For-Profit vs Nonprofit Hospice: the Controversy Continues

Several weeks ago we wrote a blog about hospice, a topic that frequently surfaces when it comes to discussions about Living Trusts and end-of-life care. Hospice offers terminally ill patients treatment focused on comfort rather than aggressive methods aimed at a cure. Hospices may be either for-profit or nonprofit–and on a growing basis, studies are showing that they do not provide the same level of care.

An increasingly wide gap in the level of care

According to a 2013 study by the Washington Post, based on hundreds of thousands of Medicare patient and hospice records from 2013, data show that the gap between the for-profits as a whole and nonprofits is striking and consistent, regardless of hospice size. The rate at which patients leave a hospice alive is a closely watched measure of quality. For-profit hospices have a higher percentage of patients who drop out of care before dying. High dropout rates can be an indicator that patients were pushed out of hospice when their care grew expensive or were enrolled for hospice even though they were not close to death.

The typical for-profit hospice:

• Spends less on nursing per patient.
• Has a smaller proportion of registered nurses on staff.
• Provides a narrower range of services.
• Is less likely to have sent a nurse to a patient’s home in the last days of life.
• Is less likely to provide more intense levels of care for patients undergoing a crisis in their symptoms.
• Is increasingly disenrolling patients before they die. Now, about 20% of hospice patients are discharged alive. Data show that it’s the hospices, not patients, who initiate a majority of these discharges. The proportion of patients leaving a for-profit hospice is typically 22%, while it is only 14% at nonprofits.

The typical nonprofit hospice:

• Typically spent about $36/day per patient on nursing visits (for-profit hospices spent $30/day).
• Is more likely to provide the more intense services—continuous nursing and inpatient care — required by patients whose symptoms are difficult to control.

While hospices of both kinds usually dispatch a nurse to see a patient at some point during the last two days of life, for-profit hospices are more likely to fail in this regard, according to the analysis.

Hospice: a boom industry

The number of hospice firms has risen rapidly, and over the past decade the growth has come almost entirely from new for-profit operations, and unfortunately, older hospices of both kinds — for-profit and nonprofit — appeared to perform better than new hospices, according to the statistics.

• In 2012, Medicare spent more than $15 billion on hospice care.
• Growth has been accompanied by turbulence. Between 1999 and 2009, more than 40% of hospices experienced one or more changes in ownership.

The expansion has been driven in large part by investors, including private equity firms, hedge funds and entrepreneurs. More than a dozen private equity firms have invested in businesses that provide hospice care, including giants such as The Carlyle Group, Kohlberg & Company and Summit Partners. The hospice market is hot, owing in large part to the favorable U.S. demographics–more old people and that tantalizing demographic—aging babyboomers.

The alignment of for-profit companies and dying patients

Some industry experts, often those in the traditional nonprofit hospices, question whether the goals of a for-profit company and a dying patient are easily aligned. Many believe the high live discharge rate indicates the hospices are being driven by financial motivation rather than patient care. Others counter that patients may be leaving these hospices because they were dissatisfied with hospice or didn’t understand what they were getting into in the first place, that the hospice failed in the admissions process.

Regulatory scrutiny of the hospice industry lags behind

Nonprofit hospices receive a large portion of their operating budgets from donations. Given the budget pressures facing hospices and the scramble to enter this market, oversight is critical to ensure that financial demands do not trump patient care. But regulatory scrutiny of hospices has lagged behind those of other healthcare institutions, though Congress has recently called for more frequent inspections. Without as much oversight, hospice operators can place more emphasis on the needs of their shareholders than those of their patients.

Next up: We’re going to be taking a look at hospice care here in the Bay Area.

Preparing a Living Trust tends to generate important conversations about end of life issues, including Advance Healthcare Directives, which are part of our comprehensive packages. California Document Preparers has three convenient Bay Area offices: Walnut Creek, Oakland or Dublin. Stop in soon to talk to us about your Living Trust.