This is the second blog this month on utilization, so you might be wondering “why care?”! Utilization is the starting point in answering the question “How do I grow?” There are several choices – find new patients, take share away from competitors and increase the “order size”. By benchmarking your agency’s utilization against high levels of utilization, you can determine how much opportunity there is to find new patients.
For 2015, we are seeing the continued leveling off of hospice utilization nationwide. It would be great if we could chalk this up to an aberration, but unfortunately as we look at utilization over the last decade, we see that hospice utilization has been leveling off for the last five or six years. The 2015 utilization rates are lower even than those of five years ago.
When you consider that we measure hospice utilization by dividing the number of hospice patients served by the total Medicare eligible population for each state (this ensures that we capture live as well as expired discharges), we would expect hospice utilization to be somewhat stable, given the increasing awareness of hospice services, the ubiquitous availability of its services and favorable demographics.
Breaking hospice utilization into state quartiles shows a dramatic difference between the bottom quartile and the top one, as well as a pretty significant jump from the third quartile to the second one.
- Just 11 states showed utilization growth from 2014 to 2015. Of those, 5 states had utilization growth of less than 1%. Of the remaining 6 states, only two (Arkansas and Maine) showed growth in excess of 2%.
- This is a significant decrease from last year in which 17 states experienced utilization growth, eight of which exceeded growth of 2%.
- 11 states experienced declines in excess of 5%. Two of these (Wyoming and Alaska) experienced declines in excess of 11%.
- This is actually better than 2014 in which 14 states experienced declines of +5%, with four of those at +11% declines.
2017 and Beyond
With increased regulatory pressure and a new payment system which dis-incentivizes long term patients, hospice utilization looks to be on a continued decline. And yet, long term prospects could be strong given hospice’ ability to help control end-of-life (EOL) costs, however this requires significant structural and attitudinal changes in the healthcare delivery system.
While a national outlook is interesting, it is more important to understand what is happening at the local level. Here a quick tutorial on how to calculate utilization locally:
Divide patients served (found in the Market Share 2 Report) into the Medicare fee-for service enrollees (as found in the Managed Care/Dual Eligible Report). Once you have that percentage, you can benchmark your agency against other agencies in that geography. A “good” utilization rate is not an absolute number, but rather should be compared to other geographies, which you can view in the state-by-state utilization chart or by looking at the quartile chart above.
Remember that a lower utilization rate means that there are patients who could be in hospice that are not. It is important to understand how your key metrics compare to those in higher utilization markets. Our research indicates that market metrics change as utilization changes and we have compiled a set of aspirational benchmarks that can be used. Outcomes to look at include: Percent of non-cancer deaths, inpatient care days, site of care mix, short stay patients, and non-white patients.
State-by-State Utilization Chart
If you would like to see the 2006 – 2015 state-by-state utilization chart used for this blog, just click here for access to it.
- Hospice utilization rates are measured by dividing the number of hospice patients served by the total Medicare eligible population for each state.
- Puerto Rico and Washington D.C. are also included in this analysis.