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For-Profit Hospices Often Aim for Return on Investment, Not Death With Dignity

Easy access to Medicare dollars without medical training has made hospice attractive to investors and con artists.

For-Profit Hospices Often Aim for Return on Investment, Not Death With Dignity

Easy access to Medicare dollars without medical training has made hospice attractive to investors and con artists.

It was something of a radical idea: that the terminally ill deserve a guide to shepherd them peacefully through life’s final transit, and that a special care service might help confront the ubiquitous anguish of death. Hospice is an ancient Roman Catholic tradition, but in its recognizably modern form, it dates only to the 1960s.

From the beginning, hospice was as much an ethos as a health care job. The earliest providers were uniformly nonprofit endeavors. With the 1982 advent of full Medicare reimbursement, hospice came to provide exceptional and humane end-of-life ministration, with nurses and counselors prepared for everything from palliative care to bereavement support to spiritual advice for families.

Yet in the last two decades, at first slowly and then in an onslaught, the field of hospice has been transformed. An influx of for-profit operations, drawn to potentially vast profit margins, dominates the field. Now, in some corners, cost-cutting and profiteering are the order of the day, with direct consequences for patients. And of course, Medicare, the public dollar, is underwriting their extraordinary returns.

There are well-operated, humane for-profit hospices, to be sure. But for the more cynical operators — and there are many — compassion, and a peaceful and dignified death, are no longer the care standards; the aim is profit alone.

Radical Compassion

The National Partnership for Healthcare and Hospice Innovation (NPHI) is a membership organization of nonprofit U.S. hospices, where Larry Atkins is chief policy officer. Forty years ago, “This was a social movement, and not a part of the Medicare program,” Atkins told Truthout. “We were all nonprofit organizations, and it was all mission-driven.”

The pioneers of hospice saw an opportunity to revolutionize the end-of-life care of the time. Before hospice was widespread, patients often died in an intensive care unit (ICU), on a ventilator, perhaps alone. Last-ditch efforts to prolong their lives could be as punishing as they were futile, ultimately snatching back only a brief span of time, marked only by more suffering. More pragmatically, pointed out Atkins, “People dying in the ICU can be extremely expensive. Really if there was nothing that could be done, it was quite wasteful, and quite intensive and invasive for the individual. The idea was that we could both humanize the experience and save Medicare money.”

To this day, hospice remains a paragon of humane medicine — treating not only a patient’s ailments but their psyche, and that of their family as well. In fact, many established hospices maintain ties that assist healing across entire communities. Truthout reached Rico Marcelli, communications director at Hospice East Bay in California, who spoke to hospices’ deep local roots and public ethos.

Medicare reimburses per-day at a flat rate, not per-procedure. No matter the level of service provided, funds are still supplied.

Hospice East Bay operates Bruns House, the only inpatient hospice unit in the Bay Area, which provides round-the-clock care to assist people and their families in passing peacefully. Operating Bruns House costs a million dollars a year, noted Marcelli. But the nonprofit doesn’t bemoan the expense. Its benefit to the community has been incalculable, he said.

“Communities take care of their people,” Marcelli said. “That’s what a community’s all about. It’s very appropriate for a community-based local organization to handle that entire realm of issues that a family is facing.” When his own family required hospice, he recalled, “How grateful we were they were guiding us through that process.”

High-Pressure Incentives

These values have informed hospice practices since its founding. Yet in the last two decades, a dramatic sea change has taken place. Per a RAND Corporation report, “The proportion of hospices that are for-profit increased from 30% of all hospices in 2000 to 73% in 2020.”

Extreme rates of return, as high as 19 percent, have made hospice the most profitable sector in health care. Naturally, this has attracted the attention of investors: The Nation cited research that counted a 400 percent increase in hospices owned by private equity from 2011-19. In concert with this shift, whether engineered by investors, profiteers or fraudulent bad actors, many hospices have been refashioned into vehicles for reaping a private harvest from the health care field.

There are certainly for-profit hospices that provide humane, high-quality service; dedicated, compassionate nurses are also not at all a rarity. But by definition, operating for profit induces distinct structural pressures. In many documented cases, cost-cutting has led to a diminution of standards and worsened patient outcomes.

The RAND study, for instance, found that patients who die in the care of for-profit hospices “have substantially worse care experiences than patients who receive care from not-for-profit hospices.” And a public statement from hundreds of alarmed palliative care doctors declared, “[W]e have observed an increasing prevalence of serious deficiencies in hospice care and high variability in quality of care from one region and one hospice program to another.”

Hospices have sent sales reps to pitch services to dementia patients, those with addiction and others who may be ill, but are not terminally so.

NPHI’s own research came to similar conclusions: “We began to see some very substantial differences in where the money gets spent in an average for-profit, as opposed to an average not-for-profit,” said Atkins. “There are things that nonprofits do that are not covered under the Medicare benefit, but are done because they’re an important part of the mission. Those are the kind of things that tend to get dropped or minimized in a for-profit environment.”

The result of decades of profit-model introduction is an accumulating base of evidence that these incentives are corroding standards and ethics from the top down. Again, this is not true of every for-profit hospice — but it’s true of enough of them to indicate a systemic problem, not an aberration. Awful stories of neglect and rampant fraud, while outlier cases, have increased in frequency and egregiousness.

Flagrant Ethical Breaches

Requiring no health care background, opening and operating a hospice is relatively simple. So simple, in fact, that it has attracted swarms of entrepreneurs and con artists alike. A crucial point of leverage is that Medicare reimburses per-day at a flat rate, not per-procedure. No matter the level of service provided, funds are still supplied. For example, Medicare mandates 13 months of bereavement support for families. Nonprofit hospices will offer home visits, therapeutic appointments, grief counseling for children and a variety of in-person options that assist in healing. Meanwhile, some for-profits will do the bare minimum, mailing family members a few printed resources.

In another example, most nonprofits feature high-level general inpatient care (GIP), like that at the Bay Area’s Bruns House. For-profits, for lack of a comprehensive care option, will often transfer acutely worsening patients back to a hospital. Or, if they’re operating illicitly outside their geographic area, as some do, staff might not be available for patients on the brink of death.

Recent reporting has uncovered these long-brewing problems and brought to light stories of corner-cutting hospices that have misled, neglected, exploited or otherwise abused patients. Last winter, a powerful piece by Ava Kofman appeared in The New Yorker, documenting the more extreme lengths to which some have been willing to go.

Kofman described some of the techniques that major for-profit hospices’ “community educators” — i.e., marketers — would utilize on the people, often desperately poor, that they solicited. Shamelessly, they would approach households wearing scrubs, despite having no medical background, and would tout “amazing government benefits,” trying “not to mention death in [the] opening pitch, or even hospice if [they] could avoid it.”

Kofman reported how staff were straining under a constant drumbeat from managers to bring in more patients and hit managerial targets. Medicare stipulates that hospice patients must be diagnostically certified to be six months from death — and yet hospices have sent sales reps to pitch services to dementia patients, those with addiction and others who may be ill, but are not terminally so. More farcically, an article in the Los Angeles Times interviewed one Martin Huff, who found himself deposited in hospice for a knee he injured in a bike accident.

Time and again, in health care and far beyond it, we see evidence that reshaping public goods to accommodate a profit motive only warps their founding intent.

The absurdity, and the ethical breaches, do not end there. Wrote Kofman, “Some hospice firms bribe physicians to bring them new patients by offering all-expenses-paid trips to Las Vegas night clubs. … Other audacious for-profit players enlist family and friends to act as make-believe clients, lure addicts with the promise of free painkillers, dupe people into the program by claiming that it’s free home health care, or steal personal information to enroll ‘phantom patients.’”

Sarah McSpadden is the CEO and president of The Elizabeth Hospice in San Diego, California. As she put it in an interview with Truthout, “There are two levels of problems. One is [that unethical for-profits] admit fraudulent patients that don’t even qualify for hospice. The other is they’re admitting qualified hospice patients, and then they’re not caring for them. … They discharge patients alive, because they get expensive, or they don’t have the staff.”

Without diagnostic recertification, Medicare reimbursement also ends after six months. There’s an incentive to attract patients for a long stay — but another to be rid of them. This can result in patients being abruptly expelled, “losing diapers, pain medications, wheelchairs, nursing care, and a hospital-grade bed that a person might not otherwise be able to afford,” Kofman wrote.

Relatedly, Atkins told Truthout about the tendency to shuffle patients between facilities, highly disruptive to patients who may be fragile, in their final days of life. If a hospice wants to keep billing Medicare for the patient after the six months are up, they might “set up a number of different Medicare provider numbers[,] and then they can live discharge the patients, and they get picked up under another provider number,” Atkins explained.

In California, as McSpadden related, loose oversight has furnished an opportunity for a racket within the racket: selling hospice licenses that new operators can use to open for business and take in Medicare dollars. She described cases of individuals ending up with hundreds of licenses to their name; in another instance, “There was a building in Van Nuys that had 120 hospices” listed at its address.

A particularly bold manipulation was used to fulfill the Medicare requirement that, after licensing, hospice applicants must treat five patients before being fully certified, said McSpadden. Numerous new California hospices were granted certification — until officials realized that they were all claiming to have cared for the same five patients.

All manner of abuses proliferated in California before state officials instated more rigorous due diligence. Eventually, a licensing moratorium was passed, and the federal government conducted an audit. “If you saw the state audit, you would be floored,” said McSpadden. “It’s very significant, what’s happening in the hospice world. … Interest is growing in ways to identify this and mitigate it.”

We should be appalled that, on the final stretches of the road from life to death, we have allowed capital to set up one final toll.

Still, “There are several good for-profit hospices in every state,” McSpadden stresses. “It’s not necessarily [a matter of] nonprofit versus for-profit — although the nonprofits invariably offer a lot more service, because we’re not answering to shareholders. We turn our money around and put it back into our communities. That’s the difference.”

Of course, regrettably, this kind of story is not unfamiliar to those in the U.S., where health care in its entirety has been on a comparable trajectory. In elder care, in child care, in home care, in emergency rooms, ICUs, and every other aspect of the system, the edicts of profit, and private equity in particular, govern the new regime. Time and again, in health care and far beyond it, we see evidence that reshaping public goods to accommodate a profit motive only warps their founding intent.

Tolling the Last Exit

In the worst instances, negligent or nonexistent hospice care might condemn patients to a traumatic death, and further lifelong trauma for those who survive them. “The children will have a memory of their parents’ death, and they want it to go well,” said McSpadden. “They’ll be playing that video in their head for the rest of their lives. To have it go badly — they’re never going to forget that.”

With pride, McSpadden detailed the breadth of services provided by The Elizabeth Hospice: not only in-person post-death bereavement services for families, but also counseling for children, a summer camp for grieving kids, connections with local schools for trauma counseling after any kind of local incident, teacher training to assist children in grief, and much, much more. Many nonprofits are similar in scope. This is what can be achieved without the insurmountable demand to harvest profit that could otherwise be directed back into the organization for improvements and amenities.

As Marcelli put it, “The incredible array of community activity and volunteers really distinguish nonprofits. I think if people really understood the whole process, they would have a different view. People generally think of hospice as one big organization, like the Red Cross. When they find out [that some are for-profit], they say, ‘You mean people are making a profit off this?’”

Too often, and in too many fields, financial gain for the ownership class comes at the expense of vulnerable people; in the case of hospice, it is at the expense of the grieving and the dying.

The insinuation of profit into hospice has had too many consequences that, for many, endanger the chance at a dignified death. It also has a grim completeness to it. The United States is the most expensive place to give birth in the world; now, by infiltrating hospice, the regime of profit has colonized life all the way from its outset up to the very moment it ceases. We should be appalled that, on the final stretches of the road from life to death, we have allowed capital to set up one final toll.

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