Hospice Acquisitions

12/21/21 update:

The Huffington Post ran an article titled, "Private Equity is Gobbling Up Hospice Chains and Getting Involved in the Business of Dying." It is a long article, but perhaps Melissa Aldridge of Mt. Sinai sums it up saying, "It is difficult to identify a health care sector more detrimentally affected by the mismatch between profit maximization incentives and quality of care than hospice."

Hospice Tax Status and Ownership Matters for Patients and Families, JAMA Internal Medicine 5/3/21.

Dr. Melissa Aldridge added this interesting invited commentary to the article below.

Acquisitions of Hospice Agencies by Private Equity Firms and Publicly Traded Companies, JAMA 4/27/21.

I recently ran across this JAMA article, and for whatever reason it keeps coming back to mind, so thought I'd share it for your thoughts, too. In short, it highlights how fast Private Equity Firms (PE) and Publicly Traded Corporations (PTC) have entered the hospice field from 2011 - 2019. Consider the following study findings:

• In 2011, of the 3162 hospices, 106 were owned by PE and 93 by PTC (7% of total).
• In 2019, of the 5615 hospices, 409 were owned by PE and 244 by PTC (12% of total).
• Across the 409 PE hospices, 72% were previously nonprofit.
• Across the 244 PTC hospices, 58% were previously nonprofit.

Study authors raise concerns about these changes, particularly by PE. They note PE owners might have little experience in hospice care, and may focus on selling acquisitions within a short time horizon, typically in 3-5 years.

My own Hospice Analytics research confirms the 2019 PE and PTC hospice percentages reported in this article. Further, I found half of 2019 hospices appear to be owned by a corporate entity (i.e., 3+ hospices appearing in public merger and acquisition articles or having related names). I believe there are examples of hospice corporate entities that centralize back-office staff, negotiate better contracts, and study data analytics to maximize both quality of patient care and revenue. However, this study and various OIG reports remind me that PE, PTC, and other corporately-owned entitites also have potential to focus on short-term profits related to mergers and acquisitions, perhaps at the expense of quality patient care.

With 12% of hospices owned by PE and PTC, and potentially half of hospices associated with corporate entities, hospice "looks different" than it did 20 years ago. Change can be good - but we'll need to keep an eye on how patient care is impacted by these changes.