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