Why is private equity interested in hospice?

Hospice is becoming an increasingly important model of care in our nation. Unfortunately, Medicare has adopted an overly complex payment system with coding as its foundation. The coding payment model has invited the private equity world into this care, as this article notes.

One of the reasons for the stark contrast in profit margins between for profit and non-profit hospice relates to coding manipulation. For profit hospice is much better at optimizing profit in the coding world.

It would help immensely if Medicare stopped using coding for hospice payment because it is costly and creates conflicting incentives. Hospice services are not complex - hence the ease of entrance for private equity mentioned in the article. Coding is complex and costly.

Hospice could be paid for on a reasonable cost basis. This would make margins similar for all providers, it would reduce costs, virtually eliminate claims about fraud and most importantly, incentivize providers to focus on the patient's needs. 

My new book, The Journey's End, discusses this recommendation and several others to improve EOL care.

How to improve the experience of death and dying in America

The more sophisticated our society becomes, the more we resist death. Our medical care models are overly rigid and controlling and fail to adapt to an individual’s changing needs or offer alternatives in terms of settings and services.

More than a change in care models, we need a shift in attitude away from medicalizing death, which is, and should be, a natural process. Knowing a patient’s preferences is crucial to this process, but because we don’t candidly discuss end-of-life care, few caregivers really know the care their patient truly desires.

As The Journey’s End argues, grappling with the reality of death has both practical and philosophical benefits. It can give us closure, freedom and a sense of purpose, yet many of us will fail to have that kind of death experience. We’ve lost our “death literacy,” the skills, traditions, and values that our predecessors used to deal with death.

A societal appreciation for death is long overdue. Today dying is no longer a familial experience but rather a cold, clinical, and medical ordeal. Modern medicine overreaches in its attempts to fend off death and this excessive focus on clinical intervention at the end of life is costly and comes at the expense of other social needs.

While investigating the experience of death and dying in the United States, The Journey’s End:

• Argues the benefits of developing death literacy

• Examines the root causes of healthcare dysfunction that shortchanges the elderly

• Provides recommendations on how we can improve elder care and dramatically reduce healthcare expenses

The process of dying should be owned by individuals and family members with support from health professionals instead of the other way around. The status quo of ineffective and expensive care for the elderly is not the only option. We can take a different approach by changing the system’s incentives and embracing natural death. We can drive change by developing death literacy and owning how we wish to face death.

I’ll explore these topics in future blogs and in greater detail in The Journey’s End, available in April.

Why focus on The Journey's End?

The seed for this book was planted in 1982 while I served on the Board of one of the first Hospices in the US. In those days, Hospice care was free and completely supported by volunteers. In 1983, Medicare added Hospice as a benefit. The regulations and business demands that came with benefit status changed Hospice care in ways that don’t help those working in Hospice or needing its services. While Hospice remains the most compassionate and rewarding approach to caring for the dying, its potential remains unfulfilled.

Over the next 40 years of my career, I was exposed to virtually all aspects of healthcare - from operating hospitals to medical education, managing physicians, working in long-term care and hospices, running a health insurance plan, and practicing law. Throughout my career, I watched how society’s approach to death and dying changed radically. It became focused on technology rather than on caring for the patient's needs. It also became extremely expensive. My healthcare career was marked by growing irrational regulations and irresponsible growth in expenses. These concerns spurred me to pursue numerous initiatives to improve healthcare, and honestly, few of those initiatives made much difference. In retirement, I decided to continue my passion to improve healthcare. My initial focus was on healthcare ethics, but that path led me to end-of-life care (EOL) and healthcare economics.

One of the first books I read in retirement was Leonardo DaVinci by Walter Isaacson. My learnings from this biography created the framework for this book. Da Vinci was successful because he approached issues from multiple lenses. He was really an engineer before he was an artist. He was an expert on anatomy. He studied and immersed himself in a wide range of fields. It was his integration of these multiple perspectives that gave him his brilliance. This informed my approach to The Journey’s End, for which I have studied EOL care from numerous perspectives: clinical, psychological, ethical, economic, legal, religious, and cultural. During the journey, I have read over one hundred books on EOL from these different disciplines.

This research and investigation, in combination, with my career experience, has stimulated some rather unique insights into EOL care. The most significant insight is that improvements to EOL reform may be the key to reforming healthcare. The second key insight is that historical reform efforts have focused on symptoms rather than the root causes of our problems. For example, fragmented healthcare is one of the significant issues we face and even more so in the end-of-life care space. However, few reform efforts have focused on the root causes of fragmented care, which are economic, legal and clinical. Solutions to date, including palliative care, gerontology, hospice and advance directives, have not addressed the root cause of the problem nor are they easily available or well integrated into the health system. Our economic solutions are either missing or offered on such a small scale they are ineffective.

In my humble opinion, fixing these healthcare issues may well be one of the most important issues we will face over the next decade.

There are two major goals of this book.

The first is to help individuals prepare for the last phase of life by learning how they wish to use healthcare and overcome the fear and reluctance everyone naturally feels when planning for EOL care. This will require individuals to develop death literacy. I hope to give people the tools and knowledge they will need to make sure they and those they love don’t fall into the death trap, my term for undergoing invasive, discomforting, and ultimately futile medical interventions at the end of life.

The second is to offer healthcare leaders and legislators a new perspective on how to provide EOL care and pragmatic recommendations on how to implement reform.