The Changing World of Hospice Care

August 8, 2011

When I was in graduate school and early in my career, hospices were viewed as one of the most altruistic components of the health care system. With a philosophy of caring holistically for those at the end of life by controlling symptoms, supporting families, and providing a “good” death (preferably at home), hospices seemed to represent the vision of compassion that should be embodied in a caring profession. Hospice care was formalized in Great Britain in the late 1960s, and federally funded in the U.S. for the first time in a 1979 demonstration project. The hospice benefit became a part of the Medicare program in 1982 and fully incorporated in 1986.

Perhaps it was inevitable that, when formalized as an insurance benefit, the nature of hospice care would change. In every aspect of the health care system, as coverage makes it easier to make money by providing a given benefit, entrepreneurs enter the system. After all, this is the American way – with all of its pluses (creating incentives for innovation) and minuses (creating opportunities to make money in ways that don’t actually add value to patient care).

Even if it was inevitable, I find what has happened to the hospice movement to be a sad story in the journey of American health care.

In the early years, hospices saw themselves as part of a movement to give better, more compassionate care to the dying. The overwhelming majority of these organizations were non-profit, often led by charismatic leaders and community boards of directors.

In today’s environment, for-profit hospices are on the rise and non-profits on the decline. In 1990, for profit hospices cared for only 9 percent of hospice patients. By 2009, they cared for 35 percent. In 1986, Medicare reimbursement for hospice care totaled $68.3 million; by 2009, that number had grown to $12 billion. As baby boomers become senior citizens, these numbers will go nowhere but up.

While there is nothing inherently wrong with for-profit hospices, an increasing body of research says their care is less comprehensive and admission criteria more selective (to focus on more profitable patients). Indeed, in 2007, profit margins of for-profit hospices ranged from 12-14 percent while that of non-profit hospices ranged from -2.9 to -4.4 percent.

Recently, the New York Times ran an article about the changing profile of hospices and increasing concerns about the cost of hospice care. An aging population and increases in Alzheimer’s and other forms of dementia account for part of the increase in hospice spending. But the Times article also reported on abusive practices by some hospice providers, and large financial settlements resulting from whistle blower and other lawsuits. As a result of ballooning costs, Congress is now considering a change in the reimbursement methodology for hospice providers.

There is no question that hospice care can improve the end of life journey for many individuals and families—but it is still under-utilized by many who could benefit. The shift from a “movement” to an “industry,” –and publicity around industry abuses—have the potential to discourage patients from seeking the care they need.

Too many times in the history of American health care the “medical-industrial complex” has overrun patient interests. Let’s hope this is one time when Congress can reverse a dangerous trend. Returning to the values of “the movement” would be a truly beneficial “back to the future” moment.