How much profit can be made from waiting for someone to die in their home?
In normal times, this was the question at the center of the $19 billion for-profit industry that sends medical professionals, once or twice a week, to watch over someone who has less than six months to live, occasionally checking their vitals or pumping them with pain medication.
According to Home Health Care News, net operating revenues for Encompass Health — the fourth largest hospice and home health-care provider in the country, per LexisNexis — “totaled $1.12 billion in Q1 of 2019, a 7.5 percent increase over the $1.05 billion the integrated health-care services provider recorded during the same period a year ago.” That’s over a billion dollars in revenue in the span of just four months. Which begins to make more sense when you consider that, according to a recent Kaiser Family Foundation poll, 7 in 10 Americans say they’d prefer to die at home. Just before the pandemic, then, it seemed as though there had never been a better time to be in the business of serving the dying their final cocktail of barbiturates.
But perhaps surprisingly, the coronavirus has actually dented those numbers somewhat. Though, overall, net operating revenues for Encompass Health increased to $1.18 billion in the first quarter of 2020 — again, compared to $1.12 billion in Q1 2019 — Home Health Care News reports that, because of COVID, “reduced visits and increased LUPAs [low utilization payment adjustment] led to a dip in the company’s revenue per episode.” Basically, for-profit hospice care providers are making less money, albeit marginally, per patient as a result of the pandemic. This isn’t too concerning for them, though, because once more, these hospice providers were already accumulating huge levels of profit in non-pandemic times.
It wasn’t always like this. The practice of making someone feel more comfortable as they near the end of their life had far more humble beginnings — in fact, the entire hospice industry began as a charitable grassroots movement. The term “hospice” first started to be used in the mid-1800s to describe caring for dying patients, but it didn’t become widely known until Dame Cicely Saunders founded St. Christopher’s House in 1967, the first hospice for terminally ill patients in the U.K. “Dame Cicely had been a nurse, but was currently working as a medical social worker when she came upon a patient by the name of David Tasma in 1948,” states HindsHospice.org. “David was suffering from inoperable cancer and together, they discussed her hopes for one day opening up a place that was more of a home environment to care for the terminally ill that did a better job of focusing on pain management and preparing the patient for death.”
To put in perspective just how different the hospice landscape used to be, up until 1990, only five percent of hospices were for-profit operations. But between 2000 and 2009, four out of every five hospices that entered the U.S. market were for-profit, and more than 40 percent of hospices operating in 2000 had changed ownership during that same decade. By 2016, “67 percent of Medicare-certified hospices were for-profit, and only 20 percent were nonprofits, according to the National Hospice and Palliative Care Organization,” per a report in Hospice News. For-profit hospices accounted for 100 percent of new providers established during 2017, according to the same report.
So what caused this tectonic shift in the hospice landscape?
Strangely, even the transition period from community-inspired palliative care to Wall Street-backed hospice providers had benevolent underpinnings. In 1986, the Medicare Hospice Benefit was made permanent, making the reimbursement rate the same for each patient who qualifies for Medicare, no matter the level of care needed to manage pain or symptoms. Essentially, that year, government-sponsored at-home hospice became a human right. Today, “Medicare covers the majority of the home hospice care expenses — a per diem reimbursement rate is set annually,” says Joy Johnston, an author and caregiver advocate.
In terms of what services they provide, as described by Kaiser Health News, “Hospice agencies primarily serve in an advisory role and from a distance, even in the final, intense days when family caregivers, or home nurses they’ve hired, must continually adjust morphine doses or deal with typical end-of-life symptoms, such as bleeding or breathing trouble.” Johnston tells me, though, that in her experience with enrolling her late mother in hospice, there’s very little these agencies actually do. “As far as palliative care, once a person is enrolled in hospice, they should receive a ‘comfort kit’ which includes palliative medications,” she says. “Other treatments must be approved by a doctor to be paid by Medicare. Otherwise, it’s an out-of-pocket expense.”
This discrepancy between what people anticipate from hospice — i.e., round the clock medical attention — and what they actually get in return — biweekly, rushed visits — explains how the reimbursement rate becomes especially lucrative for these companies, particularly when you consider that hospice agencies charge Medicare per diem on days they don’t even send a representative to check-in on the patient. Such was the case for John McCaslands, who told an NPR affiliate that he only realized this to be the case after he reviewed his monthly statements from Medicare. “I guess when you consider the amount of money that’s involved, that perhaps they would provide somebody round-the-clock,” he told WKNO in Memphis.
According to Johnston, such a lack of care is particularly glaring in rural areas, where home hospice care may be limited to one or two visits per week, “as was my experience with my mother,” she says. The visits by the hospice provider employees, Johnston says, were perfunctory in nature, only asking the Medicare-required questions and taking the vitals required to ensure the Medicare reimbursement payment. “Because I was present and deemed capable of taking care of my mother’s needs, we received only one or two visits per week in the few weeks my mother was in at-home hospice care until she died,” says Johnston. “I was alone with my mother when she died and had to wait for a hospice worker to arrive to complete the death paperwork, because they were having a going-away party for an employee.”
Unfortunately for Johnston and others living in remote areas, the only hospice companies available to them have typically transitioned from nonprofit to major for-profit players. This, according to a nurse Johnston spoke to, who had been in charge of a non-profit practice, is because the financial challenges of rural care — like finding employees who could pass background checks, etc. — weren’t economically feasible to maintain as a non-profit anymore. “While many of the same staff stayed on after the corporate takeover, there did seem to be pressure to limit visits, because the staff was stretched so thin across a large geographic area,” says Johnston.
To that morbid end, she points me in the direction of several studies which suggest that for-profit hospice companies, like the one that served her mother, provide less home-care hours per patient than non-profit entities. “With Medicare providing a per diem rate for home hospice care, there is no incentive to provide more than essential care if you’re looking to maximize profit,” she says. Specifically, Johnston cites a 2014 study which found that “nonprofit hospices were more likely to serve patients in the home and in inpatient hospice facilities, while for-profit hospices were more likely to serve patients in nursing homes and assisted living facilities.”
In other words, for-profit hospices seem to prefer their patients reside in a place where they’re already being looked after.
Moreover, Melissa Aldridge, a professor of geriatrics and palliative medicine at Mount Sinai School of Medicine, and lead author of the study, tells me that hospice disenrollment (when a patient is taken off hospice prior to dying) is a major problem for patients using for-profit hospice companies, since, statistically speaking, they disenroll their patients more often than non-profit hospices. This is especially common when a for-profit hospice patient has dementia.
Unlike patients with late stage cancer, whose deaths follow a fairly linear path, patients with late-stage dementia who have very severe cognitive decline can live up to an average of 2.5 years. “Patients who qualify to receive hospice paid for by Medicare need to be certified as terminally ill, which means a life expectancy of six months or less, if the disease follows its natural course,” says Aldridge. “Serious illnesses, like cancer, have a more predictable trajectory, and so, people with cancer tend to have shorter durations with hospice. For dementia, the trajectory isn’t as clear, and many tend to not die within six months.”
It’s precisely this vague, often drawn-out trajectory that’s so lucrative. As noted earlier, Medicare reimburses hospices at a fixed daily rate of up to $200 for six months, but some days cost more than others. “The first few days, meeting with the patient and family, setting up the plan of care, these are high-intensity days,” Aldridge told the New York Times. “Similarly, as a hospice patient nears death and hospice staff visits more frequently, costs rise.” But patients with dementia are more likely to have a greater number of “stable days in the middle,” which is where for-profit hospices are able to do the bare minimum — or nothing at all — and still make their money, then disenroll the patient after six months without ever dealing with the expensive final days.
Keep in mind, these are people who very much still need the support of hospice teams to enable them to live at home, and who have become used to the care team after long periods of time. “When disenrolled, what does the family do? What other services step in?” says Aldridge. “We found that after disenrollment, many patients die within a matter of weeks, and not with the support of hospices.”
“Yes, they can re-enroll,” Aldridge continues, but she adds that most hospice patients with dementia — who she refers to as “long-stay” patients — are, for many, reasons not re-enrolled. Sometimes, Aldridge tells me, the family decides they don’t want hospice any longer because of the quality of care. “It may also be that there isn’t a hospice physician who will recertify that the person is terminal (six months or less to live),” she explains. “One could be disenrolled after a long stay and the hospice will no longer certify that the person is terminal. With dementia, these issues are important because prognosis is so difficult.”
The alternative for the disenrolled but still dying is as bleak as you might expect: Locating a private caregiver and shelling out hundreds of dollars a day, out of their own pocket, to help mitigate their time between disenrollment and death. It’s not surprising that, according to Aldridge’s study, disenrollment “has been associated with higher rates of subsequent hospitalizations and a greater likelihood of emergency department use, intensive care unit admission and hospital death.”
In her research, Aldridge found that disenrolling patients with dementia may represent a for-profit hospice’s effort to avoid the costs of a hospitalization related to the terminal illness. “Previous research has shown that individuals in hospice with dementia are less likely than individuals in hospice with other terminal diagnoses to undergo burdensome transitions between care settings, which might be explained by the fact that patients with dementia are less able to communicate their symptoms, such as pain,” Aldridge notes in her study.
There are some checks on the system, according to Aldridge. “Medicare has increased scrutiny of hospices who have many patients with long hospice durations, because they believe that perhaps the person wasn’t initially eligible for hospice (i.e., wasn’t really terminal when enrolled),” she says. “Medicare can audit a hospice, and if too many patients have hospice stays longer than six months, the hospice has to return reimbursement to Medicare.” In practice, however, the Medicare audit Aldridge is referring to actually further incentivizes for-profit hospice providers to neatly cut off their soon-to-be-dead patients before the six-month limit.
To be clear, Aldridge isn’t necessarily against the for-profit hospice industry — in fact, she thinks there’s a great deal of potential to use the corporate apparatus to better serve those in need of end-of-life care. “Use of hospice has increased substantially over the past few decades in conjunction with a rapid increase in for-profit hospice ownership,” she says. “Access to hospice has improved and for-profits are able to expand into new markets quickly. This is a good thing if the quality of care ensures patient and family needs are met.”
The problem is, the current quality of care, while more widely available, appears to be the Medicare required bare-minimum. As things stand today, the for-profit corporate approach feels like some grudging offspring, waiting for their parent to die so they can inherit their life savings. The only difference seems to be that they’re not waiting for that last breath before grabbing the money.