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A study of 191 for-profit hospices acquired by private equity firms from 2018 to 2022 found Medicare spending per stay rose 5.9% relative to similar hospices that were not acquired. Longer stays and a shift in patient mix were key findings; researchers did not find increased visits or total time spent on visits.
A study of 191 for-profit hospices acquired by private equity firms found that Medicare spending per hospice stay rose 5.9% after acquisition, compared with similar hospices that were not acquired. Published in the November issue of Health Affairs, the research links the increase mainly to longer stays and changes in the mix of patients admitted, not to more visits or more time spent providing care.
Researchers compared the acquired hospices with 1,305 matched for-profit hospices that remained outside private equity ownership. Using Medicare fee-for-service claims, they tracked changes during the two years before and after each acquisition and compared them with changes at the control hospices. The study focused on whether a private equity buyout changed costs or care beyond the patterns seen at other for-profit providers.
After acquisition, the average hospice stay increased by 6.3 days. Patients were less likely to have stays shorter than a week, more likely to stay longer than six months, and more likely to be discharged alive. The share of patients with dementia rose from 22.6% to 23.8%; that share did not change at the comparison hospices.
The study found no significant increase in total visits or time spent on visits per week, including physician, nurse and home health visits. Researchers reported that patients received fewer social work visits. They said the findings were consistent with a shift toward patients requiring less ongoing care, although the study does not establish that ownership changes alone caused every observed difference.
How Hospice Payments Shape Spending
The findings matter because Medicare pays hospices a set daily fee, rather than adjusting payment directly to the amount of care each patient needs. A patient with dementia who requires relatively few services may bring in the same daily payment as a patient with cancer who needs frequent visits and complex pain management. The costs of those services come from that fee.
In that system, longer stays can raise Medicare spending per episode even when the amount of care delivered each week does not rise. The researchers’ findings also put attention on who is admitted and how long patients remain enrolled, not just on the number of services provided. They do not show that a particular patient was wrongly admitted or that the reported spending increase reflects poor care.
The issue reaches a large part of the health system: the source report says nearly half of people who die in the United States are Medicare beneficiaries who use hospice, and up to a quarter of Medicare spending occurs in the last year of life. The study therefore adds evidence to debate over how to pay for hospice while supporting care that meets patients’ needs.
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Private Equity in Hospice Care
The study examined private equity acquisitions of hospices that were already for-profit, comparing them with other for-profit providers. That design allowed researchers to ask whether changes after acquisition differed from the experience of similar hospices that were not bought by private equity, rather than comparing for-profit care with nonprofit care.
The researchers analyzed Medicare fee-for-service claims for acquisitions completed between 2018 and 2022. The source report describes a wider ownership shift: nearly three-quarters of U.S. hospices are now for-profit, and private equity firms are a growing owner group. In a typical private equity deal, a firm uses investor funds and borrowing to purchase a company; the acquired company may be responsible for repaying the debt.
The report also notes that Medicare hospice payments are not based on a detailed, patient-specific measure of daily service use. That payment structure is relevant to interpreting the study’s link between a changing patient mix, longer stays and higher spending. The researchers said adjusting payments for clinical need is one possible policy response, while warning that risk adjustment can create incentives to code patients in ways that increase payment.
“The goal of hospice is to provide respectful, person-centered care that helps terminally ill people approach end of life with dignity, while minimizing pain and suffering.”
— Zirui Song, the study’s senior author and an associate professor of health care policy at Harvard Medical School
What Claims Data Cannot Establish
The study reports differences associated with private equity acquisition, but the source material does not establish why each hospice’s patient mix changed or whether the acquisitions directly caused every outcome. The findings do not determine whether individual admissions or live discharges were clinically appropriate, nor do they measure every aspect of patient and family experience.
The reported summary does not provide the dollar amount represented by the 5.9% increase, the study’s confidence intervals, or detailed estimates for each type of service. It also does not establish whether the patterns apply to nonprofit hospices, other Medicare payment arrangements, or acquisitions outside the 2018–2022 period. The number of social work visits fell, but the source does not specify the size or practical effect of that decrease.
Payment Policy Questions Ahead
The researchers said changes to Medicare’s hospice payment system may be warranted. One option they identified is adjusting the daily payment according to patients’ clinical needs, using diagnoses in a way similar to hospital payment systems. Their report also cautions that risk-adjusted payments could encourage coding practices aimed at maximizing reimbursement.
The source material does not identify a specific proposed rule, legislative action or implementation timetable. The next steps are therefore a policy debate, not a confirmed payment change. Further research could test whether the patterns persist over longer periods, clarify how ownership affects clinical decisions, and assess whether payment adjustments change care as well as spending.
Key Questions
How much did Medicare spending rise after the acquisitions?
The study found that spending per hospice stay increased 5.9% at hospices acquired by private equity, compared with similar for-profit hospices that were not acquired.
What was associated with the higher spending?
The researchers linked the increase mainly to stays that were 6.3 days longer on average and a shift in the mix of patients. They did not find a significant rise in total weekly visits or time spent on visits.
Did the study find that private equity hospices provided more care?
No. The study found no significant increase in total visits or visit time; it reported fewer social work visits. The findings do not establish whether individual patients received appropriate care.
Why could patient mix affect hospice spending?
Medicare pays a set daily fee regardless of how much care a patient needs. Researchers said the higher share of patients with dementia was consistent with a shift toward patients requiring less ongoing care, but the study does not prove why that shift occurred.
Is Medicare changing hospice payments because of this study?
The researchers said payment changes may be warranted and discussed adjusting fees for clinical need. The source material does not report a confirmed policy change or timetable.
Source: medicalxpress.com
