Good afternoon, ladies and gentlemen. Thank you for standing by.
I'm Francine, your conference call operator.
Welcome and thank you for joining the Fresenius Medical Care Expert Call on the Accelerating Growth in Home Dialysis.
Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may press Star followed by one on your touchtone telephone. Press the Star key followed by zero for operator assistance.
It's my pleasure, and I would now like to turn the conference over to Dominik, Head of Investor Relations. Please go ahead, sir.
Thank you, Francine.
We would like to welcome all of you to the Fresenius Medical Care Expert Call Series 2022, with accelerating growth in home dialysis.
We appreciate you joining today. As always, I'm happy to start out the event by mentioning our cautionary language that is in our safe harbor statement on slide 2 of the presentation. For further details concerning risks and uncertainties, please refer to this document as well as to our SEC filing.
At Fresenius Medical Care and as a vertically integrated business, we are uniquely positioned to support and expand our patient population being treated at home. More than ever, accelerating our growth in home dialysis is a key strategic priority as the current labor environment further highlights the importance of extending home treatments to help reduce in-center labor costs and staffing pressures. I'm delighted to have Dr.
Franklin Maddux, our Global Chief Medical Officer, and Joseph Turk, our Global Head of Home, here to present today. Please be aware that this call will not cover the financial background or any costs or revenue questions in this relation.
I will now hand over to Franklin to begin the presentation. The floor is yours.
Great. Thank you, Dominik, and welcome everybody for joining this particular call.
Today, we are really going to be talking about something that is vitally important to our expanding strategy and the opportunity to continue to grow the opportunities for patients to have greater power and choice in the care that they get.
I want to step back for just a moment, 50 years, and recognize that next month, 50 years ago, the Social Security Amendments of 1972 fundamentally changed access to kidney care and actually created this right for patients in the United States to survive and live with a very deadly condition.
Over time, that growth of access to care has developed into this broad capability that wherever you live in many parts of the world, you can gain access to renal replacement therapy and kidney therapy. As this goal has evolved and matured, we've seen that the renal care continuum has become fundamentally more important in the evolving environment of people with kidney disease and living their lives with this difficult disease.
Treating patients more holistically and through the different stages of kidney disease has also included the expansion of the treatment modalities that are available that give them more power and more choice in what they're doing. Home treatments are a huge component of that, along with transplant CKD care, supporting acute care and the relevant areas for our call today being home.
Home is a key driver for executing on our larger strategy and addresses some of the current challenges of the development of the field that promoted broad access to care, but is now looking for ways that improve patients' symptom management, their quality of life, and a more personalized care treatment.
It positions us as a opportunity for our future growth opportunities to extend beyond the traditional healthcare facility in providing that care. Empowering patients to live the life that they want and to select the treatment that's best for them at that stage of their life is a huge part of evolving the maturity of the field of kidney disease therapy and certainly kidney replacement therapy. Developing patient choice in that and the power for patients and their doctors to choose what's best for them becomes very important.
Improving outcomes and reducing costs are important. Whether it's the U.S. government, private insurer payers, other governments, the support of home therapies and the underlying needs to get the advocacy for the appropriate home and transplant quality metrics and the appropriate value-based care arrangement is one of the opportunities to again mature the system that improves outcomes and reduces cost to the overall healthcare system of these important therapies.
Finally, labor is one of the challenges today that has been a side effect and related to the pandemic. As we address wage inflation and the fact that labor accounts for 40% of our in-center costs, we recognize that home and therapies in a non-healthcare facility like that become an important component.
Our clinic network remains important to us because it is the opportunity for us to make sure that we adequately are supporting and developing the infrastructure that's needed for patients on home dialysis, whether that's a training environment, a respite care environment, an environment for somebody who transitions to a sicker condition. Or, in fact, actually to recognize that there are other purposes that we can use for some of these facilities to support patients in their connected health environment.
If we can move on to slide four, please. We, we believe that Fresenius Medical Care is positioned uniquely to lead home growth. We have this full network of product services and value-based care opportunities with our physician partners that leverages our vertically integrated business model to serve patients where they are and through this entire journey of life that they have with this difficult disease.
It's critically important that patients and physicians are comfortable with their home treatments, and that they have both access to the most current technology, but also that that technology is reliable, straightforward, and that we've embraced this connected health environment where whether you're operating in a facility and you have direct visualization of a patient, or you're operating at home and the patient has a connected health contact to their care team, all of those become critically important.
This infrastructure is part of what is still in the process of being matured and developed and includes training support, 24/7 support, every day of the week so that there's access to a caregiver for a patient, whether they're at home, whether they're in a community facility, and to recognize that the distribution and logistics of the supplies and the treatments and the characteristics of care are something that's available to all of them.
We, as a company, have made many of these investments and have tried to expand and recognize the importance of the proper infrastructure that aligns with the options for care and the choices that we want patients to have. Our experience in dealing with this complex patient population and the reach that we have globally really is unparalleled in this industry.
Today we have over 1,200 active home programs in the United States. We have experts that are both on the medical side from the product development side, the engineering side, the science of the therapies and what it is that causes the therapies to work better or worse in an individual person.
Finally, we have our FKC clinic footprint that helps create this seamless transition between modalities of care that need to occur when a patient is actually transitioning through the various stages of their life and the various stages of the modalities of care that they have. If we could move to slide 5, please. When we look at the results of this and we say, well, what happens when you increase the degree of power and choice that an individual patient has?
What does that look like? Well, we know that one measure of that success is patient satisfaction. What we found is when patients are highly engaged in their own care, they recognize the nuances of their own health and their own physiology, we find that they are more satisfied with that care. They understand it better. They are living the life that they want.
They have more choices with that. When we look at our home patients, we see Net Promoter Scores that are world-class. They are. They're above this 70 level of this Net Promoter Score identification of world-class. It recognizes that not only is the therapy part of that, but it is this coordinated network that we provide that helps give them the confidence that they can be in charge.
Part of this is critically important in their ability to manage the ebbs and flows of living a life with a severe disease such as this. If we could move on to slide six. I want to speak for just a minute before turning it over to Joe, just a little bit about the fact that home dialysis offers a degree of flexibility in the timing of treatments, the number of treatments, and the personalization of the care that a patient gets that is substantially different than the model where everybody dialyzes in this consistent three treatments per week.
Now, although our systems and the recognition of our systems is the payment models pay us on this three times per week basis, the realistic nature of taking care of patients recognizes that for some patients, that's more than adequate.
For other patients, it's not inadequate, and you need to tailor their care. This opportunity to recognize the benefits of tailored care and, where home dialysis offers a recognition of, the potential for identifying an aligned number of treatments to what the patient needs, is something that we think is actually a substantial advantage of this self-care environment that home dialysis brings today.
For patients that recognize the number of treatments that they need based on what their oral intake is, their fluid intake, their nutritional needs, their blood pressure needs, we've seen that more frequent dialysis can be associated with better blood pressure, can be associated with lower mortality from the long interdialytic interval that can occur over the long weekend break in some patients.
We know physiologically and anatomically there's less cardiac remodeling that occurs.
We've noticed that during a treatment, lower ultrafiltration rates can reduce the myocardial impact on a patient.
We recognize that both health-related quality of life measures that patients report on themselves and better bone and mineral metabolism parameters are in fact improved when a tailored number of treatments is given to a patient.
Given these favorable outcomes, we think that it's important to recognize that payers also understand that when you personalize a treatment and you have the greatest opportunity to do that in the environment of a home environment where the patient is participating actively in their care is one of those opportunities that we think is better for our business, better for our healthcare system, and results in better outcomes for patients.
With that, I'd like to turn it over to Joseph Turk to discuss some of our aims and aspirations and starting on the next slide. Joseph?
Thanks, Franklin, and thanks, everybody for joining this call.
We like to talk about home, and we really do believe that home dialysis growth is set to accelerate in the years to come. It's a key part of our strategy.
Going back a couple years, at the time of the NxStage acquisition announcement, we set a target that we wanted to reach over 15% of home treatments in the U.S. by 2022. Now, during that period, COVID-19 and the pandemic certainly impacted our business and brought on a number of challenges.
Most notably, of this, whether it be from the hospital perspective or what was going on in the clinics, it reduced the training levels and the training capacity.
We continued to grow home dialysis through this period and achieved the 15% plus target a year ago, early in 2021. We do believe that our commitment allowed for growth that was in excess of the rest of the industry.
The pandemic certainly presented some challenges, but it also highlighted the benefits of home treatments. In February we did announce a new aspirational target of 25%. There are a number of things that we need to do that we need to continue to improve on to increase home access and the home penetration in order to approach and reach the aspirational target. The most important thing is increasing home access.
Simply put, that's increasing the number of patients that start home dialysis, get trained to go home on dialysis. That is made up of a few key strategies. About one-third of the growth, 80% is increasing the training as I mentioned, and about a third of that is by increasing the number of patients that go home from in-center. Dialysis is a continuum of care, and patients will experience multiple modalities over the course of their treatments. It's important that patients that are in-center are given the opportunity to go home, choose home.
Also, obviously, increasing the number of the new patients that are starting dialysis that go directly to home, and that's about a third of the opportunity. Then there are a number of patients that are on peritoneal dialysis as you all know.
At some point, peritoneal dialysis may not be the right therapy for them anymore. Ensuring that those patients have the opportunity to stay at home with home hemodialysis is an important growth opportunity as well. About 15% of the opportunity comes from that. The other 20% improves from increasing the number of patients that are able to stay at home and stay at home longer.
This is just continuing to improve the quality of care, the quality of training, the quality of the ongoing support of patients at home through technology and other means. This contributes as the slide says, about 20% to the overall strategy to approaching the or to reaching the 25% target of home treatments. Next, let's go to slide eight.
There, the growth will come from both peritoneal dialysis and home hemodialysis, and we feel confident in both. Currently, about two-thirds of the patients at home are on peritoneal dialysis.
We believe that will continue to grow in the mid- to high-single-digit %, obviously it's a more mature therapy and there are more patients on home peritoneal dialysis right now. The PD growth is really going to be driven by earlier detection and through CKD management and education.
I'm sure you've noted the three-way Interwell Health merger that we've announced and that really helps with management of our CKD population and helps to enable these home growths, these home goals. We really do believe that there's an opportunity to continue to grow peritoneal dialysis in the mid- to high-single-digit range through the coming years. Now, home hemodialysis is a smaller portion.
It's about 1/3 of the U.S. home treatments right now. We believe that there's much more growth opportunity and that it's about 20%. It's faster growing because the awareness is increasing more rapidly. The key drivers here are really the in-center to home transition we talked about. The re-education of in-center patients is a big opportunity here.
We also believe that not all patients are right for PD, whether it be clinically or from a lifestyle perspective. We also believe that more new patients can choose home hemodialysis. Then clearly once the PD therapy is not right for a patient, being able to transition that patient to home hemodialysis is an opportunity.
Opportunities in both therapies and together they help reach the goals. Let's go to slide nine. One of the strategies that Fresenius Medical Care has been employing to increase and retain home patients has been the transitional care unit or the TCUs. We currently have about 100 TCUs in the U.S. nationally, and these serve a number of different functions.
The TCUs help to educate patients on options. This is not solely about home therapy. It's about helping the patient choose the right therapy for themselves based upon a better understanding of what they're looking for. It's really an opportunity to.
For patients to try the different home therapies in advance understanding what's involved with either peritoneal dialysis or home hemodialysis. The TCU, the 100 TCUs that we have, each support roughly four programs, four centers that help them increase their home programs. The TCUs operate in a regional hub type of network.
The results to date really demonstrate effectiveness. This is even in some of the challenges staffing, those sorts of things during the COVID era that have impacted all of dialysis. One out of three patients that are educated in a TCU end up choosing home, which versus just 5% or one out of twenty that don't participate in a TCU.
We're starting to see multiple other clinical advantages associated with patients that experience the TCU. We're seeing a trend towards improved survival and less likelihood of being hospitalized during the time after their TCU versus matched controls.
We see more likely to be referred or wait-listed for kidney transplants, and this is a very important part of what Fresenius is looking to achieve, the support of transplantation. We also see higher rates of arteriovenous access, either grafts or fistulas versus catheters after the TCU. That's a really important part of improving the clinical outcomes and the experience of the patient. We plan to further expand our training capabilities with more TCUs.
We're looking to add 60+ in the foreseeable future, now that we understand some of these benefits, and we've worked out some of the operational processes.
An important part of success overall, but certainly success at home. Next, let's go to slide 10. One of the questions that I'm sure you're asking, and we ask ourselves, do we really believe the opportunity to grow to 25% and beyond? Then, when we take a look across our network within the United States, the home penetration in select markets really does support that growth opportunity. As we said last year, we passed 15% of treatments across the us for home.
This varies dramatically by market. There are several markets that are well above 25% of home treatments and others that are well below 15%. We're really optimistic about our ability to reach the 25% and beyond from leveraging some of the expertise and learnings from larger markets to really increase the penetration of home markets with lower penetration currently.
We've done work based upon the data that we have and we understand that the differences are really more in practices and application of the different techniques to really support and excel in home versus any fundamental clinical differences between the patients or differences in the different markets.
clearly, there are some things that must be addressed with health equity and challenges that may be associated with that, but that's really an opportunity to do even more for patients.
This is just helping doing the blocking and tackling and improving our practices across different regions, taking the experiences from others that are a little bit further ahead in the adoption will be really supportive of growing home therapy. Next, slide 11. As a vertically integrated company, we have the opportunity, clearly, to work and optimize in the services side with things like the best practices and transitional care units.
With our product side, we have the opportunity to really innovate and bring to market those products that help patients, help nurses, help our customers, grow therapy, grow home therapy.
We're committed to innovate across peritoneal dialysis, connected health, home hemodialysis. One of the examples of our innovation is the VersiPD Cycler System, which is the smallest, the lightest, the quietest PD cycler available. We announced in April that we received FDA approval for this and we continue to work on bringing this one to market.
An example of a potential real breakthrough in terms of patient-focused and trainer-focused innovations to help grow home dialysis. Next, let's go to slide 12. One of the other innovations that we feel is incredibly important is the whole connected health platforms. With peritoneal dialysis, the connected health platform we have is called Kinexus.
This is, we've begun to roll connected Kinexus out, and it's in a material number of you know of our customers, and it is already improving outcomes. It increases time on PD by three and a half months, and that's really driven by reducing the patient dropout by about 15%.
It also really allows for timely interventions clinical interventions to ensure the dosing of the therapy is right, ensure that the fluid situation is as Franklin mentioned before, with respect to hemodialysis, but it's also an opportunity with peritoneal dialysis, make sure that that's being addressed appropriately so the therapy is really optimized for patients. It's reliable, it's easy to use.
There are 15,000 patients connected. We've passed 1 million treatments collected into the system on Kinexus, and it uses a cellular connection, so no internet is required.
The vast majority of patients can adopt this and the clinics can start seeing the benefit, both from an operational perspective and from a clinical perspective. Connected health, big deal.
We continue to invest in it and think it will be a material advancement to the ability for home to grow in PD. Next, let's go to slide 13. With the NxStage acquisition back in 2019, we also have a very unique position in home hemodialysis and we continue to innovate in that with the market-leading technology with the NxStage System One.
The NxStage platform has been committed to innovation and from its introduction, it's at a steady pace of material innovations that have brought it to where it is today. i summarize what some of the the most important items on this is, the devices and the system is very simple. It's a simple interface. It's not complicated, so it's easy to learn and use.
The cartridge itself, the tubing set and the dialyzer that are used on a per treatment basis, are designed to be super easy in order to use just by dropping it in and closing the door.
The system was really designed for use in a non-clinical environment. Any plumbing connections, if necessary, are very simple and don't require changes to the home. It uses a standard electrical plug, so it does not require modifications to the electrical system.
Its most unique advantage is that it is portable. 70% of the patients actually travel in some way, shape, or form, whether it's a weekend trip to go visit family in the back of the car or putting the system on a plane to go on a vacation elsewhere. It's really the only system that allows this type of portability and travel.
It's all through all the years of experience, it's extraordinarily reliable, and it is the only model with FDA approval for additional indications other than just home, assisted home. It's approved for solo, cleared for solo use without a partner and for nocturnal hemodialysis. The reliability is high, but it's also supported by a service swap model.
If the device happens to need some repairs, the patient doesn't miss treatments because another system is sent and put in its place within 24 hours, which is really important for keeping patients at home. It is the only system out there that allows the patient either use dialysate fluid that's prepared at home or the use of pre-mixed dialysate bags.
That's important for a number of different reasons. One is there's no travel with the system without the pre-mixed dialysate bags. Part of it is associated with the portability.
Not all homes are have the quality of water or the quantity of water to allow dialysis, traditional dialysis treatments or using online fluids. Then the other thing is that like it or not, we have issues with water supply discontinuity, whether it be in quality or volume, and not missing treatments because there's always the option to use pre-mixed dialysate bags is real important.
Just like in peritoneal dialysis, connected health is essential for home hemodialysis as well. The platform with home hemodialysis is called Nx2me. Now, over time, we're going to harmonize these products, the Kinexus and the Nx2me. Nx2me has also been shown to improve patient retention. Essentially 29% lower therapy discontinuation rate and reduced training time to actually for patients that use Nx2me when they start therapy.
Connected health is a big deal for hemodialysis as well.
Now let's go to slide 14. There are a number of innovations in the HHD pipeline as well.
We've learned a lot about this market, both from NxStage's time in it, but also with the close integration between Fresenius Kidney Care services and the product side. One of the first innovations that is intended to come to market, targeted for mid-2023, is the GuideMe interface. I had mentioned before that the home hemodialysis platform has involved a series of innovations over the years and building upon each other.
The GuideMe interface is intended to be the state-of-the-art in terms of ease of use with a touchscreen interface. It builds upon uses the touchscreen that exists in today's NxStage system.
It really will drive a new level of usability within the platform. It really helps patients understand what's going on with the treatment, context-sensitive help use, just really helping improve that connectivity between the patient and the therapy. It will allow enhanced troubleshooting. The good news is that patients don't have that many issues with the system, but when you do, it's worth, for whatever reason, whether there's a kind of an arteriovenous access challenge or something else going on, it's nice to have some troubleshooting help there, because you might not have had to troubleshoot for a while.
As I mentioned before, this is a software improvement that can be applied to machines in the field with the touchscreen interface. This is really something that a large number of patients and clinics will be able to experience the benefit of relatively quickly. We're targeting this mid-2023. One example, we've got other things that are in the pipeline.
Not going to talk about those right now, but continued development and innovation is really important and one of the things that will allow home to continue to grow to 25% and beyond. Let's go to slide 15.
We also believe that there is home growth potential outside the U.S. in the mid to long term. We spent most of the time today talking about how home could develop in the U.S., and that's because the U.S., with the current status of the presence of Fresenius Kidney Care or our presence in the services market with Fresenius Kidney Care, with what's been going on with some of the governmental support of home dialysis and the evolution of value-based care in the U.S. The U.S. is really advanced with respect to its commitment to home growth.
However, several of the reasons that make home attractive in the U.S. really do apply to other regions of the world.
The technology advances and the increased connectivity really do make home treatments a possibility and more effective in more locations. Looking out in the mid to long term, we also see some growth potential based upon some of the macro trends. There's no doubt that COVID-19 has raised awareness and highlighted some of the benefits of home therapies in an uncertain environment.
There have been headwinds for sure, but the notion that home therapy is a really valuable therapy in the face of uncertain types of events, is really recognized across geographies. Second is that the U.S. is not the only market in the world facing a nursing shortage.
This is relevant in emerging markets, for sure, where the dialysis population is growing quickly. There's also issues in more of the developed markets, Eastern, Southern Europe and some of Southeast Asia.
The healthcare systems in general across the world are beginning to introduce. It's a general trend that they're beginning to introduce targets for home dialysis or preference for home dialysis versus in-center dialysis and this exists in Asia also in Europe, particularly in France and the U.K. and Italy. lastly in emerging markets, in countries with limited clinic infrastructure today, home therapies can really increase access to dialysis care.
It may not be exactly how home dialysis is implemented in more of the developed markets or how exactly it's happening in the US right now, but it really can help to increase access to dialysis care in some of these markets and change the way that these markets evolve. Again, thanks for the opportunity. We really are excited about where home dialysis can go, both from a patient access perspective and from a technology perspective. With that, Dominik, why don't I hand it back over to you for Q&A.
Thank you, Joseph. Thank you, Franklin, for the presentation.
Before we open the lines for questions, please be reminded we focus on home dialysis and not business development right now.
Please use the opportunity to ask questions on home-related topics while you have these experts here. I know this is a rare opportunity, and we gave a lot of detail, which might make it difficult to ask questions, but use the opportunity.
With that, I'll hand back to Francie to open the lines, please.
Thank you, Dominik.
Ladies and gentlemen, at this time, we will begin the question-and-answer session.
Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using a speakerphone today, please pick up the handset before making your selection. In the interest of time, please limit yourself to two questions only.
Anyone who has a question may press star followed by one at this time.
One moment for the first question, please.
We got the first question from Oliver Metzger from Oddo BHF. Please go ahead, sir.
Yeah. Good afternoon or good morning. Thanks for taking my questions.
The first one is on the labor savings. Can you give us just a rough indication? An HHD patient still needs some nursing time. You have all the trainings, you have potentially even some temporary treatments in dialysis centers. If you index a normal HD patient at 100, do you think it is fair to assume a level of 20 for an HHD patient with regards to labor intensity compared to the average hemodialysis patient? That's number one. Number two is a question on the regulatory framework.
You reflect also in the presentation that basically HHD treatments are more frequently, you mentioned even the four treatments per week compared to the three treatments per week for in-center dialysis.
First, it converts into more revenues per patients, which is good. You reflect also the medical benefits. Could you share with us your experience in conversations with the healthcare payers, how happy they are with the current reimbursement set up? If even if your aspirational target of 25% fulfills, the HHD number will be much bigger. Do you think that the payment per treatment for home hemodialysis patients will continue? Thank you.
Yeah. Joseph, why don't you take the first one on labor savings? Okay. Let me comment at least first on the second question that Oliver had. Okay. Yeah, good question on the labor savings. We're not going to answer that specifically with specific numbers, your 100 versus 20. But let me give you a little bit how we are thinking about it. Labor is clearly a challenge today. It's also historically a very significant component of in-center dialysis treatments, about 40% of in-center costs. Home is actually a little bit more labor intensive up front when you're training the patient.
It's much, much less labor intensive on an ongoing basis, when the patient's at home and you're doing case management, you're not doing the direct treatments. There's definitely an opportunity to become more efficient with labor leverage over time, with home therapies. We're continuing to make investments in things that will help to improve that. The investments in technology that we're making to help keep patients home are help to extend that period and therefore help with our efficiency in terms of ability and effectiveness and being able to manage that.
Then other investments that we make and how we organize and telehealth help to improve that as well. We're not going to give specific numbers on that, but suffice it to say that as we continue to grow and as we continue to make the improvements that we plan to make, the labor efficiency, dealing with the challenges that we have right now, is an important part of the strategy.
Yeah. May I ask one quick follow-up on your answer, please? If you look for the labor intensity during the training, is it comparable to the labor intensity of a normal HD patient? Or is it just more labor intense during this first, let's say, weeks or months, and then you just get the benefit?
It's a little bit more intense for the first during the weeks that are required for training, depending upon which modality is and depending on the patient. It's a little bit more intense just because there's actual small group communication either one-on-one or very small group, in terms of things that are required to manage for the patient to do well on the therapy at home, which is more than just more than just the machine. There's more interaction during the training period than there is during administering a treatment in the clinic.
Oliver, this is Franklin. I'll take your second question and be fairly quick about it. I think payers recognize that when patients do better, they're in the hospital less and their overall costs are substantially reduced.
We have great data to show that patients that are highly engaged in their own care, that also affects how much support they need, and reduces that sum, also reduces their intensity of care, that they're required, as an inpatient in hospitals and their overall cost of care. For us, we think that tailoring the number of treatments is accepted by the payers because the overall cost of healthcare is controlled better that way.
Okay. Thank you very much.
The next question is from James Vane-Tempest from Jefferies. Please go ahead, sir.
Good afternoon, thanks for taking my questions.
Two please if I can. Just curious on the NxStage One, how does this differentiate it to sort of Outset Medical's offering and what Quanta is kind of offering as well in terms of the differentiation of the hardware? My second question is what's the limiting factor for greater growth in home? Is it the educating the caregivers or is it more the patient worry if something goes wrong or also something else just to see what are the limiting factors to get more to the 25%? Apologies for the background noise.
Thank you.
Joseph, you want to take the System One question?
I think that the biggest difference. I heard the first question is what's different about the NxStage system versus some of the others that are out there. I think that the first is just the level of data experience all of those sorts of things that go on that are associated with tens of thousands of patients and millions of treatments. So there's a level of kind of comfort and experience with the machine. But beyond that, there are really some material differences that are very important to doing therapy at home.
The first is the portability.
This allows incredible flexibility, the ability to travel kind of even the flexibility within an individual home. I mentioned before that 70% of patients actually take advantage of travel.
Our research has repeatedly confirmed that this is the single most important feature to patients. It's not surprising that peritoneal dialysis has been adopted to the degree it has because it also gives this sort of portability, this sort of flexibility. We're the only system in this country that allows that. The new competition has gone in a different way, particularly with respect to how it deals with water and dialysate.
T he competition that's been most present in the US is decidedly not portable at a 200-pound-plus weight. It's just a different strategy from a design perspective that you know we've chosen and we feel are comfortable that we've chosen a good direction.
The second is reliability. This is so essential at home. One of the biggest ways to kill a home program is if the patients have to go back into the center routinely because lack of reliability in the machines at home.
One of the hallmarks of the System One is our reliability, the rock solid reliability that's been refined over the years. As a backup to that is the service swap model, where we replace a non-working machine within 24 hours, versus having to have a service technician go and perform the repairs, which is at a minimum expensive, also relatively patient unfriendly and in today's labor environment is a real challenge. This, the reliability and the way that we handle reliability events when they happen is really important differentiation of our system. Lastly is really the modularity. Particularly with the fluids. Our cartridge is fully integrated.
There's no connection, simplifies set up and really reduces clinical risk of the patient. The modularity allows for kind of robust treatments to happen on travel and if there are disturbances to the water supply for some reason. This portability, reliability, modularity, these are reasons that the most dominant therapy at home PD has been acceptably successful. What the System One does is apply kind of the best of some of the operational characteristics of peritoneal dialysis with the clinical flexibility and advantages of hemodialysis, particularly more frequent hemodialysis.
James, this is Franklin. I'll just quickly make a couple of comments to the second part of your question, and that is barriers that might be out there to the 25%. I think for both patients and providers, getting a clear comfort that home is a preferential treatment is a change of paradigm. For 50 years, we've been doing in-center hemodialysis, and for many of our providers, they want to make sure that they've got adequate support staff, for things that might come up in whatever time of day or night that a patient's dialyzing. Patients having confidence that they can actually participate actively in their care is something we've got to help encourage more of and recognize that we have expectations for them, that they are participatory in that care.
I think these are all things that overcome with time, maturity of the systems, intuitiveness of the systems, and maturity of how we support the infrastructure, whether it's through connected health or whether it's through other policies that recognize that this type of therapy where a patient is actively participating in their care, whether it's physically at their home, whether it's in a third-party place that's not a healthcare facility, or whether it's in a true healthcare facility, is a distinct paradigm shift.
Thank you.
Okay. We can take the next question.
The next question is from Veronika Dubajova from Citi. Please go ahead, ma'am.
Hi, guys. Good afternoon, and thank you for taking my questions.
I'll keep it to two as well, please. My first one, it's a little bit of a follow-on to James' question. I think, Franklin, you've, in the past, talked about the PD to in-center HD switch rates being fairly high. Most of the PD patients, even in your own clinics, were ending up in-center after they were no longer eligible for PD therapy. It'd be great to hear if you've made any progress in moving the needle on that, and how much more work you think you have to do, so that most of your PD patients are converting to home HD as opposed to in-center HD, once they're no longer PD eligible. That's my first question.
My second question is just sort of more conceptually on the physical footprint. I think this has been a debate we've been trying to figure out an answer to, and I haven't so far managed to, but maybe you can elucidate for us. If we do end at a place where 25% of your patients are on home HD, what would you think should happen to your physical footprint in terms of the number of clinics that you'd need to operate in the U.S. to satisfy that type of demand? Thank you.
Yeah. Let me start with the first part, Veronika. I don't think we've reached the tipping point on PD to in-center switches as much as we would like. I think we do recognize and know quite well now that if you are to keep a patient at home, then you need to allow them to go through the modality adjustments that they need to have while they're at home, so that they're continuing to be responsible for that care, whether it's physically at home or physically in a facility. That includes switches, not just PD to HD, but in-center to a home therapy transplant, coming back to dialysis, a lot of different areas.
I think the transitional care units are a huge model to disintermediate the immediate sort of knee-jerk switch to somebody going in-center, and I think we have seen improvements in that. I think there's more room to improve from where we are. I'll make a quick comment on the physical footprint, and simply recognize that Joe may have some additional color to that.
In general, I think the physical footprint begins to change what it is somewhat over time. That change includes developing more training drop-in centers, things for respite care, things that aren't traditional in-center facilities, but recognizing that there's still a substantial support system that's needed while we try to consolidate within markets the appropriate geography of real estate that's needed to support all the patients that are in that geography.
I can't give you a pure number saying this is how many clinics you'd change or close because you went to 25%. I would say you'd be utilizing your geography of real estate quite differently, as you progress to have more patients that are dialyzing in effectively non-healthcare facility space. Remember, home isn't necessarily always occurring at somebody's house.
It may be occurring in another setting in the community that's not a healthcare facility for that patient's self-care treatment. Joe, do you want to kinda elaborate on that a little more?
Yeah. I'll come on both. First with respect to the transition from peritoneal dialysis to home hemodialysis. Not surprising when you take a look across the country.
There are some program markets that have more success than others. Part of the challenge is just making sure that the discussion about the modality options takes place before it's some sort of crisis or therapy, hospitalization, whatever happens. Part of this is to continue and improve the in-center or the PD to home hemodialysis transition, which is about process and best practices.
Part of it is about you know technology and predictive analytics to so that we can help our staff and help our providers really understand when is a good time to really have some of these discussions.
There's a number of things that we can continue to do to improve that. With respect to you know the number of dialysis centers and new centers you know clearly even at 25% home there's a lot of there's still 75% in the clinics and the market you know the number of dialysis patients continues to grow. We watch this very closely and watch what's going on in different markets.
Since 2016, we've signed shorter lease agreements, so we have flexibility to be nimble when it's appropriate to be nimble. Then we'll continue to take a look at what that infrastructure and what consolidations are appropriate as we go forward.
Understood. Thank you, guys. I'll turn back into the queue.
The next question is from Hugo Solvet from BNP Paribas. Please go ahead.
Hello. Thanks for taking my questions.
I have two.
You mentioned that 75% of patients remaining on in-clinic treatments for now. What would an aspirational target for 2030 look like? Should we expect it to reach a plateau in 2025 at 25% or continue to increase at the same pace beyond that? Second, on the retention rate, can you share with us the retention rate that you have on HHD at the moment and how it has improved over time?
Thank you.
Go ahead, Joseph.
Yeah. Do you want to comment on the 25% and what happens after as we move forward?
Yeah. I, the only real comment I can make on that is to say that the conditions that patients will need more choice and more opportunity to be able to seamlessly move between modalities is going to get easier and easier over time. I would imagine by 2030 that we will have systems of care that are as mature for home treatments as they have been for in-center treatments.
The ability to transition and move to whatever is right for the patient should be easier by then. I don't have a number.
Yeah. I would definitely agree with that. Improving or increasing to 25% of treatments at home is a major change. Do we believe that we will continue to grow beyond that? Yes, we do.
We're going to understand more of the challenges to get beyond that kind of in a more discreet fashion as we approach it. we'll need to refine our strategies and our technology. What I'd say is, we're really focused on getting to the 25% right now, kinda like we were focused on getting to the 15% before, and we'll talk more about kinda what's next later.
Joseph, do you want to comment on HHD retention and the sort of progression that you've seen?
Obviously keeping you know patients on therapy for as you know and as long as they can be successful at home is important. You know there are a couple reasons that patients would come off of home therapies.
You know one is for you know clinical reasons, whether you know transplants or death. There are some patients that home therapy is just not right for anymore. You know the general, our drop rate has been pretty stable for the last three years.
Even as three years ago, we had tremendous growth, and over the last couple years, there have been the challenges associated with with COVID. We're kind of in a weird spot that there have been a number of different real impacts.
They have not changed our dropout rates significantly. We are making investments in things that we know we have evidence that it improves the retention and reduces the dropout rates namely the starting front in the transitional care units, but also further implementation optimization of the connected health.
we believe that our innovations and technology will continue to improve those drop rates. Our intent is to continue to be able to offer home therapies to more and more patients. Some of that growth may impact. You may have patients that have fundamentally more issues or more challenges in their home environment.
Our goal is to continue to make those improvements to retention rates and as we increase access to more patients at home, ensure that drop rate at a minimum does not decline, but more likely improves over time.
And the only.
Okay.
Yeah, the only thing I'll add to this comment is to just recognize that these modalities don't sit in isolation from each other. People are going to transition their journey through them and it's quite clear that people on home hemodialysis periodically, if they have an acute illness or something, go in-center for a week or have a different form of care for a week.
I think that you'll begin to see over time a little less of the distinction between the modalities as people will sort of transition through whatever their journey is. I think we look at that it's not only PD, HHD, in-center HD, but it also includes transplant and ultimately end-of-life palliative care.
Thank you.
The next question is from Richard Felton from HSBC. Please go ahead.
Hi. I will also keep it to two please, and thanks for this, your presentation.
My first question is about transitional care units. These are the transitional care units. How do they differ from your clinics? Do you usually place them near or at your clinics? Do you have these contracts of similar maturity for them?
Do you see a correlation between the locations where you build these transitional care units and the number of patients or the ratio of prevalent patients being on home dialysis? That was the first question, please.
The second one, within this 25% target, do you also have a target for ratio of patients being in PD versus home HD?
Okay.
Yeah.
Franklin, do you want me to answer those?
Yeah, go ahead.
There are a number of TCU models that are out there. There are some that are connected to a home program. There are very few that are actually kind of freestanding transitional care units. The most likely or the most common implementation of a TCU is actually taking a small section of the segregated section of an in-center floor and having that as a place where patients can start dialysis.
Because of the flexibility in how we can implement these, we can optimize that for what the needs of the market are and where the capital exists in the market. Do we see a real impact of TCUs on patients going on home? The answer is yes. One of the things that we take a look at is the number of patients that start home dialysis within the first 90 days of starting dialysis.
In those those TCUs and in the additional clinics that are served by the TCUs, the percentage of patients that are going home in the first 90 days is above what it is in markets without it.
We do see the benefit there in addition to the other long-term clinical benefits that I mentioned before. With respect to the breakdown of home dialysis or PD versus HHD, when we get to 25%, we haven't outlined that. We talked about roughly a third of treatments are HHD today, and two-thirds are PD, and that we expect home hemodialysis to grow about 20% and PD to grow in the mid- to high-single digits.
we haven't calculated a specific or released a specific number on that, but you can kind of do the math on what we talked about before.
Sure.
Thank you, Richard. This is Matt. Thank you.
There are no further questions at this time. I hand back to Dominik for closing comments.
Thank you, everyone for participating today. We have exceeded our 60 minutes.
We have been hopefully able to increase your understanding of our position in the home space and the opportunities we are seeing.
We also hope you will join us again at the next event of our expert call series, which will be about value-based care.
With that, I say again thank you to Franklin and Joseph and for all of you to participate, asking questions and having a lively discussion.
Thank you and goodbye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone.
Thank you for joining, and have a pleasant day. Goodbye.