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A study of 191 for-profit hospices found Medicare spending per stay rose 5.9% after private equity acquisition, compared with similar hospices that were not acquired. The increase was mainly associated with stays averaging 6.3 days longer and a shift in patient mix; researchers found no increase in visits or total time spent on care.
Medicare spending per hospice stay rose 5.9% after private equity firms acquired for-profit hospices, compared with spending at similar hospices that remained independent, according to a study published in the November issue of Health Affairs. The increase was mainly associated with longer patient stays, not more reported care visits, raising questions about how hospice payments reward providers and how patients are selected.
Researchers compared 191 hospices acquired by private equity firms from 2018 through 2022 with 1,305 matched, for-profit hospices that were not owned by private equity. Using Medicare fee-for-service claims, they examined changes in the two years before and after each acquisition, relative to changes at the comparison hospices.
The average stay at acquired hospices increased by 6.3 days. Patients were less likely to have stays shorter than a week, more likely to remain in hospice for over six months, and more likely to be discharged alive. The share of patients with dementia rose from 22.6% to 23.8%; it did not change at the comparison hospices.
The researchers found no significant increase in total visits or time spent on visits per week after acquisition. Physician, nurse and home health visits did not rise, while social work visits decreased. The findings point to longer stays and a changed mix of admitted patients as key factors associated with higher spending, rather than an increase in measured service volume.
How Longer Stays Affect Medicare
Medicare generally pays hospices a set daily rate, regardless of how much care an individual patient needs that day. A longer stay can therefore mean more daily payments, while the cost of services delivered comes out of that rate. The study’s authors say the shift toward patients who may require less ongoing care could help explain the spending increase under this payment structure.
The issue reaches many families: the source report says nearly half of people who die in the United States are Medicare beneficiaries who use hospice. Hospice care is intended to support people with terminal illness and their families near the end of life. The study does not establish that any individual patient received inappropriate care, but it raises questions about whether current payment incentives align with patients’ needs and Medicare’s costs.
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Private Equity Enters Hospice Care
U.S. hospice ownership has shifted over the past two decades from mostly nonprofit providers to nearly three-quarters for-profit, according to the source report. Private equity firms have become a fast-growing type of owner. The study focused specifically on hospices that were already for-profit before acquisition, allowing researchers to compare them with similar for-profit providers rather than with nonprofits.
The analysis used Medicare claims and matched comparison hospices to estimate changes associated with acquisition. It found that the share of patients with dementia increased at acquired providers while the comparison group’s share remained stable. Because the study was observational, it identifies patterns following acquisitions but cannot by itself establish why each change occurred or prove that ownership caused every outcome.
“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 Show
The findings do not explain why each hospice’s patient mix or length of stay changed, and they do not establish that private equity ownership alone caused the observed differences. Claims data also cannot fully determine whether a particular admission, discharge or level of care was clinically appropriate. The study reports fewer social work visits and no significant increase in overall visit volume, but those measures do not capture every aspect of hospice quality or patient and family experience.
The supplied report does not give the study’s full methodology, detailed spending amounts in dollars, or results for outcomes such as patient comfort and family satisfaction. It is also unclear whether the observed patterns apply to hospice acquisitions outside the study period or to providers with different ownership structures.
Payment Policy Under Review
The researchers said changes to Medicare’s hospice payment system may be warranted. One option they identified is adjusting the daily payment according to a patient’s clinical needs, using diagnoses in a way similar to hospital payment systems. The source report also notes a possible drawback: risk adjustment could create incentives to code diagnoses in ways that increase reimbursement.
The study does not announce a policy change or a timetable for one. Further research and policy debate would be needed to assess how payment reforms might affect access, care quality, patient selection and spending. For now, the reported results provide evidence for policymakers to weigh, while leaving the reasons behind individual hospice decisions and the effects of any reform unresolved.
Key Questions
How much did Medicare spending rise after acquisition?
The study reported a 5.9% increase in spending per hospice stay at acquired hospices compared with similar for-profit hospices that were not acquired.
What was associated with the increase?
The increase was mainly associated with stays averaging 6.3 days longer and a shift in the mix of admitted patients. Researchers found no significant increase in total visits or visit time per week.
Did the study find that private equity caused lower-quality care?
The study found fewer social work visits and no significant rise in overall visit volume, but it did not establish that every change in care quality was caused by private equity ownership. The reported claims analysis does not settle questions about individual patients’ care or experiences.
What payment change did the researchers raise?
They said Medicare could consider adjusting hospice payments according to patients’ clinical needs. The report also notes that risk-based payment could encourage coding practices aimed at increasing reimbursement.
Source: medicalxpress.com
