Profit Over Patient? Study Reveals Selective Admission Practices Among Private Equity-Owned Hospices

Posted Wednesday, September 27, 2023

McKnight’s Home Care

By: Adam Healy

Private equity-owned and publicly traded hospices may be making admission decisions based on profit rather than patients’ needs, according to a new study published in JAMA Network Open.

In 2019, 16% of Medicare-covered hospice patients received care from private equity or publicly traded providers, according to the study. By analyzing 1967 hospices in the United States, of which 158 were private equity-owned operations and 250 were owned by publicly traded companies, the researchers found some commonalities. Hospices saw an increase in admissions of lower-risk patients, dementia patients and those receiving home care services after being acquired by a private equity or publicly traded company.

Such patients present a lower risk and a greater profit opportunity to hospice providers, the study said. Flat per-diem reimbursement structures reward serving patients with longer lengths of stay or have lower acuity, the study said, which “may lead to agencies selectively enrolling and targeting patients who require less complex care and longer hospice stays, such as those with dementia.”

Individuals with dementia, for example, have no limits on hospice stay length. As such, hospices can bill Medicare for services provided to these patients for a much longer period of time than others. The researchers observed a nearly 6% increase in dementia patient admissions on average after a hospice was acquired by a private equity firm. For those acquired by publicly traded companies, hospices increased dementia admissions by over 13%, on average.

Home care patients, which are often lower-risk, according to the study, also had admission rates. Following acquisition by a private equity or publicly traded company, hospices on average saw a 3% and 5% increase in the proportion of home care patients admitted, respectively.

Still, further research must be done to determine these acquisitions’ effect on quality of care and health outcomes, the study noted. The researchers called for an analysis of quality measures such as the Consumer Assessment of Healthcare Providers and Systems (CAHPS) Hospice Survey to explore this potential link.

Due to these findings, the researchers called for greater transparency in hospice ownership as “a first step in achieving improved accountability for care.” A recent academic article published in HealthAffairs noted that information about providers’ ownership is “severely lacking,” which can result in price increases and thereby reduce beneficiaries’ access to care.

Recently, the Centers for Medicare & Medicaid Services has boosted its hospice oversight measures, such as proposing a Special Focus Program, in part because of prolonged lengths of patient stay. Some hospice leaders have said this increased scrutiny surrounding stay length could create a “chilling effect,” making providers even more selective of patients admitted.

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