Paying the price at the end of life: a consideration of factors that affect the profitability of hospice.
OBJECTIVE
To evaluate factors that affect the financial performance of hospice.


METHODS
Using the California Office of Statewide Health Planning and Development 2003 survey, we evaluated the organizational attributes, clinical care, and financial performance of 185 operational hospices. As outcomes, we evaluated revenues, costs, and profits per patient and per patient-day, the intensity and skill mix of care, and the provision of charitable and special palliative services. We evaluated regression-adjusted differences by profit status controlling for other organizational features and aggregate patient characteristics.


RESULTS
Hospices reported median revenue of $6865 per patient and $138 per patient-day (for-profit-not-for profit [FP-NFP] difference -$20, p = 0.045), median cost of $6737 per patient, and $135 per patient-day (FP-NFP difference -$55, p = 0.002), and median pretax profit of $334 per patient and $6 per patient-day (FP-NFP difference $34, p = 0.026). Patients received a median of 29.9 total visits by all providers per patient (FP-NFP difference 8.8 visits, p = 0.010), but there was no difference in total visits per patient-day. A median of 50.8% of all nursing visits were registered nurse (RN) visits (FP-NFP difference -14.1%, p < 0.001). Few hospices provided charity care, and only 4% of hospices reported expenditures on chemotherapy and only 9% on radiation therapy.


CONCLUSIONS
Overall hospice profitability is low. Length of stay is strongly associated with financial performance, and greater FP profitability is related to lower costs. FP hospices also provide less RN care as a proportion of nursing care. Few hospices provide charitable care or special costly services. The relationship of service patterns to patient quality needs to be examined.
O'Neill
Sean M
SM
Feinberg School of Medicine, Northwestern University, Chicago, Illinois, USA. soneill@prgs.edu
Ettner
Susan L
SL
Lorenz
Karl A
KA
D002140:California; D004358:Drug Therapy; D017598:Efficiency, Organizational / Q000191:economics; D005375:Financial Audit; D019538:Health Care Surveys; D006738:Hospices / Q000191:economics*; D006801:Humans; D010166:Palliative Care; D011878:Radiotherapy; D013727:Terminal Care / Q000191:economics*; D017664:Uncompensated Care
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