WASHINGTON–The National Partnership for Healthcare and Hospice Innovation (NPHI) today released a statement in response to a newly published paper by Dr. Jonathan Gruber and colleagues at MIT, titled ‘Dying or Lying? For-Profit Hospices and End-of-Life Care.’ The study finds that certain long-stay hospice patients, especially those with Alzheimer’s Disease and related dementias, incur relatively lower costs in for-profit hospices compared to Medicare patients who do not receive hospice care. While these findings might suggest cost-efficiency, they overlook critical factors like care quality and patient experience, which vary greatly between for-profit and nonprofit providers.
The study fails to account for differences in care quality across nonprofit and for-profit hospices, as well as variations in the types of patients treated by for-profit and nonprofit hospices—factors that significantly impact Medicare margins between these providers.
This study confirms what nonprofit providers have long recognized: the Medicare Hospice Benefit, when utilized as intended, provides significant advantages for patients, families, and taxpayers. However, the current structure has allowed for a proliferation of profiteering hospices that focus on lower-intensity, longer-stay patients to maximize profits—often at the expense of high-quality care. In some cases, resources intended to support terminally ill patients and their families are being diverted into profit margins, leaving nonprofit providers struggling to meet the needs of higher-acuity patients.
In its March 2024 Report to the Congress, the non-partisan Medicare Payment Advisory Commission (MedPAC) found that “[i]n 2021, the Medicare aggregate margin was considerably higher for for-profit hospices (19.2 percent) than for nonprofit hospices (5.2 percent)” and that “[f]or-profit hospices have substantially longer average lengths of stay than nonprofit hospices (114 days compared with 72 days, respectively, in 2022)…. These differences in patient mix and length of stay contribute to the variation observed among providers’ profit margins….” As noted in the study by Gruber et al., “[h]ospices earn the largest profits on patients with long lengths of stay.”
“NPHI member providers are dedicated to delivering compassionate, high-quality care to patients and their families, placing the well-being of those we serve over revenue-driven incentives,” stated Tom Koutsoumpas, co-founder and CEO of NPHI. “We prioritize the responsible use of resources to enhance patient and family experiences, not profit margins. It is simply not ethically possible for a provider to make substantial profit margins off the Medicare hospice benefit. If they do so, then those profits come at the expense of high-quality patient care.”
The NPHI-sponsored 2019 study, “Hospice Medicare Margins: Analysis of Patient and Hospice Characteristics” found that, compared to for-profit hospices, non-profit hospices provided more nursing visits, social worker visits, and therapy visits, while spending twice as much on bereavement services. These findings were validated by a 2023 review of more than 650,000 patient and family surveys about experiences with hospice care, conducted by the RAND Corporation (“Care Experiences Are Worse in For-Profit Hospices Than in Not-for-Profit Hospices,” RAND press release, February 27, 2023). On average, families reported having worse care experiences with for-profit hospices and were less likely to recommend for-profits to their peers. Significantly more for-profits were rated in the low-performing category across all eight measures the researchers studied. These findings underscore the commitment of nonprofit hospices to a quality-driven approach, ensuring exceptional end-of-life care that prioritize both patient experiences and family support.