For-profits Cherry-Pick Patients in Hospice Care

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February 1, 2011; Source: AP | NPQ has long been interested in studies that compare nonprofits and for profits when they function side by side in the same field and here is another one that is a doozy. A recent study published in the Journal of the American Medical Association shows that for-profit hospice care providers generally serve patients who will stay longer and need less care than nonprofits in the same field. This puts nonprofits in the field at a disadvantage because Medicaid pays all hospices at the same daily rate. Medicaid pays for care in about 84 percent of the cases.

This fixed rate "may create a financial incentive to select patients requiring less resource-intensive services," according to the study. These may be patients suffering from longer-term dementia rather than the last days of terminal cancer. The study suggests that savvy marketing strategies are the drivers of the types of patients referred to a particular agency. The study also says that there has been a recent surge in for-profit hospices even while the numbers of nonprofits in the field have remained somewhat stable.

Dorothy Deremo, of Hospice of Michigan, says for-profit hospice programs "are selectively marketing to those physicians and facilities that will give them the portfolio of patients that will create the highest profit." This, in turn, changes the mix of patients of the nonprofit providers, making them less lucrative and putting them at a financial disadvantage.—Ruth McCambridge

  • Jennifer Chesworth

    This is why, back in the good old days, the laws governing corporations required that they declare and fulfill a purpose. Corporate status was granted if that purpose was determined to serve the public good, revoked if the corporation was deemed inept negligent or unscrupulous, and dissolved when its purpose was completed (for example, the completion of a road).
    That changed when the Supreme Court rather arbitrarily ruled that corporations are persons, in 1889, at the crescendo of the industrial revolution. This is a decision worth revisiting, and currently rather hot given the recent Citizens United decision. In 2010, just before retiring, Justice John Paul Stevens wrote, “Corporations help structure and facilitate the activities of human beings, to be sure, and their ‘personhood’ often serves as a useful legal fiction. But they are not themselves members of ‘We the People’ by whom and for whom our Constitution was established.”
    Corporations, for profit or nonprofit, can achieve an economy of scale that out-competes the sole proprietor. To demand quality, decency, and an actual mission beyond profit from them does not in any way impede any U.S. citizen’s right to take advantage of other people. As a sole proprietor — a person — you are free to compete as necessary within the law, no forced scruples, no forced charity. When people, real human beings, can’t hide at the back of the herd, can’t wave a paper persona in front of them to take all blame, they tend to work harder and to make choices that reflect well on their own characters. It’s good business to do so. It’s also neighborly.
    At any rate, I hope I can find someone with scruples to help me care for my elderly parents when the time comes.