TL;DR
Get workout gear delivered free with Prime
- Fast, free delivery on millions of items
- Prime Video, Amazon Music and more included
- Member-only deals all year
A study of 191 for-profit hospices acquired by private equity between 2018 and 2022 found Medicare spending per stay rose 5.9% compared with similar, non-acquired hospices. The increase was associated mainly with stays that averaged 6.3 days longer and a shift in patient mix; researchers found no increase in overall visits or time spent on visits.
Medicare spending per hospice stay rose 5.9% after private equity firms acquired for-profit hospices, compared with similar for-profit hospices that were not acquired, according to a study published in the November issue of Health Affairs. The increase was driven mainly by stays averaging 6.3 days longer; researchers found no increase in overall care visits or time spent on visits.
The researchers examined 191 hospices acquired from 2018 to 2022 and compared them with 1,305 matched for-profit hospices not owned by private equity. Using Medicare fee-for-service claims, they tracked changes during the two years before and after each acquisition and compared them with changes at the control hospices. The reported spending increase is an association found in that comparison, not proof that ownership alone caused every change.
After acquisition, fewer patients had stays of less than a week, more stayed longer than six months, and patients were more likely to be discharged alive. The share of patients with dementia rose from 22.6% to 23.8%, while the corresponding share at control hospices did not change. The study’s findings suggest a change in the mix of people admitted may have contributed to longer stays.
Medicare pays hospices a set daily fee, rather than varying the fee directly with the amount of care a patient receives that day. Researchers found no significant increase in total visits or time spent on visits per week after acquisition, and reported fewer social work visits. They also found no increase in physician, nurse or home health visits that might explain longer stays by extending patients’ lives.
How the Daily Fee Shapes Incentives
The findings matter because hospice patients may have very different care needs while Medicare’s daily payment is not directly adjusted for the amount of care each patient requires. The researchers said a person with dementia who needs relatively few services can generate the same daily fee as a patient with cancer who needs frequent visits and complex pain management. The costs of those services come out of that payment.
In that system, a longer stay can mean more daily payments, while patients requiring fewer services may cost less to care for. The study does not establish that individual hospices admitted patients for financial reasons, but its results raise questions about whether payment incentives align with patient needs. The issue affects families making decisions during a stressful period, as well as Medicare’s spending: the source report says nearly half of people who die in the United States are Medicare beneficiaries who use hospice, and up to a quarter of Medicare spending occurs in the last year of life.
The findings do not show that every acquired hospice delivered worse care, nor do they measure every aspect of patients’ experience. They do, however, identify changes in spending, length of stay, patient mix and some services that policymakers may want to examine together.
Products Worth Considering
Philips Sonicare 5950 Rechargeable Electric Toothbrush with 2 Brush Heads, Pink
Therabody SmartGoggles 2nd Gen Heated Eye and Temple Massager
Oral-B iO5 Rechargeable Electric Toothbrush with 5 Cleaning Modes and Travel Case, White
As an affiliate, we earn on qualifying purchases.
Private Equity’s Expanding Hospice Role
U.S. hospice ownership has shifted over the past two decades from mostly nonprofit to nearly three-quarters for-profit, according to the report. Private equity firms are described as the fastest-growing type of owner. The study focused specifically on hospices that were already for-profit before acquisition, asking whether their spending and care changed after private equity ownership compared with other for-profit providers.
In a typical private equity deal, a firm uses investor money and borrowing to buy a company; debt is generally assigned to the acquired company, which must generate revenue to repay it and interest. That financing structure is relevant background, but the study did not establish that debt payments caused the observed hospice changes.
Senior author Zirui Song has previously studied private equity ownership in other health care settings. Those earlier findings concerned hospitals and physician practices and should not be treated as results of this hospice study. The current analysis is based on Medicare fee-for-service claims and concerns the 2018–2022 acquisitions it examined.
“The goal of hospice is to provide respectful, person-centered care that helps terminally ill people approach end of life with dignity, while minimizing pain and suffering.”
— Zirui Song, senior author and associate professor of health care policy at Harvard Medical School
What the Claims Data Cannot Establish
The study identifies differences associated with acquisition, but the reported results do not establish that private equity ownership by itself caused them or explain each hospice’s decision-making. The source does not provide patient-level accounts of care quality, reasons for live discharge, or detailed information about how particular acquisitions were financed and managed.
It is also unclear from the report whether the spending pattern applies to hospices outside the studied group, to Medicare beneficiaries not in fee-for-service coverage, or to acquisitions after 2022. A change in the share of patients with dementia is consistent with a shift toward patients who may require less daily care, but it does not by itself establish why that shift occurred. The study reported fewer social work visits, while finding no significant change in overall visits or visit time; those measures do not describe every dimension of care.
Payment Policy Is the Next Test
The researchers said Medicare policy changes may be warranted. One option they raised is adjusting hospice payments according to patients’ clinical needs, potentially using diagnoses in a way similar to hospital payment adjustments. The report also cautions that risk-adjusted payments could create incentives to code diagnoses to maximize reimbursement, so any redesign would need to account for that possibility.
The study does not announce a policy change or specify a timetable for one. The next steps for policymakers would include weighing whether a different payment formula could better match payments to care needs while limiting incentives to select lower-need patients or inflate coding. Further research would also be needed to determine whether the observed patterns persist in other settings and how they relate to patient and family experiences.
Key Questions
How much did Medicare spending rise after the acquisitions?
The study found spending per hospice stay rose 5.9% at acquired hospices compared with similar for-profit hospices that were not acquired. The comparison covers the study’s analysis of acquisitions from 2018 to 2022.
What was associated with the higher spending?
Stays averaged 6.3 days longer after acquisition. Researchers also found fewer very short stays, more stays longer than six months, more live discharges and an increase in the share of patients with dementia.
Did acquired hospices provide more visits?
No significant increase was found in total visits or time spent on visits per week. The researchers reported fewer social work visits and no increase in physician, nurse or home health visits.
Does the study prove private equity caused the increase?
No. It compared changes at acquired hospices with changes at matched, non-acquired for-profit hospices. The results show an association; they do not establish that ownership alone caused the observed differences.
What payment change did the researchers suggest?
They said Medicare could consider adjusting the daily hospice fee according to patients’ clinical needs. They also noted that diagnosis-based adjustments could encourage coding to maximize payment, a risk policymakers would need to address.
Source: medicalxpress.com
