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Scientific American is Worried about US Hospice

The Editorial Board of Scientific American (the oldest continuously published magazine in the US) recently chose to comment on the unfortunate state of hospice care. The Editorial observes that “corporate profiteers have taken over end-of-life care… [and this care] is failing people in their greatest moment of need…For-profit hospices do a significantly worse job of providing care than nonprofit agencies according to a study by the RAND corporation.” The article also cites a major study by ProPublica published in the New Yorker that exposed numerous and large-scale hospice abuse by for-profit (FP) hospices. This research is especially concerning when one realizes that 75 percent of US hospices are owned by FP agencies. Over the last decade, non-profit hospice agencies have struggled financially, resulting in the aggressive takeover of these hospices by the FP sector. The reason FP hospice does so well in this sector is a function of their skill at manipulating the complex hospice regulatory system to make profits.


Unfortunately, the Editorial Board’s recommended solution is to have “Policy makers better regulate this vital service.” More regulation is not the answer to these problems. The solution is to change the economic incentive for hospice. The right incentives will minimize the need for regulation and drive the right results. The true source of the “hospice problem” is the Medicare payment system which because of its needless complexity and volume bias encourages profiteering and fraud and abuse. A simple solution would be to reimburse hospice care on a simple cost-plus basis allowing for a modest 2-3 percent margin. This payment model would improve patient care because coding, technical documentation, patient mix and volume are no longer important - caring for the patient is the sole focus/incentive. Hospice services are not complex or expensive - they are labor driven and low tech. These services do not justify a complex payment model. Furthermore, these new incentives would not be attractive to the FP sector because large margins are no longer a possibility.


More details surrounding these recommendations are available in my new book, The Journey’s End.

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