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Dying and profits: The Evolution of Hospice

By Peter Whoriskey and Dan Keating

[A] Washington Post analysis of hundreds of thousands of U.S. hospice records indicates that, as [for-profit] companies transformed a movement once dominated by community and religious organizations into a $17 billion industry, patient care suffered along the way. On several key measures, for-profit hospices as a group fall short of those run by nonprofit organizations.

The typical for-profit hospice:

  • Spends less on nursing per patient.
  • 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.
  • Has a higher percentage of patients who drop out of hospice care before dying. High rates of dropout are often viewed as a sign that patients were pushed out of hospice when their care grew expensive, left dissatisfied or were enrolled for hospice even though they were not close to death.

“Unfortunately, a lot of people have come into the business for the wrong reasons,” said Michael Girard, who with his wife Deb owns the Circle of Life for-profit hospice in Reno, Nev. “A lot of the problems we have in hospice today have happened with the entry of what I call the ‘vulture capitalists.’ ” Hospice operators have an economic incentive to provide less care because they get paid a flat daily fee from Medicare for each of their patients. That means that the fewer services they provide, the wider their profit margin.

The number of hospice firms has risen rapidly, and over the past decade the growth has come almost entirely from new for-profit operations. Between 2000 and 2012, the number of for-profit hospices tripled…

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, Summit Partners and GTCR. “Hospice [mergers and acquisitions] market is red hot (peak valuation levels),” according to a presentation by financial analysts at Cain Brothers last year, which cited, among other things, the favorable U.S. demographics — more old people.

But some in the industry — often those in the traditional nonprofit hospices — have questioned whether the goals of a for-profit company and a dying patient are easily aligned. “If you think as a businessman and you want to make money, you will cut and cut and cut,” said Helen Zebarth, who cofounded the nonprofit Blue Ridge Hospice in Winchester, Va., in 1979. She credits the beginning of Medicare and insurance coverage with allowing far more people in the United States to receive hospice services. But it also turned hospice into a big business, which operates side-by-side with the visionaries remaining from the movement’s early days.

[S]ignificant differences appear to distinguish for-profit and nonprofit hospices. The key findings:

  • Nonprofit hospices typically spent about $36 a day per patient on nursing visits; for-profit hospices spent $30 per day, or 17 percent less. The gap between for-profits and nonprofits remains whether the hospices are old or new.
  • Nonprofit hospices are much more likely to provide the more intense services — continuous nursing and inpatient care — required by patients whose symptoms are difficult to control. Nonprofits offered about 10 times as much of this per patient-day as did for-profits.
  • 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. A typical patient at a for-profit hospice is 22 percent less likely to have been visited by a nurse during this window than a patient at a nonprofit hospice, the numbers show, a sign that for-profit hospices may be less responsive during this critical time.
  • Patients at for-profit hospices are much more likely to drop out of hospice care than patients at nonprofit hospices.

Some previous academic studies have found other differences between for-profits and nonprofits. Elizabeth Bradley, a Yale health policy professor, has conducted several such studies and found that for-profit hospices appear to offer less for patients: that nursing staffs at for-profit hospices had a smaller proportion of registered nurses; that patients at for-profit hospices received a narrower range of services; and that for-profit hospices were more likely to restrict enrollment of patients with potentially high-cost care.

The Washington Post


Higher Level of Care

By Toby Ehrlich

Bruce Birnberg, executive director, pointed out that the first hospices in the United States were established in 1970, many of which began in church basements. Hospice as we know it today began as a faith-based model. It is estimated today, that hospice programs serve over 450,000 terminally ill individuals and their families each year.

“There was a time going back about 15 years ago, that you would find that the huge majority of hospices were non-profit like Stein, but that reality has switched. The whole thing has turned on its head with the industry dominated by for-profit hospices,” he reported.

The public doesn’t always understand the differences between for-profit and nonprofit hospices, he said, “This happens when the patient or their family are forced to make decisions on information thrust upon them during a crisis. They automatically think that if a professional staff member is suggesting a particular hospice, that it will be fine and they just sign up.” Unfortunately, most people don’t know that they do have a choice, or that they can ask questions and they don’t fully understand that there can be vast differences between hospices. Care and services are not always the same from hospice to hospice.

Birnberg added, “At Stein Hospice, our nurse-to-patient ratio is 1 nurse to 10 patients, while most for-profit hospices in New Jersey have 25 patients to 1 nurse.” This creates a huge difference in the type of actual care that will be provided.

Complementary therapies, such as massage and harp therapy, are also available for patients and their families to help with stress management.

Members of the community eagerly pitch in to support one of Stein Hospice’s most generous and notable endeavors – The Chicken Soup Project. Volunteers cook homemade soup to help warm and nourish the patients and their families during this difficult time. Other volunteers deliver many kinds of non-medical support to the patient and family to help wrap them in loving comfort.


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