In 1998, Gambro, an international health care corporation, acquired the outpatient renal dialysis services in West Central Michigan from Mercy Health Services. Gambro assumed ownership of almost all outpatient services in the counties of Kent, Muskegon and Ottawa. At the same time, Gambro entered into contracts with all but one of the local nephrologists making them a medical director of the Gambro dialysis program. the contracts with the nephrologists contained clauses preventing them from competing with the Gambro program. As a result of the acquisition and contracts with the local nephrologists, Gambro established a virtual monopoly in the area of outpatient dialysis services without the likelihood of substantive competition from others.

Upon establishment of its monopoly, Gambro significantly increased rates charged to private payers. Without local competitors, realistic alternatives were unavailable to the payers. In the Detroit area, where Gambro also purchased outpatient dialysis services, other competitors were present in the market and Gambro did not increase its rates.

In the West Central Michigan market, the Mercy Health Services program had been receiving approximately $135 to $140 per outpatient dialysis session. Following the acquisition, Gambro instituted a charge of $610 per outpatient dialysis session, although it offered discounts of 20% for payers promptly entering into contracts with Gambro.

After reviewing the situation in the West Central Michigan market, the Attorney General of the State of Michigan filed suit against Gambro claiming violations of Michigan antitrust statutes in September 1999.

Renal dialysis services are paid by private payers for the first 30 months in a lifetime of dialysis services for individuals with chronic renal failure, or until alternative treatment such as transplantation can occur. Following the first 30 months of dialysis, the Medicare program assumes responsibility for payment. Typically, the average patient receives 3 outpatient treatments weekly.

Control of the local market enabled Gambro to dictate higher prices, which it promptly did. Higher prices eventually are reflected in premiums for local residents with health insurance. For individuals who are underinsured, higher prices place a strain on their ability to have financial access to life-sustaining services.

• The Alliance for Health objects to the actions of Gambro to take advantage of its monopolization of the local dialysis market, which has placed its profits above the well-being of the residents of West Central Michigan.

• The Alliance for Health strongly endorses the actions of the Michigan Attorney General in bringing suit against Gambro.

• The Alliance for Health invites local providers and insurers to collaborate with the Alliance for Health on means to develop outpatient dialysis services as an alternative to the Gambro program.

• If an alternative program can be organized, the Alliance for Health strongly urges the local community to use such an alternative and to avoid use of the Gambro program.