- Hospice agencies cared for more Medicare patients with dementia and offered more services in home settings after being bought by private equity firms and publicly traded companies, suggesting that hospices shift to caring for populations that maximize profitability following acquisitions, according to a recent study published in JAMA Network Open.
- Agencies bought by PE firms and publicly traded companies saw an almost 6% and 13.5% increase, respectively, in patients with dementia following an acquisition, compared with for-profit hospices that weren’t acquired. They also experienced a 3.4% and 5.3% increase in care being provided in a patient’s home.
- These changes may aim to take advantage of a reimbursement structure that rewards caring for lower-acuity patients with longer lengths of stay and those who are co-located in nursing homes and assisted living facilities, according to the study.
Hospice care has shifted to for-profit settings from smaller, nonprofit agencies over the past thirty years, with for-profit hospices making up nearly two-thirds of all agencies, according to the study.
While growth in the sector has been dominated by for-profit entities, family caregivers have reported worse care experiences at these facilities compared with their nonprofit counterparts, according to Rand research published earlier this year.
Private equity firms and public companies have been moving into hospice care, with an estimated 16% of U.S. hospice providers owned by PE firms or publicly traded companies, according to the JAMA study.
Both PE firms and public companies use a “platform and roll-up” approach to hospice investments, buying a large and well-managed agency and then acquiring smaller hospices to increase market share and capture referrals, according to the JAMA study.
Hospice agencies saw a 1.4% decrease in Hierarchical Condition Category scores, a risk adjustment model that aims to predict healthcare costs, after a publicly traded company deal.
The study, which analyzed nearly 2,000 hospice agencies, suggests hospice agencies acquired by PE firms and public companies shift their operational strategies to focus on patient populations that will yield more profit.
Patients with lower HCC scores, dementia or those who live in nursing homes are more likely to need longer-term, but less-complex care, according to the study. In comparison, a cancer patient might have more significant healthcare needs and stay in hospice for less time.
But researchers noted the findings should be interpreted carefully, especially when it comes to quality of care. Further research should examine how PE firms or public company deals are related to patient outcomes or what other factors drive acquisitions.
Private equity investments in healthcare more generally have increased over the past 10 years, with dealmaking soaring in 2021 and 2022. However, researchers have raised concerns about high costs and worsened quality of care as private equity firms take over healthcare facilities.
Hospice ownership can be difficult to determine, according to the JAMA study. Though the CMS released some ownership data on its Hospice Compare website, it’s not possible to identify agencies with common ownership, like chains or PE and public company-owned facilities.