Management Report Outlook Health Care Sector and Markets 
HEALTH CARE SECTOR AND MARKETS
The health care sector is one of the world’s biggest industries. The generally difficult conditions in 2009 should have a moderate impact on the industry because of its defensive and, compared to other sectors, less cyclically sensitive character. The demand for life-saving and life-sustaining products and services, especially, will remain intact since they are medically necessary. However, in the mid to long-term, funds channeled into economic programs to contend with the financial crisis in other sectors may not be available for the health industry.
The dialysis market
We expect the number of dialysis patients to rise by 5 to
7% in the coming years, although significant regional
differences are anticipated. In industrialized nations, such
as the United States, Japan, and the countries of Central
and Western Europe, where people already have broad
access to dialysis treatment, we expect below-average patient
growth. In many developing countries, however,
where the needs of patients with chronic kidney failure
are still not met sufficiently, we expect above-average
growth rates of up to 10% in these markets. That more
than 80% of the world’s population lives in these growth
regions highlights the enormous potential of the dialysis
market there. The global dialysis market will probably
grow by approximately 5% p. a. to clearly more than
US$ 70 billion by the year 2010.
Reimbursement schemes for dialysis treatment vary from country to country. Reimbursement structures may also differ within individual countries. They may depend, for instance, on regional factors, the method of treatment, regulatory aspects, or the status of the dialysis care provider. Reimbursement for dialysis treatments according to quality-based criteria also remains a central issue. In this reimbursement model, the quality of treatment should increase while the total cost of treating a dialysis patient should remain constant.
Fresenius Medical Care has been active for many years in numerous countries, involving a variety of health care systems and reimbursement schemes. Thanks to this international experience, we are able to support the varying activities of the national health care systems, to adjust our business to the local environment, and to generate profitable growth. Patients covered by the public health insurers Centers for Medicare and Medicaid Services (CMS) in the United States account for about 35% of Fresenius Medical Care’s dialysis care revenues.
The Medicare Improvements for Patients and Providers Act of 2008 was passed in 2008. The act increases the composite rate by 1% from January 1, 2009 and by another 1% from January 1, 2010. It also provides for the introduction of a bundled payment system for ESRD (end stage renal disease) from January 1, 2011. Under this scheme, CMS will reimburse the dialysis clinics with a single payment for (i) all items and services currently included in the composite rate, (ii) all erythropoietinstimulating agents and other pharmaceuticals (other drugs and biologicals, other than vaccines) furnished to the patients that were previously reimbursed separately, (iii) diagnostic laboratory tests and (iv) other services furnished to individuals for the treatment of ESRD. The bundled reimbursement rate is initially fixed at 98% of the estimated costs of the Medicare program for dialysis care in 2011. This estimate is calculated on the basis of the lowest per patient utilization data from 2007, 2008, or 2009 under the present reimbursement system.
From 2012 the bundled payment amount will be subject to yearly increases, based on the increase in the cost of a mix of dialysis items and services still to be defined by HHS (U.S. Department of Health and Human Services) minus 1%.
