Fresenius and U.S Renal Care) spent $111 million. The measure ultimately failed. Prop 23 proposes regulations focused instead on patient care.

SEIU-UHW collected signatures to place this measure on the ballot. It requires a simple majority (50% plus one vote) to pass.

Equity Impacts

If this measure were to lead to improved patient care, it would impact the elderly, who are more likely to develop kidney disease as they age and make up the majority of dialysis patients. It would also impact Black people, who make up close to a third of all dialysis patients. Kidney disease is prevalent in the Black community, largely because of the higher rates of type II diabetes and high blood pressure, which are major health risk factors.

However, should higher operating costs at these clinics force some dialysis clinics to close, these patients would have reduced access to critical treatments.

Pros

• SPUR did not identify any pros to this measure.

Cons

• This measure does not belong on the ballot. Patient advocates, labor advocates and clinic operators could negotiate these changes through the normal legislative process.
• Any future amendments to these regulations (with a few exceptions) would need to come back to the voters.
• Should dialysis clinics be forced to close as a result of increased operating costs, vulnerable patients could lose access to life-saving treatments.