Hospices owned by private equity firms underperform nonprofit facilities, study says

Dive Brief:

Caregivers of hospice patients reported more negative experiences at facilities owned by private equity firms and publicly traded companies than at nonprofit hospice facilities, according to a study published last month in JAMA Network Open.
Survey respondents ranked hospices owned by private equity firms or publicly traded companies lower on all metrics — including communication, timely care, respect for hospice patients, help with symptoms and hospice care training. 
The study comes as private equity firms have been increasingly buying up hospice facilities, with limited oversight from regulators. Researchers said the discrepancies in care quality between nonprofit and certain for-profits “suggest the need for greater transparency and accountability of hospice ownership.”

Dive Insight:

Private equity investment in hospice care has surged in recent years, with acquisitions accelerating from just a handful in 2016 to over 30 by 2021, according to a September study published in Health Affairs. 

Scrutiny of the owners has grown in kind. 

In March, federal regulators launched a cross-agency probe to understand how private equity healthcare ownership might impact care quality, including at hospice facilities. Last year, the CMS made hospice ownership data public, in an effort to help patients better choose between care options. 

The probe follows a growing body of research suggesting quality concerns at private equity-backed facilities. Hospices run by private equity firms are more likely than nonprofit facilities to discharge patients before their death or transfer them to hospitals, according to the JAMA study.

The diminished care quality may be in part due to the owners’ business model, the authors reasoned.

“Although all for-profit ownership models are oriented toward profit maximization, [private equity firm] and [publicly traded company] ownership structures are distinct in being incentivized to generate short-term and above-market returns for investors, raising questions about the potential influence of financial objectives on quality,” the study said.

Senior author on the study Robert Tyler Braun, an assistant professor of population health sciences at Weill Cornell Medicine, called for more transparency about ownership in a statement.

“Greater ownership transparency would allow regulators and families to make informed decisions, safeguarding care quality and helping hold hospices accountable when ownership shifts occur,” Braun said.