How For-Profit Hospices Compare to Nonprofit Hospices

When choosing hospice care, it's important to know the differences between for-profit and nonprofit hospices and how those differences may affect your dying loved one and your family.

Research has found key differences, including the fact that for-profit hospices are taking over bigger and bigger shares of the market and bringing in significantly more money than nonprofits.

This article compares for-profit and nonprofit hospice agencies, including the changing hospice marketplace, how Medicare payments impact who they serve, the services provided, how location impacts care, and future problems being created.

What Is Hospice?

Hospice is medical care for the end of life. Its goals are to help people with terminal illness live as well as possible for as long as possible. It helps with symptom management, coordinating medical care, and decision making. Hospice provides physical, psychological, social, and spiritual support to the dying person and their family.

African American nurse holding patient's hand
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The Growth of For-Profit Hospice Agencies

The for-profit hospice sector has increased substantially over the past 30 years. A 2011 study found the number of for-profit agencies doubled from 2000 to 2007 while the number of non-profit hospice agencies remained the same.

A 2014 survey found that between 1990 and 2011, for-profit agencies increased from 5% to 51% of the hospice market. And four out of five new hospices that opened were for-profit.

By 2016, for-profits accounted for 67% of all hospices certified by Medicare. In 2017, 100% of new hospice providers were for-profit.

It's promising that the number of hospice agencies is increasing overall. But the rise in for-profit hospices has been a source of debate and controversy in the medical community.

Critics of for-profit hospices raise concerns about the type of patients these agencies seek, the services they provide, and their lack of clinical training and research involvement.

An area of concern has also been that for-profit agencies tend to bring in significantly more money than non-profits. Some critics say they take advantage of a Medicare policy in order to benefit their shareholders.

Recap

The for-profit hospice industry has grown rapidly to become nearly 70% of the hospice marketplace. The overall growth of hospice services is positive. However, the rise of the for-profit model has led to concerns and criticisms.

Exploiting Medicare Reimbursement

No matter the diagnosis, Medicare reimburses hospice agencies at a per-diem (per day) rate. That means the agencies get the same amount regardless of the care and services needed by you or your loved one.

Meanwhile, end-of-life needs vary greatly by diagnosis.

For example, people with cancer have a fairly predictable life expectancy and course of treatment. By the time they enter hospice care, most have exhausted treatment options and are close to death.

End-stage cancer patients also tend to need more expensive care with intensive pain and symptom management.

Dementia patients and other patients with less predictable diagnoses tend to live longer than cancer patients and need less costly care. Studies show that non-cancer hospice patients have fewer visits per day from hospice nurses and social workers.

Hospices can therefore get the per diem rate for longer and with less out-of-pocket expense.

Studies have shown that for-profit hospices tend to favor non-cancer patients. They also have longer than average enrollment and significantly more dementia patients than nonprofits.

Medicare also has a yearly limit on how much it will pay for hospice. For-profit agencies have been shown to be three times more likely than nonprofits to exceed this maximum benefit.

That means more financial burden on the family of the dying person if they remain in hospice after exhausting their benefit. For-profits also have a higher rate of people leaving hospice before death. That may be due, at least in part, to families' inability to pay for hospice without help from Medicare.

Recap

For-profit agencies tend to seek out non-cancer patients who need less care and will be enrolled longer. This allows the agencies to earn more profit from Medicare reimbursment. They're also more likely to exceed the Medicare cap, which means families of patients may face higher expenses.

Services Provided

The services provided by nonprofit and for-profit hospices are often different. Studies have shown for-profit hospices:

  • Provide fewer services
  • Offer less comprehensive bereavement services
  • Have less professional staff
  • Have fewer staff members per patient

For-profit hospices are somewhat less likely than nonprofits to provide charity care, as well.

Location of Care

For-profit hospices also tend to have a higher percentage of patients in medical facilities rather than at home.

People in nursing homes often cost hospice agencies less money because the facility handles most of their care. Someone dying at home generally requires a lot more hospice visits and more varied services.

For-profit hospice agencies tend to heavily market themselves to nursing homes to achieve an "in" with the staff and increase referral rates.

Outreach Demographics

Research has shown that for-profit hospices are doing a better job of outreach to ethnic minorities and people with low incomes. These groups have been less likely than others to use hospice, so for-profits may be helping to lessen the disparities.

However, researchers say we need studies looking into the quality of care these groups are receiving.

Recap

For-profit hospice agencies tend to provide fewer services, have fewer employees per patient, and provide less charity care than nonprofits. They tend to have more patients in medical facillities rather than at home, which reduces costs and increases profits.

For-profits are more likely to do outreach to minority and disadvantaged communities, which may help lessen disparities in access to hospice care.

Training and Research

Nonprofit hospices have long provided clinical training for healthcare workers and taken part in research studies. Research shows for-profit hospices are somewhat less likely to be involved with these important functions.

Hospice and palliative care are rapidly growing fields. According to a survey published in The American Journal of Medicine, the medical community currently has a severe and growing shortage of doctors trained in these areas.

The survey shows a projected shortage of 18,000 doctors. Similar shortages exist in nurses, social workers, and chaplains. Data project a 1% growth in palliative care doctors over the course of 20 years, while the number of people in need of this care is expected to grow by more than 20%.

Hospice training is considered essential for filling these roles. Not only are for-profit hospices less likely to provide this training, as they've taken over much of the market it's become harder for nonprofits to bring in enough revenue to continue this function.

Recap

America is facing a critical and growing shortage of doctors and other medical workers trained in hospice and palliative care. For-profit hospices are less likely to offer clinical training, which raises more concerns about the ability to meet rising demand.

Closing the Gaps

Some researchers into these trends in hospice have called for changes in the Medicare Hospice Benefit. With how the fixed per diem appears to be shaping for-profit care, there's a concern that the people most in need of hospice may not be able to access it.

They're also calling for more research into the services and quality of care provided by different types of hospice.

Summary

For-profit and nonprofit hospice care have different practices that may be important considerations when looking for end-of-life care.

The industry has shifted significantly, going from almost entirely nonprofit to a majority of agencies being for-profit. This has led to some concerns.

For-profit hospices tend to favor non-cancer patients. In generally, their care requirements are generally lower and they live longer, meaning the agency gets more from the Medicare per-diem than they would from cancer patients.

They often favor people in nursing homes, where much of their care is provided by the facility, which also means they need fewer hospice services. For-profit agencies are more likely to exceed Medicare's annual cap, as well. That means families face additional expenses.

Studies show for-profits provide fewer services, have less professional staff, and have less staff per patient. They also provide less charity care than nonprofits.

For-profit hospices do more outreach than nonprofits in low income and ethnic communities. This may help lessen disparities in care for these demographics.

Nonprofit hospice agencies have historically taken part in research and training, which for-profits are less likely to do. With a critical and growing shortage of medical workers trained in end-of-life care, fewer training opportunities only exacerbate the problem.

Researchers have called for reform of the Medicare Hospice Benefit and more investigation into the quality of services provided by for-profit agencies.

A Word From Verywell

Hospice care can provide valuable care, comfort, and emotional support not only to someone facing death, but to their whole family. The decision of which agency to hire is an important one.

While industry trends and profit models are aspects to consider, each agency is different. You should also consider other important factors such as cost, staff training and experience, coverage and payment options, and what services they provide.

Having the right hospice care for your loved one can help them face the end of life physically, mentally, emotionally, and spiritually.

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Article Sources
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  1. Hospice Foundation of America. What is hospice?

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  3. Hospice News. Nonprofit hospices fight to compete with for-profit chains. Updated April 10, 2019.

  4. Kamal AH, Bull JH, Swetz KM, Wolf SP, Shanafelt TD, Myers ER. Future of the palliative care workforce: Preview to an impending crisisAm J Med. 2017;130(2):113-114. doi:10.1016/j.amjmed.2016.08.046

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