Hospice Profit Status and Patient Diagnosis/Utilization Profile

During the past decade, for-profit hospice agencies soared in number, jumping from 725 in 2000 to 1660 in 2007, while the number of nonprofit hospices remained virtually unchanged. The profit margins of for-profit hospices also increased (12% to 16%) whereas those of nonprofit decreased (–2.9% to –4.4%) between 2001 and 2004. This proliferation of for-profit hospices and the noticeably different trends in profit margins between the 2 sectors have caused debates about Medicare payment policy, which reimburses hospices at a fixed per diem rate for routine in-home or nursing home facility care, regardless of the level of care incurred. Medicare makes up the most significant component of hospice reimbursement.

Up to 84% of the total hospice patients receive Medicare benefits (approximately 1 million beneficiaries) each year. Costs related to hospice stays follow a U-shaped pattern, with the highest fixed costs at the beginning of enrollment and near death. According to researchers, data previously available were inconclusive in regard to the average length of stay (LOS) between for-profit and nonprofit hospices. In a report in the Journal of the American Medical Association [2011;305(5):472-479], the researchers compared key patient profiles (diagnosis, LOS, and location of care) between the 2 hospice sectors. Data for this exempt study were sampled from the 2007 National Home and Hospice Care Survey. A total of 1036 hospice agencies, representing 4705 discharged patients, were included in the study. Eligibility was defined as hospice discharges during the 3-month period prior to agency interviews. The admission diagnoses were categorized as cancer, dementia, or other. Locations of care were home, nursing home, hospital, residential hospice, and other. LOS was defined as the date of hospice enrollment to discharge or death. Included in the study were visits per day by nurses, social workers, and home health aides.

All results were weighted to reflect national estimates and have 95% confidence intervals (CIs). Proportionately, for-profit hospices admitted considerably fewer cancer patients (34.1% [95% CI, 29.9%-38.6%] vs 48.4% [95% CI, 45.0%-51.8%]), more than double the dementia patients (17.2% [14.1%-20.8%] vs 8.4% [95% CI, 6.6%-10.6%]), and more patients with other diagnosis category (48.7% [95% CI, 43.2%-54.1%] vs 43.2% [95% CI, 40.0%-46.5%]) than nonprofit agencies. The differences remained significant after adjustment (P<.001). Compared with nonprofit, for-profit hospices had proportionately more patients in nursing homes than at home. When adjusted for all covariates, however, profit status did not cause a bias in location of care. Stratified by diagnosis, overall for-profit hospice median LOS was 4 days longer than nonprofit (20 days vs 16 days; P=.002). Unadjusted for-profit LOS was 40% longer, and after full adjustment, the difference remained significant: 26.2% (P=.01). When adjusting only for diagnosis and location of care, this model suggested these 2 factors accounted for most of the differences in LOS. Median LOS for cancer patients was similar for for-profit and nonprofit (16 days vs 15 days, respectively), much longer for for-profit in the cases of dementia (43 days vs 26 days) and other noncancer diagnoses (23 days vs 14 days). For-profit also had more patients with LOS ≥365 days.

According to researchers, “Compared with nonprofit hospice agencies, for-profit hospice agencies had a higher percentage of patients with diagnoses associated with lower-skilled needs and longer lengths of stay.” Under the current Medicare payment system, a hospice may be able to maximize its profit by preferring patients who require a lower level of care and need longer LOS. The Medicare Payment Advisory Committee has recommended that beginning in 2013, hospice reimbursements be adjusted for the higher care costs during the first 30 days of enrollment following the Ushaped cost pattern. The researchers recommend that “…future research is needed to understand more fully the association of profit status with quality of care…near the time of death.”