Health Affairs Ownership , Growth , And Shift To For-Profit Status US Hospice Industry Experienced Considerable Turbulence From Changes In

The US hospice industry, which provides palliative and supportive care to patients with terminal illness, has undergone substantial changes during the last decade. The magnitude of these changes has not been fully captured in previous studies or reports. In this longitudinal study of hospices active in Medicare during 1999–2009, we analyzed Provider of Services files to understand key shifts in the industry. We found evidence of substantial turbulence. One-fifth of Medicare-certified hospices active in 1999 had closed or withdrawn from the program by 2009, and more than 40 percent had experienced one or more changes in ownership. The most prominent trend was the shift in ownership type from nonprofit to for-profit ownership. Four out of five Medicare-certified hospices that entered the marketplace between 2000 and 2009 were for-profit. Hospices also became larger, as the proportion with 100 or more full-time employees doubled to 5 percent from 1999 to 2009. Although each of the Census regions had more hospices in 2009 than in 1999, the geographic distribution of hospices in the country changed, with proportionally more in the South and West. The impact of all of these changes on cost and quality of hospice care, as well as patient access, remains a critical area for future research. T he US hospice industry, which provides palliative and supportive care to patients with terminal illness, has experienced enormous changes since Congress first authorized a hospice benefit as part of Medicare in 1983. In that year, forty hospices became certified to provide care under Medicare; only 10 percent of these were for-profit organizations. By 2010 the Medicare Payment Advisory Commission estimated that there were 3,555 Medicare-certified hospices in theUnited States, and more than half were for-profit institutions. Researchershave expressed concern thatMedicare’s reimbursement system for hospice care may distort patterns of enrollment and use. Medicare reimburses hospice providers on a flat per diem basis, although the first and last days in hospice are typically higher-intensity and higher-cost than other days. As a result, per diem hospice reimbursement may unintentionally encourage longer enrollment periods, when a patient has a longer period of lower-intensity, lower-cost care—days that may be more profitable for providers than the first and last days. Many patients are enrolled in hospice for only a short period of time before their death. On an annual basis between 2000 and 2010, 25 percent of Medicare beneficiaries enrolled in hospice receivedhospice care for five days or less. During the same time period, however, the average length of hospice enrollment for the 10 percent ofMedicarebeneficiarieswith the longest enrollment periods increased by nearly 60 percent, doi: 10.1377/hlthaff.2011.1247