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Allowing For-Profit Hospice: The Worst Health Policy Idea Ever?

September 20, 2021

Summary: For-profit ownership has reached two-thirds of hospice agencies. Yet for-profit status is associated with fewer services, less clinically skilled staff, more formal complaints, more discharges of sicker patients, and more hospital and emergency department use. Removing for-profit ownership is part of health reform.

Hospice Tax Status and Ownership Matters for Patients and Families
(behind a paywall)
JAMA Internal Medicine
August 1, 2021
By Melissa D. Aldridge.

From the article: 

The increase in ownership of hospices by private equity (PE) firms and publicly traded companies . . . follows almost 2 decades of steady growth of for-profit ownership of hospice agencies, from one-third of hospices in 2000 to almost two-thirds by 2017. Why is this noteworthy? It is difficult to identify a health care sector more detrimentally affected by the mismatch between profit maximization incentives and quality of care than hospice. Whereas some have argued that tax status (ie, whether a hospice is for profit or nonprofit) is unrelated to hospice quality, an increasing body of evidence suggests otherwise. The requirement for for-profit organizations to distribute net income to shareholders provides strong incentives to generate consistent profits over short time periods. . . .

For-profit compared with nonprofit hospices provide narrower ranges of services to patients, use less skilled clinical staff, care for patients with lower-skilled needs over longer enrollment periods, have higher rates of complaint allegations and deficiencies, and provide fewer community benefits, including training, research, and charity care. For-profit hospices are more likely than nonprofit hospices to discharge patients prior to death, to discharge patients with dementia, and to have higher rates of hospital and emergency department use. In one analysis of 355 hospices, 90% of those with the lowest spending on direct patient care (eg, patient home visits) and the highest rates of hospital use were for-profit hospices.

Comment by: David Himmelstein and Steffie Woolhandler

Allowing for-profit hospices is crazy. The deranged care documented in the commentary above (each statement is referenced in the original article) is the predictable result of reimagining dying patients as prudent shoppers in a commercial transaction. Medicare pays for the overwhelming majority of hospice care and could proscribe the participation of for-profits – it excluded for-profit home care agencies until 1980.

With more and more health care providers being snapped up by for-profit firms, and evidence of their misbehaviors mounting, proscribing for-profit ownership has become an essential element of health care reform.    

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