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Hospices in Florida: From Cause to Commerce

Hospice room
Florida is home to some of the largest non-profit and for-profit hospices. While the number of non-profits held steady from 2000-07, for-profit hospices more than doubled. [Photo: Jon M. Fletcher]

BY THE NUMBERS


The Medicare Factor

$2.9 billion — Medicare payments to hospices nationally in 2000

$11 billion — Medicare payments to hospices nationally in 2008

$1.2 billion — Medicare payments to Florida hospices in 2008

87% — Hospice patients on Medicare

49% — Medicare enrollees in Florida who die in hospice care

In the 1970s, hospices began to grow in the United States as a grassroots effort by those who believed that terminally ill people should be able to die with dignity.

Advocates set up non-profit organizations called hospices on shoestring budgets to care for the emotional, social and spiritual needs of dying people and their families. The programs relied almost entirely on charitable contributions and volunteers. Florida became the first state to set standards for care, enacting a hospice licensure law in 1978.

In 1983, the federal government validated the approach when Congress approved Medicare reimbursement for hospice services aimed at cancer patients, then expanded coverage to other terminal illnesses.

Medicare reimbursement also began transforming hospice from righteous cause to a multibillion-dollar industry. Once Medicare began paying, demand for hospice services surged. In 2008 alone, Florida hospices provided care to nearly 100,000 Medicare recipients with terminal illnesses at an estimated cost of $1.2 billion, far more than any other state in the nation.

Florida's Largest Non-Profit Hospices

» Tidewell Hospice: Admitted 7,500 patients in Florida last year. The community hospice launched in 1979 to provide services at Sarasota Memorial Hospital and now covers Sarasota, Manatee, Charlotte and DeSoto counties.

» Suncoast Hospice: Admitted 7,388 patients in Florida last year. Founded in 1977, Suncoast serves Pinellas County and for many years has been one of the nation's largest non-profit providers of community hospice care; its daily patient census is usually the largest in Florida.

» Hospice of Palm Beach County: Admitted 6,449 patients in Florida last year. Launched as a grassroots movement by a group of women volunteers in 1978, Hospice of Palm Beach County now operates six in-patient units throughout the county, but more than 90% of patients are cared for at home. The hospice plans to begin operations in Broward County this month.

» Hope HealthCare: Admitted 4,536 patients in Florida last year. Based in Fort Myers, Hope was founded in 1979 and now operates in nine Florida counties, from the southwest coast to rural Hendry and Glades.

Sources: Agency for Health Care Administration and individual hospices. Rankings based on patient admissions from July 2009 through June 2010.

Providers of hospice services grew to meet the demand. Many non-profits got bigger, but the Medicare reimbursement system was generous enough to attract for-profit providers, too. Recent growth has been noticeably uneven. Between 2000 and 2007, the number of non-profit hospices nationally has remained at around 1,200, while the number of for-profit hospices more than doubled, from 725 to 1,660.

In Florida, Vitas Healthcare, founded in Miami ["Homegrown Profits"], was the only for-profit hospice firm that operated in the state until out-of-state for-profit firms convinced the Legislature to let them do business here in 2006. Since then, the number of for-profit hospices operating in Florida has doubled, and for-profit companies have challenged non-profits' market share in almost every region of Florida.

"Hospice began as a tiny seed of an idea rooted in the belief that dying could be more humanistic, and that concept has grown into a massive web of corporate entities," says Kathy Cerminara, law professor and end-of-life-care expert at Nova Southeastern University.

Today, Florida is home to some of the largest non-profit U.S. hospice organizations, including Suncoast Hospice of Pinellas County and its $131-million annual budget, and some of the biggest for-profits companies, including Vitas Healthcare, which in 2010 posted revenue of $926 million. About a third of Vitas' business last year was in Florida.

Just as it spurred the expansion of the industry, the Medicare reimbursement system continues to shape its evolution and the tension that has emerged between the for-profits and non-profits. Non-profit executives, for example, rejoice at the overall acceptance of hospice while lamenting what they see as the loss of a sense of mission implicit in the emergence of so many for-profit providers. Susan Ponder-Stansel, CEO and president of Community Hospice of Northeast Florida, calls it the "best of times, worst of times" for the hospice approach.

Susan Ponder-Stansel
Growth as a result of Medicare reimbursements has created the best of times and the worst of times for hospices, says Susan Ponder-Stansel, CEO and president of non-profit Community Hospice of Northeast Florida. [Photo: Jon M. Fletcher]
Both sides think the system favors the other. Typically, non-profit hospices operate at a 3% to 4% loss, supplementing the reimbursements they receive from Medicare with fundraising that lets them serve more patients, including some not covered by either Medicare or insurance.

Non-profit executives say their broader community mission puts them at a financial disadvantage. For example, Community Hospice of Northeast Florida operates a $2.2-million PedsCare program for children with life-threatening diseases, offering palliative care not covered by either Medicaid or insurance. Other Florida non-profits cover rural counties where no for-profit wants to compete or operate stand-alone hospice facilities.

For-profit hospice executives say that they also offer services far beyond those required for reimbursement. They claim non-profits have an advantage in being able to turn to their communities for millions in charitable donations. Still, Medicare reimbursement is generous enough that for-profit hospices sustain operating profits of between 12% and 16%.

An important question in the debate is whether the Medicare reimbursement system creates incentives for the for-profits to try to cherry-pick the most lucrative patients.

Medicare reimburses at a per-day rate — $143 in 2010 — for routine hospice care regardless of the patient's disease or place of care, which might be a patient's home, a nursing home or a stand-alone hospice facility.

Long stays, therefore, are far more profitable than short stays. That means it can be profitable to care for an Alzheimer's patient who lives for months needing relatively little medical intervention. But Medicare may not come close to covering the overhead for a renal-failure patient who dies in just a few days and requires intense medical help or a cancer patient in need of drugs or radiation to help reduce pain.

For the past few years, an independent congressional agency called the Medicare Payment Advisory Commission (MedPAC) has raised concerns that the system creates financial incentives for for-profit companies to market to the families of patients with longer, less-expensive illnesses such as dementia. The commission is worried that non-profits are left to manage shorter-term, costlier cases involving diseases such as cancer.

A team of researchers at Harvard Medical School published a study in February in the Journal of the American Medical Association, finding "notable differences" in the types of patients enrolled in for-profit vs. non-profit hospices. The for-profits had longer average stays than non-profits. The for-profits also had higher proportions of patients with dementia and lower proportions with cancer.

Medicare Reform?

Both non-profit and for-profit hospice executives are watching the D.C. donnybrook over Medicare's future. In addition to considering tweaks in specific Medicare reimbursements for hospice services, Congress in 2013 is expected to reform the hospice benefit to ensure it does not create a financial disincentive for hospices to provide a full range of care for patients with conditions that require the most technological intervention. "If I could wish for anything, it would be for concurrent care reimbursement — allowing a patient with terminal illness to continue to access chemo and radiation," says Barbara Ivanko, COO at Hospice of Palm Beach County.

Another important change under way is a new requirement to report outcomes, from pain management to how well hospices assist families. The federal government this year is expected to release outcome measures and base reimbursement in part on how well hospices perform.

Congress is expected to reform the hospice benefit in 2013. MedPAC is recommending a U-shaped payment curve that recognizes the first and last several days of hospice care as the most expensive, paying a little more on each end — and a little less in the middle.

Leadership at the National Hospice and Palliative Care Organization in Alexandria, Va., which represents both for-profits and non-profits, does not support that model, however. "We understand the need to examine hospice reimbursement, and we are not opposed to that," says organization spokesman Jon Radulovic. "However, NHPCO feels that changes must be based on comprehensive data collection and analysis — which we don't feel has been done at this point."

In Florida, anecdotal evidence is inconclusive. Researchers here have noted the growth in for-profit hospices, but they say the state's current measures and standards don't provide a clear comparison of how a hospice's business plan affects the quality of care.

Florida regulators who work with hospices say while operations can vary greatly from one hospice to the next, the differences don't derive from the business model. Some for-profits may be more efficient simply because they're part of national chains with streamlined operations, for example. Non-profits may be more deeply embedded in their communities.

More important are quality, access and character of care — not whether the provider is a for-profit or non-profit, says Jeff Gregg, chief of the bureau of health facility regulation for Florida's Agency for Health Care Administration. Indeed, he says, the path toward death for terminally ill patients can be so complex and unique that a simple solution is not likely.

"It's good to try and get a sense of the approach," he says, "and to figure out which hospice is the best fit."

Community Hospice of Northeast Florida - military flag
Community Hospice of Northeast Florida displays military flags outside the rooms of dying veterans, a gesture to Jacksonville's large military-retiree population that non-profit providers say is typical of the ties they try to cultivate with their communities. [Photo: Jon M. Fletcher]