For-profit hospices may choose cheaper-to-treat patients, study finds


Study results released Tuesday by the Journal of the American Medical Assn. report that for-profit hospice services may be selecting patients who are less expensive to treat -- leaving the pricier patients to nonprofit agencies.

The researchers, led by Dr. Melissa W. Wachterman of Beth Israel Deaconess Medical Center in Boston, suggested that Medicare’s hospice reimbursement system -- currently a flat-rate per diem, regardless of the needs of the patient ($142.91 in 2010) -- may create incentives for profit-seeking providers to avoid taking on the sickest cases.

Close to 1 million Americans enrolled in Medicare use hospice services -- palliative care intended for the last six months of life -- each year. That’s about 40% of Medicare patients in all, the authors wrote. Eighty-four percent of patients in hospice are Medicare beneficiaries.


The team looked at data from the 2007 National Home and Hospice Care Survey, tracking 4,705 hospice patients and examining their diagnoses, the lengths of their hospice stay, how many visits they received per day, whether they were treated at home, and whether they received care from for-profit or nonprofit agencies.

They found that for-profit services had a lower proportion of patients with cancer than nonprofit providers, and a higher proportion of patients with dementia (which are, generally, less expensive to treat). For-profits had more patients living in nursing homes (also less expensive to treat.)

The team also found that the average length of stay for patients in for-profit hospice was 20 days, while the average length of stay in a nonprofit hospice was 16 days. Because costs are highest at the onset of enrollment and near death, longer stays in hospice are more profitable for providers.

Between 2000 and 2007 the number of for-profit hospice agencies more than doubled, from 725 to 1,660, while the number of nonprofit operators stayed about the same. For-profits have “significantly higher” profit margins than nonprofits, reported the researchers. Indeed, nonprofits, true to their name, operate at a loss.

The team did not assess the relationship between profit status and quality of care, but did suggest that policy makers should consider the study’s results when planning how Medicare hospice reimbursements will work in the future.

“Patient selection of this nature leaves nonprofit hospice agencies disproportionately caring for the most costly patients,” the team wrote. “As a result, those hospices serving the neediest patients may face difficult financial obstacles to providing appropriate care in this fixed per-diem payment system.”


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