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Profiteering: Putting Financial Goals Ahead Of Quality Care For The Terminally Ill – Part 5

Profiteering: Putting Financial Goals ahead of Quality Care for the Terminally Ill – Part 5

Post Series: Profiteering


While this paper is not specifically about ownership status of the nation’s 5,000 Medicare-certified hospices, many of the markers used to evaluate the quality and cost effectiveness of hospice ultimately demonstrate the divide between how for-profit and not-for-profit hospices operate. The Medicare Payment Advisory Committee (MedPAC) notes the difference in for-profit and not-for-profit margins in its annual reports to Congress. For example, in its March 2019 report, MedPAC stated that the margins of for-profit companies ranged from 16.8 to 17.6 percent, while the margins of not-for-profit providers ranged from 2.7 to 6.4 percent.14

“For mission-driven hospices, numbers like these are worrying—and bordering on dangerous,” Lycan warned. “Even the concept of ‘total cost of care per day’ is a somewhat biased indicator in the MedPAC report if we consider profiteering as a motive. MedPAC should move to measuring the Medicare Spend per Beneficiary (MSPB) to incorporate the effects of live discharge rates, post hospice emergency room and hospitalization,” he added.

The for-profit average cost per patient per day is $133; the not-for-profit cost per patient per day is $170. The Medicare Hospice Benefit, however, pays a per diem rate that is the same for all hospices—regardless of ownership status. From the perspective of those who look at healthcare spending as an entitlement that needs to be cut, the data appear to make a compelling case for a significant reduction in the Medicare Hospice Benefit per diem reimbursement. But if the focus is quality of care and meeting demonstrated community need for comprehensive end-of-life care, then the real question is whether $133 per day is far too low a figure. Are the much higher margins of the profit-focused hospices an indicator of more efficient care or the result of high live discharge rates and shunning of costs? Or are those higher margins an indicator of care that falls below—sometimes well below—the values that are at the heart of the Medicare Hospice Benefit?

“When the sickest and most vulnerable individuals of our society are exploited for financial gain, everyone loses. In a competitive marketplace that is dominated by profiteering, the patient-centered hospice that prioritizes compassionate and dignified care of the dying eventually will not be able to survive,” cautioned Lycan. The Medicare Hospice Benefit itself will be consumed by the profiteering of for-profit hospices—the inevitable decline in quality and scope of care ultimately will lead to the benefit’s demise. These are real threats to the terminally ill and the mission-driven hospices that formed the hospice movement and have set the standard for quality, compassionate, timely end-of-life care for more than 40 years. As a result, these are threats to the Medicare Hospice Benefit itself.

These threats must be addressed now before it is too late to preserve the legacy of Cicely Saunders, whose simple goal was to help people “die peacefully” and “to live until they die.”

Profiteering as a business strategy of certain for-profit hospices eventually could destroy hospice as we know it, threatening not just quality, compassionate end-of-life patient care but also the community-based, mission-driven, patient-centered hospice organizations that built hospice care across America. This will be the focus of Part 2 of this report.


Our mission is to provide world-class, business support services, maximizing financial and process efficiencies to empower community-based, not-for-profit hospice providers to focus their resources on the delivery of quality care.


14 MedPAC, Chapter 12, March 2019 report.

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