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For-Profit Hospice Patients More Likely To Require Lower Skilled-Care Needs, Longer Lengths Of Stay

February 2, 2011

An examination of data from a nationally representative sample of patients discharged from hospices demonstrated that compared with nonprofit hospice agencies, for-profit hospices had a higher percentage of patients with diagnoses associated with lower skilled-care needs (such as dementia) and longer lengths of stay, according to a study in the February 2 issue of JAMA.

During the past 10 years, the for-profit hospice sector has increased substantially, with a doubling of these types of hospices from 2000 to 2007, while the number of nonprofit hospices has remained essentially the same. Overall, for-profit hospices have significantly higher profit margins than nonprofit hospices. “This rapid increase in the for-profit hospice sector and the differential profit margins have raised questions about potential financial incentives in hospice reimbursement. Medicare payment policy is a key determinant of hospice reimbursement. Medicare beneficiaries compose 84 percent of patients in hospice, and about 40 percent of Medicare decedents use hospice annually. Medicare reimburses hospices a per diem rate for routine care, which can be provided at home or in a nursing home,” the authors write. They add that this capitated rate is fixed regardless of the care needs of individual patients or the services that they receive and may create a financial incentive for hospices to select patients requiring less resource-intensive services or longer hospice stays, which are thought to be more profitable.

Melissa W. Wachterman, M.D., M.P.H., of Beth Israel Deaconess Medical Center, Harvard Medical School, Boston, and colleagues compared patient diagnosis and location of care between for-profit and nonprofit hospices and examined whether lengths of stay (LOS) and the number of visits per day by hospice personnel varied by patient diagnosis and by hospice profit status. For this analysis, the researchers used data from the 2007 National Home and Hospice Care Survey, with a nationally representative sample of 4,705 patients discharged from hospice.

Comparing data from for-profit hospices (1,087 patient discharges from 145 hospice agencies) and nonprofit hospices (3,618 patient discharges from 524 hospice agencies) revealed that diagnosis and location of care both varied by profit status. Compared with nonprofit hospices, for-profit hospices had a lower proportion of patients with cancer (48.4 percent vs. 34.1 percent) and higher proportions of patients with dementia (8.4 percent vs. 17.2 percent) and other diagnoses (43.2 percent vs. 48.7 percent). The data also indicated that approximately two-thirds of patients in for-profit hospices had dementia and other noncancer diagnoses, whereas only about half of patients in nonprofit hospices had these diagnoses.

Compared with nonprofit hospices, for-profit hospices had a higher proportion of patients residing in nursing homes and a lower proportion residing at home. Compared to patients with cancer, those with dementia or other diagnoses had fewer visits per day from nurses and social workers.

The researchers also found that the median (midpoint) LOS was 4 days longer in for-profit hospices as compared with non- profit hospices (20 days vs. 16 days; after adjustment, 26.2 percent longer LOS). Compared with patients in nonprofit hospices, patients in for-profit hospices were more likely to have stays longer than 365 days (2.8 percent vs. 6.9 percent) and were less likely to have stays less than 7 days (34.3 percent vs. 28.1 percent).

“”¦ there are important policy implications if hospice agencies differentially enroll more patients with dementia and other noncancer diagnoses, who require fewer visits from skilled personnel such as nurses and social workers,” the authors write. “Patient selection of this nature leaves nonprofit hospice agencies disproportionately caring for the most costly patients””those with cancer and those tending to begin hospice very late in their course of illness; 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.”

The researchers write that their findings are timely, complement the findings of the Medicare Payment Advisory Committee reports, and can help inform the current debate around payment reform in the Medicare Hospice Benefit. “Given that approximately 1 million Medicare beneficiaries use hospice each year and that the for-profit hospice industry continues to expand rapidly, future research is needed to understand more fully the association of profit status with quality of care and patient and caregiver experiences at the end of life.”

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