The Big (and Profitable) Business of Dying

Last Updated May 24, 2011 3:45 PM EDT

Taking leave of life is never good. But when the time comes, most people would like to think that they could come to an end free of pain, without needles stuck in their veins or tubes up their noses, surrounded by their families, preferably at home or in a home-like setting.

Achieving that dignified death has been the purpose of the hospice movement which got its start with Dame Cicely Saunders, a physician who founded St. Christopher's Hospice in 1967 in a London suburb. She eventually exported the hospice concept to America via the Yale School of Nursing where she taught the holistic treatment -- spiritual, medical, psychological -- of dying patients. Rather than being subjected to so-called heroic measures that were often inhumane and of little benefit, terminal patients in hospice would be able to choose the end-of-life care they would receive.

Initially, small nonprofit groups, many of them composed of dedicated volunteers, provided care. Now, however, according to a study published in the summer issue of the Journal of Law, Medicine and Ethics, hospice care has evolved into "a multimillion dollar industry where the surviving nonprofits compete with for-profit providers, often publicly traded, managed by M.B.A.-trained executives, and governed by corporate boards." Right now approximately 52 percent of hospices are for-profit, 35 percent are non-profit, and 13 percent are owned by the government.

Can this possibly be a good development? I guess I would put it on a par with for-profit prisons, which haven't worked out so well (what with owners scrimping on medical care, food and rehabilitation), for-profit orphanages, which, thank heavens, haven't been around since Oliver Twist, or for-profit organ sales and child adoptions, which are both outlawed. The incentives for profit, say the study's authors, Joshua E. Perry, assistant professor in the Department of Business Law and Ethics at Indiana University's Kelley School of Business and Robert C. Stone, an emergency medicine physician and assistant medical director at Indiana University Health Bloomington Hospital Hospice, are not necessarily on the side of the patient.

Fueling the money-making is Medicare which since 1982 has provided a hospice benefit for terminally ill patients -- those whom physicians certify to have a life expectancy of 6 months or less. The government pays a set daily rate, currently about $143, regardless of the services actually provided on any given day. By 2008, according to study authors, hospice expenditures exceeded $11 billion, Medicare beneficiaries receiving hospice services (for increasingly longer periods of time) topped one million. (The National Hospice and Palliative Care Organization reports that in 2009, hospices served a total of 1.56 milion patients.) The number of hospice locations has risen to about 3,300, most of the increase coming from for-profit providers.

And, the for-profit business has been, well, amnazingly profitable. A 2005 study in the Journal of Palliative Medicine found that large hospices owned by publicly traded companies generate margins nine times higher than those of large nonprofits. "These cost savings and profit margins appear to flow primarily from business decisions relating to selective recruitment of a longer-term, increasingly non-cancerous, population of Medicare patients and the payment of lower salaries and benefits to less-skilled staff," say study authors.

And what about quality? While Perry and Stone are cautious about drawing conclusions, others have. For example, a 2004 Medical Care study of 2,080 patients enrolled in 422 hospices across the country found that "terminally ill patients who receive end-of-life care from for-profit hospice providers receive a full range of services only half the time compared with patients treated by nonprofit hospice organizations." Families of patients receiving care from a for-profit hospice received counseling services only [45% as often] as those in a nonprofit hospice. What's more, for-profit hospices are only half as likely as nonprofits to provide palliative radiotherapy, which reduces pain for patients with tumors. Research from the University of California, Irvine, found that patients who stay longer at for-profit hospices receive less high-skilled nursing care-such as tracheotomy care, wound care, and suctioning or feeding tubes-because skimping on these services keeps costs down.
In fact, tumor care happens less in for-profit hospices because they take on a smaller share of cancer patients, partly because their care costs more than that of patients with other diseases. "For-profits are targeting long-term dementia patients," says Joshua Perry. Their demise could be years in the future, but, he adds, "as long as the hospice medical director declares them terminal every 60 days, Medicare will pay." Gaming the system boosts profits but also perhaps unfairly burdens taxpayers, adds Perry.

When you (or someone you love) is in extremis, you don't exactly go shopping for a hospice program. "Consumers can't evaluate a hospice like they would a cell phone or a car," says Perry. "They are compromised, overwhelmed, in a different state of mind." Usually, the hospital or nursing home sends in - or recommends -- the hospice team. It's unlikely that you'd know whether they are non- or for-profit. And the study authors point out that hospice providers don't always get business on the merits. For example, VITAS Hospice Services, LLC, the largest provider of hospice services in the United States reportedly sends its patient recruiters into nursing homes equipped with pens and coffee cups for staff and then pays a commission to those recruiters who successfully sign-up patients. A rival hospice provider was indicted for allegedly paying nursing home operators $10 per day to assist in patient recruitment efforts and paying physicians $89 a month to certify patients as hospice eligible without examining the patient or reviewing medical records.

MedPAC, which advises Congress on Medicare, has recommended a change in reimbursement -- though not until 2013 -- that would pay more per day in the earliest and last days of a patient's hospice care, when service needs are most intense, and less for days in-between. But that will probably do little to discourage the for-profits' cherry-picking of patients who are likely to last the longest -- leaving the non-profits to deal with the sickest patients and giving them fewer resources to do so.

I am sure that there are some for-profit hospices that do a good job with their patients. But in general, you can't say that the interests of for-profits and their patients are aligned. "Things get very messy when profit enters the picture," says Perry. Until new regulations or payment structures come into place to remedy that, consumers had better be asking: who owns the hospice that's providing care for me or my family?

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  • Marlys Harris

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