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A study published in the November issue of Health Affairs found Medicare spending per hospice stay was 5.9% higher at for-profit hospices after private equity acquisition than at comparable, non-acquired hospices. The increase was associated mainly with stays that were 6.3 days longer on average, without a corresponding rise in overall care visits.
Medicare spending per hospice stay rose 5.9% after private equity firms acquired for-profit hospices, compared with spending at similar for-profit hospices that were not acquired, according to a study published in the November issue of Health Affairs. Researchers linked the increase mainly to stays that averaged 6.3 days longer, while finding no increase in overall visits or time spent providing care. Related research on Medicare spending after private equity hospice acquisitions examines similar concerns.
The researchers used Medicare fee-for-service claims to study 191 hospices acquired by private equity firms between 2018 and 2022 and compare them with 1,305 similar, non-acquired for-profit hospices. They examined changes during the two years before and after each acquisition and compared those changes with the control group. The study focused on hospices that were already for-profit before the acquisition.
After acquisition, patients were less likely to have stays of under a week and more likely to remain in hospice for over six months. They were also more likely to be discharged alive, the report said. The share of patients with dementia increased from 22.6% to 23.8% at acquired hospices, while it did not change at control hospices. The study described dementia and cancer as the two largest patient groups in hospice.
The researchers found no significant increase in total visits or visit time per week after acquisition. Physician, nurse and home health visits did not rise; social work visits decreased. The authors said the pattern was consistent with longer stays and a changed patient mix, including more patients who may need less day-to-day care, rather than more services being delivered. That interpretation is not proof of why individual patients stayed longer or were discharged alive.
Longer Stays Affect Medicare Costs
The findings matter because Medicare pays hospices a daily rate, rather than paying separately for each service a patient receives. As a result, a longer stay can increase total spending even when weekly visits do not rise. The daily fee must also cover the costs of care, which can vary with patients’ needs.
For patients and families, hospice care is intended to support people with terminal illnesses near the end of life, including by easing pain and providing person-centered support. A higher share of patients with longer stays or live discharges may affect how resources are used, but the study does not establish whether individual patients received inappropriate care. It reports group-level changes after ownership shifts.
The fiscal stakes extend beyond the studied companies. The source 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. The study raises questions about whether the current payment structure accounts adequately for differences in clinical need and length of stay.
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Hospice Ownership and Payment
Over the past two decades, U.S. hospice ownership has shifted from mostly nonprofit to nearly three-quarters for-profit, according to the source report. Private equity firms are described there as the fastest-growing type of owner. The study asked whether a private equity purchase changes costs or care even when the acquired hospice already operates for profit.
Private equity deals commonly combine investor money with borrowing, and debt may be assigned to the acquired company. That general financial structure provides context for the research question, but the study summary does not show that debt payments caused the spending changes it measured. The comparison identifies differences associated with acquisitions; it does not, by itself, establish every mechanism behind them.
The study’s authors also point to a payment-design issue: Medicare’s daily hospice fee does not vary in the same way as the level of service a patient requires. A patient with dementia who needs relatively few services and a patient with cancer needing frequent visits and complex pain management may be paid at the same daily rate, while the cost of those services comes out of that fee.
“The bigger question is whether that is the best payment model for meeting the needs of people who need hospice, or of ensuring that Medicare spending is sustainable.”
— Zirui Song, senior author and associate professor of health care policy at Harvard Medical School
What the Study Cannot Establish
The reported results show differences between acquired hospices and comparison providers, but they do not establish why each patient’s stay changed, why more patients were discharged alive, or whether any particular discharge was appropriate. The proposed link to a shift toward patients needing less ongoing care is the researchers’ interpretation of the observed patterns.
The source summary does not provide the study’s full methods, uncertainty ranges, or detailed results by individual hospice. It also does not quantify the total change in Medicare spending across all acquired hospices. The findings concern the studied acquisitions and Medicare fee-for-service claims; they should not be read as evidence that every private equity-owned hospice behaves the same way.
Payment Policy Remains Under Review
The researchers said policy changes to Medicare’s hospice payment system may be warranted. One option discussed in the source report is adjusting the daily fee according to a patient’s clinical needs, potentially using diagnoses as a guide. The study does not prescribe a finalized policy or show how such a change would affect patients, providers or overall spending.
For now, the published findings add evidence for lawmakers and health officials weighing hospice payment rules and ownership oversight. Further analysis would be needed to test whether the same patterns appear in other periods or settings, how much they affect total Medicare spending, and whether payment adjustments can address financial incentives while preserving access to appropriate hospice care.
Key Questions
How much did Medicare spending per hospice stay increase?
The study reported a 5.9% increase per stay at acquired hospices compared with similar for-profit hospices that were not acquired. The reported increase was associated mainly with longer stays.
How much longer were hospice stays after acquisition?
The average stay was 6.3 days longer after private equity acquisition, according to the study summary. Patients were also less likely to have stays under a week and more likely to stay longer than six months.
Did acquired hospices provide more services?
Researchers found no significant increase in total visits or time spent on visits per week. The summary reports fewer social work visits and no increase in physician, nurse or home health visits.
Does the study prove private equity caused inappropriate hospice care?
No. The study found changes associated with acquisition, including higher spending and longer stays, but the reported results do not establish that any individual patient received inappropriate care or prove why stays changed.
What payment change did the researchers raise?
The authors said changes to Medicare’s hospice payment system may be warranted. One option is to adjust the daily fee based on a patient’s clinical needs, but the study does not set out a finalized policy.
Source: news-medical.net
