Hospice care , once provided primarily by nonprofit agencies , has seen a remarkable shift over the past decade , with more than two-thirds of hospices nationwide now operating as for-profit entities . The ability to turn a quick profit in caring for people in their last days of life is attracting a new breed of hospice owners : private equity firms .
That rapid growth has many hospice veterans worried that the original hospice vision may be fading , as those capital investment companies ’ demand for return on investment and the debt load they force hospices to bear are hurting patients and their families .
“ Many of these transactions are driven by the motive of a quick profit ,” said Dr . Joan Teno , an adjunct professor at Brown University School of Public Health , whose work has focused on end-of-life care . “ I ’ m very concerned that you ’ re harming not only the dying patient , but the family whose memory will be of a loved one suffering because they didn ’ t get adequate care .”
According to a 2021 analysis , the number of hospice agencies owned by private equity firms soared from 106 of a total of 3,162 hospices in 2011 to 409 of the 5,615 hospices operating in 2019 . Over that time , 72 % of hospices acquired by private equity were nonprofits . And those trends have only accelerated into 2022 .
Hospice is an easy business to start , with most care provided at home and using lower-cost health workers . That allowed the entry of smaller hospices , many launched with the intent of selling within a few years . Private equity firms , backed by deep-pocketed investors , could then snatch up handfuls of smaller hospices , cobble together a chain , and profit from economies of scale in administrative and supply costs , before selling to an even larger chain or another private equity firm .
Private equity-owned hospice companies counter that their model supports growth through investment , which benefits the people in their care .
“ Private equity sees a huge opportunity to take smaller businesses that lack sophistication , lack the ability to grow , lack the capital investment , and private equity says , ‘ We can come in there , cobble these things together , get standardization , get visibility and be able to create a better footprint , better access , and more opportunities ,’” said Steve Larkin , CEO of Charter Healthcare , a hospice chain owned by the private equity firm Pharos Capital Group .
But he acknowledged that not all of those entering the hospice market have the best intentions .
“ It is a little scary ,” he said . “ There are people that have no business being in health care ” looking to invest in hospice .
A Boom Industry
With the U . S . population rapidly aging , hospice has become a boom industry . Medicare — the federal insurance program for people 65 and older , which pays for the vast majority of end-of-life care — spent $ 22.4 billion on hospice in 2020 , according to a Medicare Payment Advisory Commission report to Congress . That ’ s up from $ 12.9 billion just a decade earlier . The number of hospices billing Medicare over that time grew from less than 3,500 to more than 5,000 , according to the report .
But with limited oversight and generous payment , the industry is at high risk for exploitation . Agencies are paid a daily rate for each patient — this year , about $ 200 — which encourages for-profit hospices to limit spending to boost their bottom lines . For-profit hospices tend to hire fewer employees than nonprofits and expect them to see more patients .
Many hospice nurses and social workers are booked for 30-minute appointment slots throughout the day , unable to spend more time with patients if needed . For-profit hospices hire more licensed practical nurses than registered nurses , who are more skilled , and rely more on nurse ’ s aides to further cut costs . One study found patients in for-profit hospices see doctors or nurse practitioners one-third as often as those in nonprofit hospices . The U . S . Government Accountability Office found in an analysis of federal data from 2014 to 2017 that patients in for-profit hospices were less likely than patients in nonprofit hospices to have received any hospice visits in the last three days of life .
“ The main way of making the bottom line look good is decreasing visits ,” Teno said .
According to the Medicare Payment Advisory Commission , for-profit hospices had Medicare profit margins of 19 % in 2019 , compared with 6 % for nonprofit hospices .
For-profit hospices also enroll a different set of patients , preferring those likely to remain in hospice longer . Most costs are incurred in the first and last week of hospice care . Patients who enroll in hospice must undergo several assessments to develop a care plan and set their medications . In their final days , as the body begins to shut down , patients often need additional services or medications to stay comfortable .
“ So the sweet spot is kind of in the middle ,” said Robert Tyler Braun , an assistant professor of population health sciences at Weill Cornell Medical College .
That makes dementia patients particularly profitable . Doctors have a harder time predicting whether a patient with Alzheimer ’ s disease or another form of dementia has less than six months to live , the eligibility criterion for enrollment . For-profit hospices enroll those patients anyway , Teno said ,
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