TL;DR
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A study published in Health Affairs found Medicare spending per hospice stay was 5.9% higher at 191 for-profit hospices after private equity acquisitions than at matched, non-acquired hospices. Longer stays accounted for much of the rise; researchers found no increase in overall visits and reported fewer social work visits.
Medicare spending per hospice stay rose 5.9% after private equity firms acquired for-profit hospices, compared with similar hospices that were not acquired, according to a study published in the November issue of Health Affairs. Researchers linked most of the increase to longer hospice stays, while finding no increase in overall service visits.
The researchers analyzed Medicare fee-for-service claims for 191 hospices acquired by private equity firms from 2018 through 2022 and compared them with 1,305 matched for-profit hospices that remained outside private equity ownership. They assessed changes during the two years before and after each acquisition against changes at the comparison hospices.
Average length of stay increased by 6.3 days at acquired hospices relative to the comparison group. Patients were less likely to have stays shorter than a week, more likely to stay longer than six months, and more likely to be discharged alive. The share of patients with dementia rose from 22.6% to 23.8% at acquired hospices, while the share at control hospices did not change.
The study found no significant increase in total visits or time spent on visits per week after acquisition. Researchers also found no rise in physician, nursing, or home health visits, and reported that patients received fewer social work visits. The authors said a shift toward patients who may need less day-to-day care could help explain the longer stays, but the findings describe associations rather than establishing why each patient’s stay changed.
Why Longer Stays Raise Medicare Costs
Medicare pays hospices a set daily rate, rather than adjusting each day’s payment to the amount of care a patient uses. A longer stay can therefore raise total spending even if the number of visits or care hours does not rise. The same payment structure also means a hospice may receive the daily rate for patients with different diagnoses and care needs, while covering the cost of services from that payment.
The issue reaches a large share of older Americans and their families. 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 during the last year of life. The findings raise questions about whether payment rules reward the right mix of care and how Medicare can fund hospice sustainably without compromising support for people nearing the end of life.
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How the Study Compared Hospice Owners
The study addressed a specific question: whether hospices already operating for profit changed after being bought by private equity, compared with other for-profit providers. That comparison helps separate acquisition-related changes from the broader characteristics of for-profit hospice care, though it cannot by itself establish that ownership caused every observed change.
The source report describes a longer shift in hospice ownership: U.S. hospice providers have moved from mostly nonprofit ownership to nearly three-quarters for-profit over the past two decades, with private equity becoming a faster-growing owner type. In a typical private equity transaction, a firm uses investor money and borrowing to acquire a company; the acquired company may carry debt. The study focused on care patterns and Medicare spending following acquisitions, not on the finances of individual firms or the motives behind specific admissions.
Senior author Zirui Song, an associate professor of health care policy at Harvard Medical School and a general internist at Massachusetts General Hospital, said the research examined whether private equity ownership made a difference even among providers with the same profit status and payment system. The study’s findings add hospice-specific evidence to earlier research on private equity ownership in other parts of health care, but those other findings are not proof of the cause of the hospice results.
““That makes sense from the point of view of a for-profit facility that looks to generate revenue under this payment system.””
— Zirui Song, senior author and Harvard Medical School associate professor
What the Claims Data Cannot Show
The study reports differences between acquired hospices and matched controls, but the source material does not establish that private equity ownership alone caused the spending increase, longer stays, or changes in admissions. It also does not identify the reason for each live discharge or whether individual patients received care that matched their needs. The reported rise in dementia patients is a change in the share of admissions; it does not, by itself, show why that change occurred.
The available report does not provide a dollar estimate of the additional Medicare spending, results for individual firms, or evidence about whether the observed patterns persisted beyond the study’s two-year post-acquisition period. It also does not report patient-level outcomes such as symptom relief or satisfaction. Those details remain unclear from the material provided.
Possible Changes to Hospice Payments
The researchers said changes to Medicare’s hospice payment system may be warranted. One option they raised is to adjust the daily payment to reflect a patient’s clinical needs, rather than paying the same amount regardless of care intensity. The source report does not specify a proposed formula, say that policymakers have adopted such a change, or give a timeline for action.
Further evaluation would need to weigh spending against the quality and appropriateness of care, including whether patients receive needed services and whether discharge patterns are suitable. For now, the study documents higher spending per stay and differences in length of stay and patient mix; what Medicare or regulators will do in response remains unsettled.
Key Questions
How much did Medicare spending rise after private equity acquisition?
The study found 5.9% higher spending per hospice stay at acquired hospices compared with matched for-profit hospices that were not acquired. The source report does not give a dollar amount for the increase.
What was associated with the increase?
Researchers said the increase was driven mainly by longer stays. Average length of stay rose by 6.3 days relative to the comparison group, alongside more long stays and live discharges.
Did acquired hospices provide more visits?
No significant increase in total visits or time spent on visits per week was found. The study reported no rise in physician, nurse, or home health visits and found fewer social work visits.
Does the study prove private equity caused the changes?
No. It found differences after acquisitions compared with matched hospices, but the results do not establish that ownership alone caused every change or explain the decisions behind individual admissions and discharges.
What policy change did the researchers raise?
They said Medicare could consider adjusting hospice payments according to a patient’s clinical needs. The report does not say that a policy change has been approved or scheduled.
Source: news-medical.net
