The National Partnership for Healthcare and Hospice, which represents 80 nonprofit hospices, is welcoming an investigation by the Senate Finance Committee into private equity’s expanding role in the hospice industry.
“All of a sudden this is an area of interest by people who are motivated by shareholders,” NPHI President Carole Fisher told McKnight’s Home Care Daily. “Where was everyone 40 years ago when we were providing care?”
Senate Finance Committee Chairman Ron Wyden (D-OR), Sen. Sherrod Brown (D-OH) and Sen. Elizabeth Warren (D-MA) launched the investigation earlier this month out of concern that private equity’s business model of generating profits on a rapid turnaround could come at the expense of dying patients and their families.
“Since its inception as a small volunteer-run movement in the 1960s, the hospice industry has transformed into a $20 billion industry with a marked increase in for-profit ownership,” committee members said in a joint statement. “There is evidence that care quality is lower in for-profit hospice companies, making these ownership trends in the hospice industry a cause for concern.”
A study conducted by the consulting firm Milliman for NPHI lends cause for concern. The study found nonprofit hospices provide 10% more nursing visits and 35% more social worker visits than for-profit hospices. At the same time, aggregate net profit margins were 19.9% for for-profit agencies compared to 3% for nonprofits.
Fisher also charges that for-profit hospices admit patients who are more likely to remain in hospice longer, while taking a pass on patients who are sicker and likely to die more quickly.
“The business model is to, for lack of a better word, cherry pick what patients they want to care for and it has really wreaked havoc on the quality of care,” Fisher said.
Hospice, home healthcare and home care have become magnets for private equity investment in recent years due to the nation’s aging demographics. According to mergers and acquisitions advisory firm Mertz Taggart, private equity accounted for 63 of the 107 hospice deals completed in 2020 and the first two quarters of 2021.
Humana’s investment in Kindred at Home and subsequent acquisition is drawing particular scrutiny from the Senate committee. It has asked the company for detailed information regarding average patient length of stay, the number of hospice discharges and a list of closed hospice locations.
A Kindred at Home spokeswoman told McKnight’s Home Care Daily the company is cooperating fully with the committee’s investigation, but declined to comment further. The National Association for Home Care & Hospice also declined to comment until the committee investigation is complete.