[Federal Register Volume 81, Number 4 (Thursday, January 7, 2016)]
[Notices]
[Pages 775-778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00038]


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FEDERAL TRADE COMMISSION

[File No. 151-0215]


Rangers Renal Holdings LP; Analysis 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 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 January 29, 2016.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/rangersrenalconsent online or on paper, 
by following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Rangers Renal Holding, 
LP; US Renal Care, Inc.; Dialysis Parent, LLC; and Dialysis HoldCo, 
LLC.,--Consent Agreement; File No. 151-0215'' on your comment and file 
your comment online at https://ftcpublic.commentworks.com/ftc/rangersrenalconsent by following the instructions on the web-based 
form. If you prefer to file your comment on paper, write ``Rangers 
Renal Holding, LP; US Renal Care, Inc.; Dialysis Parent, LLC; and 
Dialysis HoldCo, LLC.,--Consent Agreement; File No. 151-0215'' on your 
comment and on the envelope, and mail your comment to the following 
address: Federal Trade Commission, Office of the Secretary, 600 
Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, 
or deliver your comment to the

[[Page 776]]

following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex 
D), Washington, DC 20024.

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

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 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 December 30, 2015), on the World Wide Web, 
at http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before January 29, 
2016. Write ``Rangers Renal Holding, LP; US Renal Care, Inc.; Dialysis 
Parent, LLC; and Dialysis HoldCo, LLC.,--Consent Agreement; File No. 
151-0215'' 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 privileged or confidential,'' as discussed 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/rangersrenalconsent 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 ``Rangers Renal Holding, 
LP; US Renal Care, Inc.; Dialysis Parent, LLC; and Dialysis HoldCo, 
LLC.,--Consent Agreement; File No. 151-0215'' on your comment and on 
the envelope, and mail your comment to the following address: Federal 
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., 
Suite CC-5610 (Annex D), Washington, DC 20580, or deliver your comment 
to the following address: Federal Trade Commission, Office of the 
Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 
5610 (Annex D), Washington, DC 20024. 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 January 29, 2016. 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 Order (``Consent 
Agreement'') from Rangers Renal Holdings LP (``Rangers Holdings''), the 
parent of US Renal Care, Inc. (``USRC''), and Dialysis Holdco, LLC 
(``Dialysis Holdco''), the parent of Dialysis Newco, Inc. d/b/a DSI 
Renal (``DSI''). The purpose of the Consent Agreement is to remedy the 
anticompetitive effects resulting from Rangers Holdings' purchase of 
Dialysis Parent, LLC (``Dialysis Parent''). Dialysis Parent is the 
parent of Dialysis Holdco. Under the terms of the Consent Agreement, 
USRC is required to divest DSI's three dialysis clinics in Laredo, 
Texas.
    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, modify it, or make final the Decision and Order 
(``Order'').

The Transaction

    Pursuant to an agreement dated August 21, 2015, Rangers Holdings 
proposes to acquire all of the outstanding membership interest in 
Dialysis Holdco from Dialysis Parent in a transaction valued at 
approximately $640 million. Dialysis Parent is currently the sole owner 
of all membership interests in Dialysis Holdco. 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 substantially lessening competition in one market--Laredo, 
Texas--for the provision of outpatient dialysis services.

The Parties

    Privately owned and headquartered in Plano, Texas, USRC is the 
third-largest provider of outpatient dialysis services in the United 
States. USRC operates more than 200 outpatient dialysis clinics in 20 
states and treats approximately 15,500 patients.

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    DSI, headquartered in Nashville, Tennessee, is a privately held 
company and the sixth-largest provider of outpatient dialysis services 
in the United States. DSI operates 100 dialysis centers, providing 
dialysis services to approximately 7,500 patients in 22 states.

The Relevant Product and Structure of the Markets

    Outpatient dialysis services is the relevant product market in 
which to assess the effects of the proposed transaction. For patients 
suffering from End Stage Renal Disease (``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 treatment 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, ESRD patients have no 
alternative to dialysis treatments. ESRD patients who are not 
hospitalized must obtain dialysis treatments from outpatient dialysis 
clinics.
    Dialysis services are provided in local geographic markets limited 
by the distance ESRD patients are able to travel to receive treatments. 
ESRD patients are often very ill and suffer from multiple health 
problems, making travel further than 30 miles or 30 minutes very 
difficult. As a result, competition among dialysis clinics occurs at a 
local level, corresponding to metropolitan areas or subsets thereof. 
The exact contours of each market vary depending on traffic patterns, 
local geography, and the patient's proximity to the nearest center.

Entry

    Entry into the outpatient dialysis services markets identified in 
the Commission's Complaint is not likely to occur in a timely manner at 
a level sufficient to deter or counteract the likely anticompetitive 
effects of the proposed transaction. 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 also essential to the success of a clinic 
because they are the primary source of referrals. In the relevant 
geographic market, there are few unencumbered nephrologists and few 
outside nephrologists willing to move into the area. These obstacles 
make entry in the affected market more challenging and less likely to 
avert the anticompetitive effects of the transaction.

Effects of Acquisition

    The geographic market identified in the Complaint is highly 
concentrated. The proposed acquisition would cause the number of 
providers to drop from three to two in this market leaving USRC with a 
dominant position in Laredo, Texas. The post-acquisition HHI for this 
market exceeds 4000, and the change in HHI is more than 1200. The 
evidence shows that health insurance companies and other private payers 
who pay for dialysis services used by their members benefit from direct 
competition between USRC and DSI when negotiating rates charged by 
dialysis providers in this market. The high post-acquisition 
concentration level, along with the elimination of USRC's and DSI's 
head-to-head competition suggest the proposed combination likely would 
result in higher prices for outpatient dialysis services in this 
geographic market. In addition, the evidence shows that market 
participants compete for patients on a number of quality measures--
including quality of facilities, wait times, operating hours, and 
location. Given the high post-acquisition concentration level, the 
proposed combination would likely result in diminished service and 
quality for patients in Laredo, Texas.

The Consent Agreement

    The Consent Agreement remedies the proposed acquisition's 
anticompetitive effects in the Laredo, Texas market by requiring USRC 
to divest DSI's three outpatient dialysis clinics to Satellite 
Healthcare Inc. (``Satellite'').
    As part of these divestitures, USRC is required to obtain the 
agreement of the medical director affiliated with the divested clinics 
to continue providing physician services after the transfer of 
ownership to the buyer. Similarly, the Consent Agreement requires USRC 
to obtain the consent of all lessors necessary to assign the leases for 
the real property associated with the divested clinics to the buyer. 
These provisions ensure that the buyer 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 the buyer with the opportunity to interview 
and hire employees affiliated with the divested clinics and prevents 
USRC from offering these employees incentives to decline the buyer's 
offer of employment. This will ensure that the buyer has access to 
patient care and supervisory staff who are familiar with the clinics' 
patients and the local physicians. Second, the Consent Agreement 
prevents USRC from contracting with the medical director affiliated 
with the divested clinics for three years. This provides the buyer with 
sufficient time to build goodwill and a working relationship with its 
medical director before USRC can attempt to capitalize on DSI's prior 
relationship in soliciting his services. Third, to ensure continuity of 
patient care and records as the buyer implements its quality care, 
billing, and supply systems, the Consent Agreement requires USRC to 
provide transition services for a period up to 12 months. Firewalls and 
confidentiality agreements have been established to ensure that 
competitively sensitive information is not exchanged. Fourth, the 
Consent Agreement requires USRC to provide the buyer with a license to 
use USRC's policies, procedures, and medical protocols, as well as the 
option to obtain USRC's medical protocols, which will further enhance 
the buyer's ability to continue to care for patients in the clinics 
that will be divested. The Consent Agreement requires USRC to provide 
notice to the Commission prior to any acquisitions of dialysis clinics 
in the market addressed by the Consent Agreement in order to ensure 
that subsequent acquisitions do not adversely impact competition in 
that market or undermine the remedial goals of the proposed order. 
Finally, the Consent Agreement allows the Commission to appoint a 
monitor to oversee USRC's compliance with the Consent Agreement.
    The Commission is satisfied that Satellite is a qualified acquirer 
of the divested assets. Satellite is currently a significant operator 
of dialysis clinics, operating over 70 outpatient and home dialysis 
clinics since 1973.
    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.


[[Page 778]]


    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-00038 Filed 1-6-16; 8:45 am]
BILLING CODE 6750-01-P