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Formerly Run as Non-Profits, Hospices Have Become Big Business for For-Profit Firms, Raising Concerns About End-of-Life Care

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Most of us have at least some personal experience with hospice care. As a loved one, a friend, or a family member has approached the end of life, perhaps a physician or caregiver has arranged for hospice workers to visit them and offer services that provide physical, emotional and often spiritual comfort. As Wikipedia defines it, “Hospice care prioritizes comfort and quality of life by reducing pain and suffering.” It’s an alternative to the kind of life-prolonging treatments that are the focus of traditional medicine.

Historically, hospice care has been the province of non-profit organizations, in a tradition that traces back centuries in some countries but only a relatively short time in the U.S. (the National Hospice Organization was formed in 1977). But now, in what appears to be a disturbing new trend, the combination of the aging population and the popularity of hospice care has caused private equity firms and other venture capitalists to take notice.

This recent story from Kaiser Health Newsthe work of reporter Markian Hawryluk, reveals the hidden movement by private firms to capitalize on the public demand for hospice care by acquiring or launching for-profit “hospice chains.” The fear is that, in the relentless quest for profits, end-of-life care is bound to suffer. We think this is a vitally important issue for anyone walking with a loved one through the journey of terminal illness. If there’s any advice from this story, it’s “Choose carefully when arranging hospice care.”

Two-Thirds of U.S. Hospices are For-Profit

In the Kaiser article, Hawryluk’s article begins, “Hospice care, once provided primarily by nonprofit agencies, has seen a remarkable shift over the past decade, with more than two-thirds of hospices nationwide now operating as for-profit entities. The ability to turn a quick profit in caring for people in their last days of life is attracting a new breed of hospice owners: private equity firms.”

The natural consequence? The rapid growth hospice-for-hire is making hospice-care veterans nervous that the original vision for hospice might be disappearing in favor of pursuing a strong ROI – all to the detriment of patients and families.

Private-Equity Control of Hospices is Soaring

Studies reveal the real stats behind the increasing for-profit hospice trend. According to a 2021 analysis, Hawryluk states that “the number of hospice agencies owned by private equity firms soared from 106 of a total of 3,162 hospices in 2011 to 409 of the 5,615 hospices operating in 2019. Over that time, 72 percent of hospices acquired by private equity were nonprofits.”

And the trend shows no signs of slowing, in large part because hospice is a business with a low barrier to entry. It’s easy to launch, relative to other businesses, and once up and running a hospice agency can be turned around and sold easily to private equity firms working on behalf of deeper-pocketed investors. These firms “could then snatch up handfuls of smaller hospices, cobble together a chain, and profit from economies of scale in administrative and supply costs, before selling to an even larger chain or another private equity firm,” Hawryluk writes.

The Industry Counters that Investment Promotes Growth

Hospice companies owned by these private equity firms argue that their model has its benefits, both for small business owners as well as patients. As Steve Larkin, CEO of Charter Healthcare (owned by private equity firm Pharos Capital Group), told Kaiser Health News, “Private equity sees a huge opportunity to take smaller businesses that lack sophistication, lack the ability to grow, lack the capital investment, and private equity says, ‘We can come in there, cobble these things together, get standardization, get visibility and be able to create a better footprint, better access, and more opportunities.’”

That said, Larkin also noted that the hospice market is full of people with less-than-stellar intentions. He added, “It is a little scary. There are people [investing] that have no business being in health care.”

Hospice as an industry is booming as the U.S. population rapidly ages. Medicare, which pays for the vast majority of end-of-life-care, is spending billions of dollars on hospice in increasing amounts, and the amount of hospices billing Medicare grew from less than 3,500 a decade ago to over 5,000.

Hawryluk cautions, “But with limited oversight and generous payment, the industry is at high risk for exploitation. Agencies are paid a daily rate for each patient — this year, about $200 — which encourages for-profit hospices to limit spending to boost their bottom lines.” Practically speaking this means lower quality of care, higher patient debts, false promises, and less oversight. 

For-Profit Hospices Offer Lower Quality of Care

“The main way of making the bottom line look good is decreasing [patient] visits,” notes Dr. Joan Teno, adjunct professor at Brown University School of Public Health. Because of this, many hospice nurses and social workers are booked for firm 30-minute appointment slots and are therefore unable to be more flexible in their schedule with each patient if needed.

“For-profit hospices hire more licensed practical nurses than registered nurses, who are more skilled, and rely more on nurse’s aides to further cut costs,” Hawryluk writes. “ One study found patients in for-profit hospices see doctors or nurse practitioners one-third as often as those in nonprofit hospices. The U.S. Government Accountability Office found in an analysis of federal data from 2014 to 2017 that patients in for-profit hospices were less likely than patients in nonprofit hospices to have received any hospice visits in the last three days of life.”

Profits Rise as Patients Stay Longer in Hospice Care

The profit motive also seems to rear its head when it comes to which patients receive care. In the article, Hawryluk writes, “For-profit hospices also enroll a different set of patients, preferring those likely to remain in hospice longer. Most costs are incurred in the first and last week of hospice care. Patients who enroll in hospice must undergo several assessments to develop a care plan and set their medications. In their final days, as the body begins to shut down, patients often need additional services or medications to stay comfortable.”

The enrollment decision-making of for-profit hospices therefore comes across as quite detached, even heartless. The article notes that while for-profit hospices tend not to enroll cancer patients—since they tend to die sooner—dementia patients are “particularly profitable”, as the timeline of decline is less easy to predict. “For-profit hospices enroll those patients anyway,” Teno said, “and stand to profit the longer those patients live.”

“It is a very simple business model,” Teno added. “Go to assisted living facilities and nursing homes, and it’s one-stop shopping.”

Hawryluk notes that “about a third of a hospice’s patients die each week, so agencies need to market heavily to replace them. That leads to some hospices making promises to families — such as daily visits from a nurse’s aide — that they can’t keep.”

Non-Profit Hospices Offer More Patient Visits

According to the analysis, “Patients in nonprofits had more nursing, social worker, and therapy visits. For-profit hospices, the report found, had longer lengths of stay by patients, discharged more patients before death, and had profit margins nearly seven times higher.”

At the same time, Hawryluk adds, “Other studies have found that for-profit hospices have higher rates of complaints and deficiencies, provide fewer community benefits, and have higher rates of emergency room and other hospital use.”

And the financial pressures are far worse for private equity-backed hospices than for other for-profit models. “A private equity firm will typically put up only 10 percent to 30 percent of the acquisition cost itself, borrowing the rest,” Hawryluk explains. “The acquired hospice not only has to generate profits to satisfy its private equity owners but is stuck with the costs of the loan as well. Private equity firms typically look to flip their hospice investments in three to seven years.”

Quick Turn-Around Avoids State, Federal Inspection

You might be wondering: what about oversight? What about inspections? While both for-profit and non-profit hospices are certainly subject to inspection and regulation, loopholes allow many facilities to avoid them.

“Because hospices are inspected every three years, some are bought and sold without a state or federal inspection — and sometimes without regulators even knowing about the sale,” Hawryluk writes. “And quality oversight is weak. Hospices have a financial interest in reporting quality metrics to the Centers for Medicare and Medicaid Services, but there is no penalty for poor performance tied to those metrics.”

Christy Whitney, former CEO of nonprofit hospice HopeWest, believes that the for-profit hospice model is giving the industry an increasingly negative reputation. “They get paid the same as us, but they don’t take the same patients. They don’t provide the covered services that are supposed to be covered to be paid a per diem. They’ve developed kind of a shadow business that really has very little to do with the business that I run. But they’re called the same name.”

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(originally reported at

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