For-Profits Profit, Non-Profits Pay for It

For-profit hospices care for less expensive, more profitable patients while non-profit hospices pay the costs of expensive patients

(RxWiki News) A new study shows that non-profit hospices care for a higher proportion of expensive patients compared to for-profit hospices.

Using data from 4,705 discharged hospice patients, researchers at Beth Israel Deaconess Medical Center (BIDMC) found that non-profit hospices care for a greater number of patients who need frequent visits from skilled care providers. For-profit hospices, on the other hand, care for a larger amount of patients who require less skilled caregivers and who generally spend longer periods in hospice care.

For example, non-profit hospices care for more cancer patients, whereas for-profit hospices care for more dementia patients. Cancer patients require more skilled care providers, such as nurses and social workers, and generally spend less time in hospice care compared to dementia patients.

Non-profits not only suffer the costs of advanced care, but also the costs of shorter patient stays. Medicare pays the same daily rate to hospices regardless of patient diagnosis, length of stay, or whether care is given in a private home or nursing home. As dementia patients often last longer than cancer patients, for-profit hospices reap the benefits.

In fact, researchers found that the median length of stay for patients in for-profit hospice care was four days longer than that of patients in non-profit care. According to senior author Ellen McCarthy, Ph.D., M.P.H., an epidemiologist at BIDMC and a professor of medicine at Harvard Medical School, there are substantial costs associated with hospice enrollment and at the time of death. As such, longer stays are "thought to be more profitable," write the authors.

Because for-profit hospices have money to gain, this sort of patient selection has important policy implications, says lead author Melissa W. Wachterman, M.D., M.P.H., a palliative care physician and research fellow at BIDMC's Division of General Medicine and Primary Care. In 2009, an estimated 1.56 million patients received hospice care services.

As healthcare reform remains an important topic in policy circles, this study may help policymakers in their current debate on payment reform. This study from Beth Israel Deaconess Medical Center is published in the Journal of the American Medical Association (JAMA).

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Review Date: 
February 2, 2011