TL;DR
A study of 191 for-profit hospices acquired by private equity firms from 2018 to 2022 found Medicare spending per hospice stay rose 5.9% compared with similar non-acquired hospices. The increase was linked mainly to stays averaging 6.3 days longer, while researchers found no rise in overall service use and fewer social work visits.
A study of 191 for-profit hospices acquired by private equity firms found that Medicare spending per hospice stay rose 5.9% compared with similar hospices that were not acquired. The increase was mainly associated with patients staying an average of 6.3 days longer, not with more visits or more time spent providing care, according to the research published in the November issue of Health Affairs.
Researchers compared Medicare fee-for-service claims for hospices acquired between 2018 and 2022 with claims from 1,305 matched for-profit hospices that remained outside private equity ownership. They examined changes during the two years before and after each acquisition, relative to changes among the comparison hospices. The reported spending increase was per hospice stay; the source material does not give a total national spending estimate.
After acquisition, a smaller share of patients had stays shorter than a week, more stayed in hospice for longer than six months, and patients were more likely to be discharged alive. The share of patients with dementia increased from 22.6% to 23.8% at acquired hospices, while it did not change at control hospices. Researchers also found no significant change in total visits or time spent on visits per week, and reported fewer social work visits.
The study authors said the pattern was consistent with a shift toward admitting patients who may need less day-to-day care, rather than an increase in services that might explain longer stays. The findings describe associations following acquisition; they do not, on their own, establish that private equity ownership caused every observed change.
Why Hospice Stays Affect Medicare Costs
The results matter because Medicare pays hospices a set daily fee, regardless of how much care an individual patient needs. A longer stay can raise total spending for a patient even when the number of visits does not increase. The study’s findings also point to a possible mismatch between that payment structure and the different care needs of people receiving hospice services.
For patients and families, the issue is not only spending. Hospice is intended to provide support and comfort to people with terminal illnesses. Longer enrollment and discharge alive are not necessarily evidence of poor care on their own, but the combination of these patterns with no increase in measured services raises questions about whether patients’ needs are being met and how admissions are shaped by the payment model.
The authors suggested that Medicare payment changes may warrant consideration, including adjusting daily payments for patients’ clinical needs. Such changes could reduce incentives to favor patients expected to need less care, but the study source also cautions that risk adjustment may encourage coding to maximize payments.
Private Equity’s Expanding Hospice Role
The study focused on a specific question: whether ownership by private equity was associated with changes at hospices that were already for-profit. Comparing them with other for-profit providers helped researchers distinguish the acquisition-related pattern from changes shared across the wider for-profit sector, though the design cannot rule out every difference between organizations.
The source report says U.S. hospice ownership has shifted over two decades from mostly nonprofit to nearly three-quarters for-profit, with private equity described as the fastest-growing owner type. Medicare is a major payer in end-of-life care: the report says nearly half of people who die in the United States are Medicare beneficiaries who use hospice, and up to a quarter of Medicare spending occurs in the last year of life.
Hospice payment is central to interpreting the findings. Medicare pays a daily amount while a patient is enrolled, and the hospice covers the cost of services from that payment. A patient with dementia who needs relatively few visits and a patient with cancer who requires frequent visits and complex pain management can generate the same daily payment, despite different care needs.
“The goal of hospice is to provide respectful, person-centered care that helps terminally ill people approach end of life with dignity, while minimizing pain and suffering.”
— Zirui Song, senior author and associate professor of health care policy at Harvard Medical School
What the Study Cannot Establish
The reported analysis does not establish that private equity ownership alone caused the spending increase or the changes in patient mix. It compares acquired hospices with matched controls over time, but the supplied report does not provide details on how the findings varied by firm, location, patient outcome, or specific acquisition.
It is also unclear from the source material whether longer stays or live discharges reflected appropriate clinical decisions, differences in patient eligibility, or other factors not captured by the analysis. The study found no significant change in overall visits or visit time, but those measures cannot account for every element of care or patient experience. The report does not quantify the effect of fewer social work visits on patients and families.
The supplied material does not give the study’s full methods, uncertainty ranges, or total Medicare cost impact. The 5.9% figure applies to spending per hospice stay in the comparison described, not to all Medicare hospice spending.
Payment Policy Debate Ahead
The researchers said Medicare hospice payment changes may be warranted, including a daily fee adjusted for clinical need. The source material does not identify a proposed rule, legislative measure, or implementation timetable, so no policy change should be treated as settled.
Any payment redesign would need to weigh whether patient-level adjustments better reflect care costs against the possibility that providers could change diagnosis coding to increase reimbursement. Further scrutiny of admission patterns, patient needs, services delivered, and outcomes could help clarify how the observed differences affect care. The study itself does not specify a next research milestone or a federal response.
Key Questions
How much did Medicare spending rise after the acquisitions?
The study found spending per hospice stay rose 5.9% at acquired hospices compared with similar non-acquired for-profit hospices. The source does not report this as a 5.9% increase in all Medicare hospice spending.
Why did spending per stay increase?
Researchers linked the increase mainly to longer stays: patients stayed an average of 6.3 days longer after acquisition. They found no significant rise in total visits or visit time per week.
Did acquired hospices provide more services?
The study found no significant increase in total visits or time spent on visits. It reported fewer social work visits, but the supplied report does not quantify the effect of that change on patients.
Does the research prove private equity caused the changes?
No. The study found changes associated with acquisitions by comparing acquired hospices with matched controls. That comparison does not, by itself, prove private equity ownership caused every difference.
What payment change did the researchers raise?
The authors said Medicare could consider adjusting the daily hospice fee for patients’ clinical needs. They also noted that risk adjustment could create incentives to code diagnoses in ways that increase payment.
Source: medicalxpress.com
