As Diaverum, one of the big five global dialysis operators, gears up for a $1bn-plus sale in 2019, what is the future of the only health care service which is truly internationalised?

As in so many health care sectors, patients on dialysis are ageing, requiring closer cooperation with referring hospitals and healthcare providers to manage co-morbidities and more complex cases. Moving from payment-per-session to capitation-based systems which cover all renal failure-associated illnesses is needed. But progress is “pretty crap everywhere,” says a former executive at a Big 5 company: Fresenius, Davita, B. Braun, Baxter and Diaverum.

Proving quality would help convince the public sector to hand over more control to operators, the first step towards the development of more holistic payment models. But without even considering the impact of scandals in the USA, there are barriers. Measuring quality is more straightforward than in other services. But comparisons between the private and public sector are not always fair. Public hospitals are often left with the highest-severity patients. That drags average mortality and complication rates upwards, rendering public-private comparisons pointless. And our contacts do not expect to see a big move towards per capita.

Even when dialysis is high quality that does not equate to a high quality of life. Far from it.

Haemodialysis which calls for a big machine in a centre and three visits a week, can be reduced. New tech that increases at-home peritoneal dialysis penetration or more transplants would go a long way to reducing dialysis need, while the invention of an artificial kidney, the holy grail, would render it extinct. But operators in dialysis talk of “a graveyard of technologies”. They have seen new ideas come and go enough to not be very worried.

But costs will be cut down the line. We hear Davita and Diaverum’s tariffs were negotiated down 15-20% for their Saudi renewals. In Hungary, the dialysis budget was static for a decade until late 2018, while haemodialysis tariffs were cut in Poland and Portugal recently.

But for dialysis operators high-growth markets like South East Europe, the GCC, Turkey and Brazil will make up for crisis-stricken countries that used to be core markets. Russia was a third of Euromedic’s dialysis profits when that segment was carved out and acquired by Fresenius in 2011, while Argentina has been 10-15% of Diaverum’s total patients for a decade. But currency devaluation in both may have affected dollar-revenue and exposure.

It is also becoming clear which emerging markets are off-limits. Diaverum is not interested in India, we hear, while Davita pulled out last year.  Africa still seems off-limits. But China, the Middle East and Latin America are all attracting substantial investment and M&A activity by the big five.