Hospices have become big business for private equity firms: Kaiser Health News

Filed Under: Costs, Patients, Providers

older woman in bed hospice
- photo by Ron Lach

“Hospice care, once provided primarily by nonprofit agencies, has seen a remarkable shift over the past decade, with more than two-thirds of hospices nationwide now operating as for-profit entities,” Markian Hawryluk writes over at Kaiser Health News. “The ability to turn a quick profit in caring for people in their last days of life is attracting a new breed of hospice owners: private equity firms. That rapid growth has many hospice veterans worried that the original hospice vision may be fading, as those capital investment companies’ demand for return on investment and the debt load they force hospices to bear are hurting patients and their families. ‘Many of these transactions are driven by the motive of a quick profit,’ said Dr. Joan Teno, an adjunct professor at Brown University School of Public Health, whose work has focused on end-of-life care. ‘I’m very concerned that you’re harming not only the dying patient, but the family whose memory will be of a loved one suffering because they didn’t get adequate care.’ According to a 2021 analysis, the number of hospice agencies owned by private equity firms soared from 106 of a total of 3,162 hospices in 2011 to 409 of the 5,615 hospices operating in 2019. Over that time, 72% of hospices acquired by private equity were nonprofits. And those trends have only accelerated into 2022. Hospice is an easy business to start, with most care provided at home and using lower-cost health workers. That allowed the entry of smaller hospices, many launched with the intent of selling within a few years. Private equity firms, backed by deep-pocketed investors, could then snatch up handfuls of smaller hospices, cobble together a chain, and profit from economies of scale in administrative and supply costs, before selling to an even larger chain or another private equity firm. Private equity-owned hospice companies counter that their model supports growth through investment, which benefits the people in their care. ‘Private equity sees a huge opportunity to take smaller businesses that lack sophistication, lack the ability to grow, lack the capital investment, and private equity says, “We can come in there, cobble these things together, get standardization, get visibility and be able to create a better footprint, better access, and more opportunities,”’ said Steve Larkin, CEO of Charter Healthcare, a hospice chain owned by the private equity firm Pharos Capital Group.” Markian Hawryluk, “Hospices Have Become Big Business for Private Equity Firms, Raising Concerns About End-of-Life Care,” Kaiser Health News.