for profit or non profit hospice

Friday, January 23, 2009

For Profit or Non-Profit Hospice

There is a very through article at Health Beat Blog discussing the great debate between for profit and non-profit hospices. I disagree with the underlying opinions, but they have done their research and put a lot of information into the article. It is a good read for anyone involved in this debate.

You can read the post here.

As I said, I don’t totally agree with their conclusion that for-profit hospices are bad. I have said many time on this blog that I believe that there are great for profit hospices and bad non-profit hospices. There may well be a higher percentage of bad for-profit hospices than non-profit, but that doesn’t make for-profit hospice bad. The way you care for patients is the key, and you can do that well no matter what your governmental tax status is.

Read the article. Let me know what you think. It’s very interesting. (You know the author is smart, she quoted me! J)


Maggie Mahar

Thanks for mentioning the HealthBeat post–

I especially appreciate the fact that you recommend it even though you don’t entirely agree.

Let me ad that I think you’re right when you say that there are non-profit hospices out there that are not as good as some for-profit hospices.

But the reerach does seem to suggest that, overall, non-profit hospices are more patient-oriented, for-profit hospices more profit oriented.

I think that it is just very, very hard to make a decent profit on hospice care. It is so labor-intensive. Good hospice care requires so much hands-on very skilled and empathatic care.

In many industries, you can down-size, streamline, and improve productivity while lifting profits.

But that’s very hard to do in healthcare–expecially when you’re dealing with dying patients. . .


I see no mention in the article about the non-profit hospice’s ability to appeal for money through contributions.

The non-profit hospice in my community is able to hold elaborate, up-scale fundraising events and actively solicit contributions from the patient’s family or estate. These sizable extra sources of funding plus reimbursement from Medicare and private insurance can add up to a lot of “pull up diapers”.

The for-profit hospices are not allowed to do that. Or am I wrong?

Dr. Eve Huston

I do question the research suggesting that not-for-profit/tax-exempt hospices provide better care. In FL, the research done shows little difference. Perhaps the bottom line is that the not-for-profits have more money than the for-profits. Afterall, both are paid the same amount of money from the payor sources. The only true difference is that the not-for-profits can raise money and spend it however they please.

On an NHPCO conference call a few months ago, the presenter was asked by a crafty person to define “margin” since the presenter kept referencing the ills of for-profit hospices, yet also kept referencing “margin”. The presenter just mubled something unintelligible, but hopefully, everyone on the call knows that margin = profit. And every hospice must make a profit or go out of business.

The not-for-profit hospice in my area clearly spends their donations on their beautiful office building, CEO salary, and building their new stand-alone hospice house (which we all know is a money pit). However, some not-for-profits may be spending their donations on more staff, and that would make a difference.

Another Hospice Guy

To answer dethmama’s question ; many For Profit hospices have a non -profit entity affiliated with the corporation which they use to solicit donations very similar to fund raising done by non-profits.

I have seen large for profit hospices use this non-profit fund to assist clients needs, such as paying for a client’s rent, buy an air conditioning unit, and many other items to improve a client’s quality of life.

In general though I would maintain that many non-profits obtain more donations because of their warm and fuzzy community affiliations. Non-profits can generate a substantial amount of revenue via fund raising initiatives.

Another Hospice Guy

In response to Dr. Huston:

Both non-profit and for profit hospices generate profits to continue their operations. The observations you make regarding not for profit hospices in your area may appear to be an inappropriate use of their revenue.

I would disagree with your categorization regarding the hospice house though. I believe that it is important to spend money building a nice inpatient facility.
Patient’s and families notice and it does make a difference if the patient requires inpatient care.

In my experience the profit margins desired by the for profit hospices, typically corporately owned, are very high. Gross profit expectation typically are greater than 25%. The only way a hospice director can meet corporate expectations is to cut costs. As you said, both the non-profits and for profits are receiving the same payment. This means the for profit hospices must sometimes cut back on services to meet budgetary requirements.

The non-profit hospice can dip into their savings generated by donations and fund raising activities to make up the difference.

Over the past 15 years or so the “white hats” have indeed fallen off of the hospice industry. I suppose it was inevitable as for profit entities realized the potential revenues that could be realized in the hospice industry.

The key in any industry is to balance performance with revenue. The hospice industry needs to balance revenue expectations with quality of life for the patients that receive their care.

I have the somewhat naive belief that you should not cut corners in end of life care; I would hope that all health care professionals engaged in the end of life arena would advocate for our patients regardless of cost.

The example of pulls ups versus regular briefs is a good example of hospices cutting corners without consideration of the patient’s quality of life. If a patient is capable of improving his or her quality of life by maintaining dignity and autonomy by dressing his or herself, that should be supported by the clinical team.

NHPCO should set quality of life guidelines that it’s members agree to abide by.

If that does not work then I believe that CMS should examine profit margins of hospices and determine what is a reasonable return on investment. If hospices exceed the defined standard in their region their care should be scrutinized.

Some of you may recall that the home health industry in the late 1970’s and early 1980’s were essentially defrauding Medicare and the Medicare guidelines were changed to prevent Medicare fraud. Unfortunately, I see the hospice industry heading down a similar path in which greed is the overriding driver for the hospice industry. CMS will correct the hospice industry if we don’t self regulate ourselves.


Yes, Dr. Huston, the not for profit hospice in my community was also able to build several “stand alone” inpatient units due to their healthier financial status.

While many of us may feel that corporate hospices are “cold”, those of us that work within them give no mind to that and strive to preserve the comfort and dignity of those who need us.


GEE, DETHMAMA wondering what “healthier financial status” infers. In our neck of the woods, it is synonomous with “profit margin”


I work as a discharge planner in an area that would appear to have a hospice on every street corner,(OKC) and it appears that the situation here is not typical. The for-profits in our area are much larger than the non-profits, and the only free-standing inpatient units are being built by the for-profits.

My personal experience with the non-profits has been a reluctance to accept non-funded patients, (even from their own non-proft hospital affiliate) while the for-profits have been willing to provide the same care to patients regardless of payor source.


Barbara, Alabama
I am an RN with a for profit hospital in my town. this is also the home of 1 of only 2 inpt facilities for hospice in Alabama. I am so tired of the not for profit tooting their own horn, stealing, literally, legitimate referrals to the for-profit agencies in town and using the sympathy card because they are not for profit. All this means is that they do NOT pay taxes, give the directors enough to drive Mercedes,and the community doesn’t get it. They are all paid from the same dime! They even went so far as to say in an editorial that they would provide DME, meds and incontinent supplies, like WE all don’t?!!


Could the idea that some non-profit hopsices are more patient oriented be simply the fact that the non-profit status attracts a certain kind of employee that wants to work there? I have often heard people say that they only want to work at a non-profit, sometimes implying possibly better working conditions but also to me implying that people of like minds tend to gravitate together.