UPI, May 19, 2011
BLOOMINGTON, Ind. (UPI) — End-of-life hospice care is being dominated by investor-owned chains that cherry-pick patients and cut labor costs to maximize profits, U.S. researchers say.
Dr. Robert Stone, an emergency medicine physician in Bloomington, Ind., and Joshua Perry of Indiana University say end-of-life hospice care was once the province of charitable organizations, but 52 percent of hospices are now part of the for-profit sector.
For-profit hospice industry grew by 128 percent from 2001 to 2008, while the non-profit sector grew by only 1 percent. During the same period, government-sponsored hospices increased by 25 percent.
“Research shows that for-profit hospices, and especially publicly traded chain providers, generate higher revenues than their non-profit counterparts,” Stone says in a statement. “They do this in part, studies show, by selectively recruiting longer-term patients, most of whom do not have cancer, thereby gaming the Medicare payment system.”
Medicare currently pays hospice providers a fixed per diem payment throughout a patient’s stay, regardless of whether services are provided on any given day, Stone says.
“Hospice patients’ use of services are greatest on the first day, when services are set up, and in the last few days of life,” Stone says. “Hospices that recruit longer-term patients will be overpaid and will drain funds that should be going to patient care. Typically, the for-profit companies also pay lower salaries and benefits to a less-skilled staff, and employ fewer registered nurses. This raises quality concerns.”
The study is published in the Journal of Law, Medicine and Ethics.
Rapid growth of for-profit hospices raises ethical concerns, study says
McKnight’s Long-Term Care News & Assisted Living, May 19, 2011
The success of the for-profit hospice industry has caused concern among ethicists who say that the goal of profitability interferes with their ability to provide quality end-of-life care, according to new research.
The for-profit hospice industry grew by 128% between 2001 and 2008, while nonprofits expanded only 1% and government-sponsored hospices jumped 25%, according to research published in the summer issue of the Journal of Law, Medicine and Ethics. Not surprisingly, for-profit hospices generate higher revenue than their nonprofit competitors. Investigators say they do this by selectively recruiting long-term patients who don’t have cancer, thus gaming the Medicare payment system. The study co-author, Robert Stone, M.D., says that other studies have shown that when for-profit hospices select longer-term patients, this results in overpayment, which, in turn, drains funds from the hospice program.
“Typically, the for-profit companies also pay lower salaries and benefits to a less-skilled staff, and employ fewer registered nurses. This raises quality concerns,” Stone said.
Stone and his co-author, Joshua Perry, J.D., M.T.S., contend that these practices put non-profit hospices’ financial survival at risk. The study also highlights questionable marketing practices used by for-profit hospices. One tactic involves sending representatives into nursing homes and giving residents branded gifts. Another is paying nursing home employees for future hospice referrals.
For-Profit Hospice Providers Skyrocket in Last Decade
By Emily Mullin
Dorlund Health, June 9, 2011
In the past decade, the for-profit hospice industry has grown at an astounding rate – from 2001 to 2008 the for-profit sector ballooned by 128 percent, according to a study released in the May issue of the Journal of Law, Medicine and Ethics.
In contrast, in those same years, the nonprofit hospice industry grew by only 1 percent and government-owned hospice grew by 25 percent.
The authors of the study, called “In the Business of Dying: Questioning the Commercialization of Hospice,” critique the rise in for-profit hospice care, a sector in end-of-life healthcare that focuses on improving the quality of life for people who face life-limiting illnesses.
Hospice, which traces its origins to 1960s London, started out in the United States as a fraction of the healthcare industry. In 1978, there were fewer than 60 hospice providers in the country, according to the study. But by 1981, that number grew to more than 400. In 2008, there were 3,300 hospice providers in the United States.
Currently, 52 percent of all hospices in the United States are for-profit while 35 percent are nonprofit entities and 13 percent are owned by the government.
This shifting landscape of the hospice industry could be troubling as the delivery of hospice services becomes increasingly commercialized, say authors Joshua E. Perry and Robert C. Stone, both faculty members at Indiana University.
Perry and Stone argue that the Medicare payment structure for hospice care, which reimburses hospices at the same per-diem rate regardless of the patient’s illness, is an incentive for for-profit hospices to select patients with illnesses that will allow them to stay in a hospice longer than patients with terminal illnesses like cancer.
“The concern is that some new hospice providers, which are predominantly for-profit, may be pursuing a business model based on maximizing length of stay and thus profitability,” a 2009 Medicare Payment Advisory Commission (MedPAC) to Congress said.
Perry and Stone say that adjusting the Medicare payment structure could help alleviate this. They suggest changing the payment structure so that hospices would be paid more per day for higher costs associated with the entrance of a patient into hospice and for higher costs at the end of a patient’s life with relatively lower costs in the middle.
While evidence indicates that for-profit facilities generate higher revenues than nonprofit ones, the study’s authors say that there is still not enough research to indicate whether for-profit hospices actually provider worse care than their nonprofit and government counterparts.
Brenda Mitchell, CEO of the nonprofit Crater Community Hospice, which serves central Virginia, said she has noticed a trend in the past several years of more for-profit hospices springing up.
“Really what has happened over the years is that the community not-for-profit hospitals have been sold to bigger for-profit hospitals, and some of those hospitals once they were sold got rid of their hospice services,” Mitchell says.
Plus, the recession and economic downturn have made it increasingly difficult for nonprofit hospices to stay afloat.
“You need profit regardless of whether you’re a for-profit hospice or nonprofit,” Mitchell says. “At this point in time, if you were going to start a nonprofit then you’ve got to have a lot of money up-front to make sure you’re going to be able to keep the doors open before you build up your business.”
Crater Community Hospice is the only nonprofit in Richmond and the surrounding area, but the facility still competes with other for-profit hospices, according to Mitchell.
“It’s hard to say that your tax status has anything to do with the quality of care that you’re providing,” she says.
Theresa Forster agrees. Forster, vice president for hospice policy and programs for the Washington, D.C.-based National Association for Home Care and Hospice, says it’s unfair to generalize about the values of a healthcare provider based on the financial structure of the organization.
“It is also important to keep in mind that the rise of the for-profit entity on the hospice ‘scene’ has occurred at the same time that hospice has gained greater public understanding, acceptance and popularity,” Forster says.
The National Hospice and Palliative Care Organization responded to a February article about for-profit hospices in the Journal of the American Medical Association by saying the article didn’t provide any correlation between the profit status of a hospice program and the quality of care provided.
In contrast, the Family Evaluation of Hospice Care, a quarterly survey conducted by the organization, has found that there is no difference in family caregivers’ evaluation of the quality of care based on a hospice program’s profit status.
Concerns raised about increase in for-profit hospice care
By Stephanie Bouchard, Associate Editor
Healthcare Finance News, May 26, 2011
INDIANAPOLIS – In less than a decade, for-profit hospices have proliferated at an astounding rate, and that may be cause for concern, say the authors of “In the Business of Dying: Questioning the Commercialization of Hospice,” a study released earlier this month in the Journal of Law, Medicine and Ethics.
For-profit hospices grew 128 percent from 2001 to 2008, while nonprofits grew by 1 percent and government-owned hospices grew by 25 percent, the authors noted in the study.
While no one can explain why for-profits have grown by leaps and bounds, various arguments include aggressive marketing strategies and “cherry picking” patients on the part of for-profits.
“What we do know exists is that the for-profit facilities have figured a way to make healthy profits in this area,” said Joshua Perry, one of the study’s authors. “I guess that’s what was prompting some of the questions that my colleague and I raise in the article. How are they doing this? It turns out that in part they’re doing it because they are very selective about the types of patients that they treat. So there’s clearly a strategy whereby they’re going to target the patients that are least costly to care for.”
A study referred to in “In the Business of Dying,” which was released by the Journal of the American Medical Association last winter, reported that for-profit hospices seem to have a higher proportion of patients that are cheaper to treat than nonprofits – for example, patients who stay longer in hospice care.
Medicare’s payment structure reimburses hospices at the same per-day rate regardless of the patient’s illness – which, say the authors of “In the Business of Dying,” causes a perverse incentive for hospices to select patients whose illnesses will allow them to remain in hospice longer, such as dementia patients, over those with more acute illnesses, such as cancer patients.
“If you can recruit an Alzheimer’s patient, there may not be an awful lot of day-to-day expense, and yet the per diem is the exact same for that care as it would be if you’re a hospice taking all comers and you have a cancer patient that requires a lot more palliative care and end-of-life care,” Perry said. He noted that there has been no evidence of for-profit hospices denying patients admission based on their terminal illness.
“When they talk about cherry picking – which is a serious issue and that’s illegal – no hospice should be able to stay in business if they’re performing illegal practices of any sort,” said Jon Radulovic, vice president of communications for the National Hospice and Palliative Care Organization, an nonprofit member group representing hospice and palliative care programs and professionals, including both for-profit and nonprofit hospices.
Radulovic said he believes the rise in for-profit hospices has more to do with the roots of hospice, which began as a volunteer-based movement outside mainstream medicine and focused on end-of-life care for cancer patients. Because nonprofits have established decades-long relationships with those in the cancer community, he theorized, for-profits were forced to create a business model seeking non-cancer patients.
He also thinks nonprofits who are dedicated to the original vision of hospice may have a hard time facing the challenges of a maturing hospice marketplace.
“There’s competition in markets that never had competition before,” he said. “I think it means a lot of providers, regardless of their tax structure, those long-term providers who have been in their communities, have to market in a more aggressive way, and I think for a lot of those the marketing is sort of the ‘M’ word. It’s something that just – it’s not dignified. It doesn’t honor this sacred journey that we go on.”
While Perry said he believes changes to the Medicare reimbursement structure would even out the playing field between for-profits and nonprofits by eliminating the perverse incentives, Radulovic cautions against being hasty on the reimbursement issue.
“There is a need to look at reimbursement, absolutely,” he said, “but not until we are sure we have the data (to support that sort of change). Just changing it for change’s sake would ultimately end up turning into a barrier to reaching people who are in need of care.”
“Our concern is that if there’s too much of a focus on just the profit status question,” he noted, “you’re missing the opportunity to home in on those areas where we really do need to improve.”