Private equity hospice ownership data scant despite PE moves

There were 124 private equity acquisitions of U.S. hospice facilities between 2015 and 2022, but it's still not easy to find the data about hospice ownership, according to a group of researchers writing in Health Affairs.

Indeed, the question of private equity ownership in healthcare has shaken the industry, with numerous studies showing the middling to negative impacts PE ownership can have on patient care access and clinical quality.

But before industry experts can fully understand the impacts PE ownership has particularly on hospice organizations, they need data, and that's still missing.

"Recent reports detail an increase in PE ownership across the health care delivery system, with mixed to harmful impacts on the quality of care," the researchers wrote in the report. "Validated data regarding PE investment in hospice care are nonexistent."

The researchers worked to fill in the data gaps by creating a database of PE firms and hospice agencies that engaged in PE transactions between 2015 and 2022. They integrated real-time merger and acquisition data from the investment banking industry with Medicare administrative data on hospice characteristics.

The novel database showed that there were 124 PE acquisitions of hospice organizations between 2015 and 2022, with more acquisitions happening in the latter half of that study period.

Most PE firms only acquired one or two hospices, leaving two PE firms to overrepresent the PE-backed hospice industry. One PE firm acquired 22 hospices spanning 10 states, while another acquired 14 hospices spanning four states.

"This suggests that consolidation among the hospice industry is rapidly occurring, with some PE firms becoming potentially large players," the researchers said.

This could be a bad thing, the researchers added. Previous studies have shown that access and quality differ between for-profit and nonprofit organizations, with for-profit facilities offering a narrower range of services and fewer community benefits.

For-profit hospices also have a higher likelihood of caring for patients with lower acuity over longer enrollment periods, higher rates of discharge before death, higher hospital and emergency department utilization rates and more complaint allegations, the researchers said.

Although being for-profit does not necessarily mean a hospice is owned by private equity, the researchers explained that PE ownership could exacerbate the quality issues many for-profit facilities face.

"PE firms face similar pressure to maximize profit, yet they must do so over short time horizons -- typically three to five years between the purchase and sale of a company," the research team explained. "This means that the differences identified above may be magnified for hospices acquired by PE and conflict with the need for longer-term investment in quality, training, and staff."

There are still issues in accessing data about healthcare ownership in the U.S., the researchers said.

For example, there's little easily accessible data about various types of for-profit hospice ownership. This means researchers cannot break down hospice ownership by individual, partnership, corporation or private equity, and this limits the ability of experts to compare outcomes by type of for-profit ownership.

The industry has taken a step in the right direction with the Medicare Provider Enrollment, Chain and Ownership System (PECOS), which requires providers to report a change in ownership or control to CMS.

"However, there are long-standing concerns about the accuracy and completeness of the PECOS data, and there is no independent verification of information submitted by providers to PECOS," the study authors noted.

PECOS would also benefit from adding details about PE ownership, they added.

Better data about hospice and overall healthcare organization ownership is an urgent issue, the researchers stated. Their analysis showed that hospice acquisitions usually happen as part of integration across related healthcare services, such as skilled nursing facilities or assisted living services.

"To examine these emerging trends, it is necessary to look beyond the usual data sources and consider data used in other industries, such as the LevinPro HC database used in this analysis. Linking these data sources can enable researchers to track outcomes for patients, to understand the impact of PE ownership both before and after PE acquisition and across hospice agencies with differing ownership structures," the researchers concluded.

"Given the documented influence of organizational structure on hospice quality, researchers need timely, transparent, validated data on hospice ownership to continue to build the evidence base for high-quality end-of-life care."

Sara Heath has covered news related to patient engagement and health equity since 2015.