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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.

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