The origins of hospice care in the United States had benevolent intentions. The goal was to provide quality care to those near death in an effort to provide dignity and comfort. By enabling individuals to spend their final days at home with adequate support, end-of-life suffering could be minimized. Without question, this continues to be the spirit that drives support for hospice today. But the industry has strayed a long way from its charitable and care-focused beginnings. And to a great extent, unethical business practices share a significant part of the blame.
Over the last several decades, hospice care in the United States has become big business. Between 2011 and 2019, the number of private equity firms owning hospice centers has tripled. The reason for this relates to the incredible profits and revenues these organizations enjoy. Compared to non-profit hospice companies, for-profit ones earn three times the amount. And sadly, these earnings are often attained through deceitful and fraudulent behaviors. To make matters even worse, such activities routinely go unpunished with limited regulatory oversight. Not only does this undermine quality hospice care, but it costs taxpayers $22 billion each year. If ever an industry needed disruption, it’s certainly hospice care in the United States.
“Under the daily-payment structure, a small hospice that bills for just 20 patients at the basic rate can take in more than a million dollars a year.”
Volume Payments Instead of Value Payments
In the early 1980s, Medicare began covering hospice care in the United States. Prior to this, much of the support came through private funding, charities and volunteerism. As the need grew, and societal support increased, structures were established under Medicare for provider reimbursement. The intention was to leverage charitable intentions toward better products and services. But these structures played a significant role in undermining quality hospice care over time because payment was primarily based on volume. Because providers received a set rate per day regardless of the services provided, more patients was better. And in fact, more patients who demanded very little in care were ideal from a profit perspective.
By definition, hospice care in the United States is for dying patients with less than six months to live. Two doctors must certify that this is the case in order for Medicare to cover such care services. But predicting length of life can be difficult, and recertification even after six months isn’t questioned. Therefore, hospice companies began exploited these rules to their advantage. As long as their average patient’s length of stay in hospice was less than six months, no penalties were imposed. As a result, the goal was to maintain a high volume of hospice care patients who needed few services. And at the same time, “graduate” patients from hospice to keep their average length of hospice stay reasonable. The focus was not on quality hospice care but instead on volume-based economies of scale.
“Up to a point, the way Medicare has designed the hospice benefit rewards providers for recruiting patients who aren’t imminently dying.”
Regulations Without Enforcement
In terms of Medicare’s oversight of quality hospice care, there have been many shortcomings as well. Like nursing homes, hospice care in the United States is subject to periodic inspections and reviews. But for hospice, Medicare inspections need only to occur once every 3 years. Recent reports of these investigations have shown that hundreds of hospice centers have several deficiencies. These involve lack of training, insufficient staffing, and failure to focus on quality improvement. But despite this, penalties and punishments are rare. Out of the more than 4,000 hospice organizations in the country, only 19 have been banned from participating in Medicare in the future.
Regulatory oversight and punishments are an even bigger problem when it comes to larger corporations. Several have been charged with Medicare fraud with whistleblowers attesting to unethical practices by these companies. But repeatedly, these corporations choose to reach a settlement for dollar values representing a small fraction of the revenues they’ve received. In addition, these settlements allow these companies to continue to operate and bill Medicare moving forward. Given the climate, it’s clear why some companies choose to roll the dice. When rules and regulations lack enforcement, liberties will be taken. This is precisely what has happened to hospice care in the United States over the last several decades.
“A government review of inspection reports from 2012 to 2016 found that the majority of all hospices had serious deficiencies, such as failures to train staff, manage pain and treat bedsores. Still, regulators rarely punish bad actors.”
A Need for Bold Disruption
It can be said that a large part of the problem with hospice care in the United States involves business. Based on the above, it would be hard to argue that point. But at the same time, business can also provide the solution in much the same way it is in other healthcare practices. Quality hospice care firms should embrace medical ethics and lobby for a value-based reimbursement system for hospice. Payments to providers should be based on efficient use of resources, patient satisfaction surveys, and cost containment. At the same time, business should impose best practices within the industry to guide regulatory oversight. This should even go as far as establishing recommendations for penalties and punishments should violations occur. By taking the initiative in this regard, quality hospice care organizations can thrive in an environment focused on patient outcomes. Certainly, disrupting the industry as it stands today won’t be easy. But each of us as well as the nation deserve better, and businesses can lead the way in achieving this goal.
