Hospices a hot investment as profiteers seek a buck to life’s very end

hospitalbedhospice-300x200Profit-raking private investors, aka hedge funders, have taken aim at operations intended to help the elderly, desperately ill, and grievously injured experience a dignified death. The rapacious takeover of the hospice industry nationwide ought to be setting off political and regulatory alarms in a rapidly graying nation.

As is typically the case when MBA-driven interests buy up different kinds of enterprises, they not only don’t exhibit much concern about the whys or wherefores of a business. They focus, instead, on how they can build volume, while cutting services, staff, and costs, the Huffington Post reported, describing what private equity firms have targeted for hospices. As the online news site found:

“Today, private equity firms are acquiring American hospices at an astonishing rate. From 2012 to 2019, the number of hospices owned by private equity companies tripled. The pace of acquisitions seems to have only gotten faster during the Covid-19 pandemic. Industry brokers who have never before put together a deal involving private equity say they now field calls from private equity buyers multiple times a week. Tempted by a wave of retiring baby boomers, the-sky’s-the-limit Medicare payments, the mom-and-pop nature of the industry and a lack of regulation that is pretty startling even by U.S. standards, private equity now accounts for three out of every five new hospice acquisitions.”

The news article also reported this:

“One of the most active companies has been Traditions Health, whose owner is a private equity firm called Dorilton Capital. In the past three years, Traditions Health has acquired more than a dozen hospice, palliative, and home care businesses, expanding its footprint to 18 states and allowing Traditions Health to boast that it is one of the fastest-growing private companies in the U.S. According to data provided by PitchBook, as measured by the number of deals, Dorilton is the most active private equity investor in elder care in the country. Dorilton is not the kind of fast-turnaround, make-a-quick-buck private equity firm that piles debt onto its new acquisitions only to sell them a few years later. Even so, former workers at hospices acquired by Traditions described undue pressure to maximize profit — cost-cutting, staff reductions and an aggressive pursuit of more patients.”

The notions that launched the hospice movement may have played an unintended role in boosting the facilities’ popularity and making them plump targets for investor acquisition, the Huffington Post reported:

 “Until the latter part of the 20th century, people with terminal diseases often died alone in an antiseptic medical setting, typically a hospital. They were largely out of sight and out of mind. ‘People wouldn’t come and visit because they felt they wouldn’t know what to say and they were afraid to say the wrong thing,’ said Samira Beckwith, who survived a bout with cancer in the 1970s and joined the nascent hospice movement as a social worker. Just a few years earlier, Cicely Saunders had established the world’s first modern hospice, St. Christopher’s Hospice of London. Then, in 1969, the psychiatrist Elisabeth Kübler-Ross published ‘On Death and Dying,’ which made the case for helping terminally ill people cope physically, mentally. and spiritually with their death. (The book, an instant bestseller, is better known today for her theory of the five stages of grief.) Their message — that death can be more dignified and comfortable — inspired a massive grassroots movement of small, community hospices. Medical practitioners explored ways to deliver end-of-life care in peoples’ homes while social workers, volunteers and clergy encouraged frank and difficult conversations about death between patients and their families.”

With the U.S. population aging fast and with its more humane approaches to death and dying, the hospice movement took off, including with not only humanitarian but also profits in mind. As the news article reported:

“From 2000 to 2012, the share of for-profit hospices doubled, to 60%. Then, about a decade ago, private equity began to get more and more interested in the health care sector. It has recently come to dominate fields including dermatology and dentistry and impose steep profit demands, practitioners say, at the expense of patient care. From 2011 to 2019, private equity ownership of hospices tripled. By 2019, there were more than 300 private-equity-owned hospices providing care to more than 112,000 Medicare recipients, according to Tyler Braun, a health policy researcher at Weill Cornell Medical College. That is a modest share of the total number of Medicare hospice patients — 1.46 million in 2019 — but it still works out to a soaring increase in the number of people spending their final days in the care of private equity: a 328% jump since 2012.”

In case readers may be unfamiliar with private equity’s general and soaring role in health care, the Huffington Post also found this:

“Private equity is notorious for taking businesses down to the studs. It has been linked, in the health care industry, to worse care, higher prices, more unnecessary procedures and ruthless working conditions, and it has been blamed for the financial sector’s hyper-focus on short-term profits over long-term value.”

Why hospices? The news article points, in part, to federal funding — a point that raises questions about what politicians, lawmakers, and regulators might need to take to safeguard the vulnerable:

“Hospice can be a serious money maker. In general, Medicare pays hospice providers the same rate per day per patient visit, no matter how complicated or expensive that person’s medical needs — meaning a nurse who spends an hour administering pain medication for a cancer patient nets the same reimbursement as a lower-paid certified nursing assistant who spends a half hour helping a dementia patient eat a meal. Medicare also pays the same rate no matter where a patient is located — in their home, where the next closest patient is many miles away, or in an elder care facility, where the next closest patient is right down the hall. ‘So, you can imagine what the incentive is,’ said David Stevenson, a professor of health policy at the Vanderbilt University School of Medicine. For-profit hospices offer fewer services, hire staff with less training and enroll more patients who have less-complicated needs and spend a longer time in hospice. Enrolling patients with dementia — who may go many months without declining and may primarily need an aide to help them eat and bathe — can be especially lucrative, while enrolling patients with cancer — who may need a suite of expensive medications, and someone trained to dispense them — can be a money loser. A 2019 study of Medicare billing data found that one of the chief differences between nonprofit and for-profit hospices is that for-profits enroll more patients with diagnoses other than cancer. ‘The opportunities for profit maximization are pretty ripe,’ Stevenson said.”

In my practice, I see not only the harms that patients suffer while seeking medical services, but also the damage that can be inflicted on them by neglect and abuse in nursing homes and other long-term care facilities.

The coronavirus pandemic has given the public a brutal view of the significant problems with nursing home and long-term care and these same challenges likely extend to vulnerable individuals entrusted to profit-first hospices. Lawmakers and regulators have played a dismal catch-up role in assessing and starting to improve the many shortfalls of institutional care, leaving loved ones with the dilemma of whether to seek justice for potential wrongdoing in the civil justice system.

But must horror stories also engulf hospice care before federal, state, and local regulators step in and safeguard the elderly, sick, and injured in desperate need of the industry’s services? Credit goes to the Huffington Post for reporting on an aspect of health care that we need to know much more about and to do more significantly more work to ensure it serves those in its care well.

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