Selling the Financial Value of Hospice

Filed under Articles
Originally published in Market Research Letter: March/April 2013

Hospice and palliative care are primed to lead the way into a new healthcare delivery system that results in lowered costs and improved patient care. In this month’s feature, see how hospice can be a valuable solution for healthcare organizations caring for end-of-life patients.

Current Healthcare Trends that Benefit Hospice

The hospice industry currently stands to benefit from the confluence of two healthcare trends:

  1. There is maturation of the hospice industry. Hospice utilization has grown by serving more non-cancer patients and more individuals in congregational living arrangements, such as skilled nursing facilities. At the same time, Medicare annual reimbursement has climbed from $2 billion at the beginning of the 21st century to over $13 billion. In addition, regulators now subject hospice providers to reporting and operational requirements that are, in concept, not dissimilar to what is required of other healthcare sectors.
  2. The Patient Protection and Affordable Care Act focuses on bending the healthcare cost curve by reducing the rate of growth in expenditures. Most medical professionals are well aware of end-of-life situations in which patients are subject to unnecessary discomfort at considerable cost. In these cases, hospice and palliative care are alternative lower-cost solutions. Additionally, the primary objectives of healthcare reform today are to achieve better quality of care and increase access to healthcare. This is a traditional sweet spot for hospice.

Hospice Helps Non-Acute Providers Achieve Healthcare Reform Goals

Underlying healthcare reform are four solutions impacting non-acute providers: value-based purchasing, “tearing down the silos,” outcome-based reporting, and post-acute integration. Increased utilization of hospice can benefit each of these components of the legislation, helping to achieve healthcare reform goals.

For example, consider patients who are at the end of their life and have a diagnosis that is among one of the readmission penalty diagnostic-related groups (DRGs) – congestive heart failure, acute myocardial infarction, or pneumonia. These patients are significantly less likely to be readmitted to the hospital if they are admitted to hospice.

If patients are admitted to hospice, hospitals also can improve their value-based purchasing scores in fiscal year 2015. This is because healthcare costs will likely be less and the hospital experience viewed more favorably through post-discharge surveys.

Hospice Helps Managed Care Organizations Lower Costs and Improve Patients’ Healthcare Experience

The concept of improved population management is at the heart of the reform efforts reflected in accountable care organizations, dual-eligible programs, and reduced Medicare Advantage rates. Increased hospice utilization can help these organizations deliver lower costs while improving a patient’s healthcare experience. Hospitals and these various “managed care organizations” have the power to make structural changes in the healthcare delivery system through policies, procedures, incentives, and allocation of resources.

How Can Hospices Motivate Change?

To motivate these management teams to go through the “pain of change” by increasing hospice utilization, hospices need to show them – in their own particular situations – where they are, where they could be, and how much they can save. Two metrics become paramount – hospice utilization and Medicare per beneficiary spending. Being able to provide localized statistics for these metrics will be the catalyst for change.

Healthcare Market Resources’ president Rich Chesney recently gave a presentation at a National Hospice and Palliative Care Organization conference in which he discussed this topic in greater detail. For a copy of his presentation and/or to learn more about how you can use these metrics to help sell the financial value of your hospice, Email or give us a call at 215-657-7373.