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Each week, Health Affairs' Rob Lott brings you in-depth conversations with leading researchers and influencers shaping the big ideas in health policy and the health care industry.
A Health Podyssey goes beyond the pages of the health policy journal Health Affairs to tell stories behind the research and share policy implications. Learn how academics and economists frame their research questions and journey to the intersection of health, health care, and policy. Health policy nerds rejoice! This podcast is for you.
Not all hospice providers are created equal. Indeed, organizations may offer similar core services, but there may also be significant differences in staffing, responsiveness, and care quality that can really affect the experiences of patients and families. We've known this for a long time, but less clear is what factors most reliably predict these differences, and that's the subject of A Health Podyssey Today. I'm here with Doctor. Jiebing Wen, a research assistant professor at the University of Texas at Austin College of Pharmacy.
Rob Lott:Together with coauthors, she has a new paper in the August issue of Health Affairs. Its title is also one of its main findings. Quote, hospice acquisitions by certain firms and corporations were associated with reductions in care intensity from 2010 to 2021. This is really fascinating stuff. It affects people's lives in a really fundamental way, and I can't wait to learn more about the research.
Rob Lott:Doctor. Jiebing Wen, welcome to A Health Podyssey.
Jiebing Wen:Thank you so much for having me. It's a pleasure to join Health Podyssey and discuss our study. I would first like to thank our senior author Doctor. Robert Tyler Brown for his leadership and guidance throughout the project. I'm also deeply grateful to my co authors, Alexandra Sotov, Doctors Mark Auldhu and David Stevenson for their contributions.
Rob Lott:Awesome. Let's dive right in. Can you give us a sense of how widespread private equity as well as publicly traded corporations acquisition of hospice practices are these days?
Jiebing Wen:Sure. Acquisitions of hospice practices by private equity firms and publicly traded corporations are substantial and geographically widespread, although these entities do not own the majority of hospice providers. A 2023 study by Doctor. Brand and colleagues found that PE and PTC acquired hospices were widely distributed across The United States, from coast to coast, from the Midwest to the South. By 2021, an estimate 25% of Medicare hospice beneficiaries received care from PE or PTC owned hospice agencies.
Jiebing Wen:That study provided the foundation for our analysis. Overall, PE and PTC involvement in the hospice sector is no longer marginal. Our recent industry reports suggests that interest in hospice acquisitions among PE firms and PTCs remains strong and has begun to accelerate again following a slowdown in 2023 and early twenty twenty four. Health's volume rebounded substantially in the late twenty twenty five, and both PE backed and the public traded providers have continued to pursue acquisitions and the geographic expansion.
Rob Lott:Wow. So a substantial and and growing presence in the broader hospice market. What kind of factors have made hospice so attractive to potential private equity acquisition as well as that of publicly traded corporations?
Jiebing Wen:The first is expected increase in demand as baby boomers age, along with stable Medicare payments. Since Medicare established the permanent hospice benefit in 1983, rapid growth during the past few decades has shifted the industry toward for profit ownership, with nearly 80% of hospices now being for profit. This growth is reflected in the Medicare spending. For example, in 2023, Medicare spent nearly $26,000,000,000 on hospice care for approximately 1,700,000 beneficiaries. Spending has increased with rising enrollment and longer hospice stay.
Jiebing Wen:And more than half of the Medicare beneficiaries now use hospice before death. Because Medicare is a primary payer and they generally reimburse hospice on a daily basis, so hospice agencies can have relatively predictable full revenue.
Rob Lott:Okay. So stable revenue, that makes a lot of sense. Are there other factors that are driving the sort of growing role of private equity in corporate acquisitions?
Jiebing Wen:So another one is relatively low barriers to market entry compared with hospitals, nursing homes, and other types of facility based healthcare sectors. Hospices can enter a new market without constructing or purchasing large facilities. And new agencies can begin operating with a relatively small administrative and clinical workforce, and then expand by developing referral relationships with hospitals, physicians, nursing homes, and assisted living facilities. These characteristics can make it easier for investors investors to establish new locations, expand geographically, or combine agencies into larger regional or national platforms. The third factor is the minimum upfront capital requirements, especially since the interest is high, I guess.
Jiebing Wen:The hospice is largely an asset light and home business. So agencies generally do not need to purchase hospital beds, buildings, or expensive medical equipment on the same scale as facility based providers. Their primary expenses are staffing, administration, medications, and contracted services. As a result, investors may be able to acquire and expand hospice agencies with less initial capital. So together, they have made hospice an attractive acquisition target for both PE firms and PTCs.
Rob Lott:Yeah. Really sounds like it a lot of potential upside there that that might be attractive to these investors. Now I I think, generally speaking, PE has kinda gotten a a bad rap when it comes to sort of inserting or, investing in in the health care system. But I'm curious sort of what the evidence or the literature knows about the role of private equity as well as publicly traded corporate acquisitions in terms of quality of care in in medical practices in general, but specifically in hospice. What do we know about the impact of their their role on people's experiences receiving that care?
Jiebing Wen:PE firms and PTCs face distinct pressure to generate short term above market returns. PE firms typically target annual return exceeding 20% and seek to sell acquired agencies within three to five years, roughly. And PTCs, which are owned by public shareholders, face pressure to deliver consistent quarterly earnings. Our prior research on nursing homes, hospitals and hospice agencies suggests that PE and PTC ownership creates strong profit incentives, potentially leading to lower quality, particularly under PE ownership, and higher post acquisition costs. So they may not lead to lower quality, but may lead to higher costs.
Jiebing Wen:Importantly, the effect of PE and PTC acquisitions on hospice quality of care was understudied. Existing evidence suggests that this ownership model may influence resource allocation, patient mix, care location, and consumer satisfaction. For example, a recent cross sectional study by Sottov and Doctor. Brown and a colleague using 2022 Medicare Cost Reports found that PE only the hospices reported the highest profits and the lowest spending on direct patient care, and including nursing labor compared with other ownership types. Another cross sectional study, also by sort of Doctor.
Jiebing Wen:Brown and colleagues using data from twenty twenty one-twenty twenty two Consumer Assessment of Healthcare Providers and Systems Hospice Survey, found that hospices had significant PE and PTC owned hospices had significantly lower consumer reported quality ratings than hospices of other ownerships. To our knowledge, before conducting this study, no studies have used the claim based data and the rigorous quasi experimental methods to examine the impact of PE and the PDC acquisitions on hospice care delivery and Medicare reimbursement.
Rob Lott:Great. Okay. So you are breaking ground, and let's not delay any further. I wanna hear about what you found. You linked a database of private equity and publicly traded corporate acquisitions to Medicare claims, as you said, for beneficiary sample, for the period from 2010 to 2021.
Rob Lott:And then you compared those versus those that weren't acquired by for profit entities, you looked at process based quality measures and Medicare reimbursement. So what did you find?
Jiebing Wen:So I think our main intention is to really contribute to this area of study. So the most important takeaway from our findings is that not all PE and the PDCA owned hospices are bad. So reductions in care intensity were concentrated amongst certain large acquisitive platforms, rather than occurring constantly across all PE and PTC owned hospices. We also did not find evidence of broad declines across other process based quality measures. From a methodological perspective, evaluating all PE and PTC owned hospices as a single group and focusing only on average treatment effects can obscure meaningful difference across firms and transactions.
Jiebing Wen:So these acquisitions should be evaluated on a deal by deal and form by form basis. Specifically, we found that in the pre acquisition period, there were notable differences between PE and PTC owned hospices and non acquired for profit hospices across several characteristics. For example, PE acquired hospices were smaller compared to PTC acquired and non acquired hospices. Beneficiary characteristics also differed on average with PE and PTC acquired hospices serving a higher percentage of dual eligible beneficiaries or beneficiaries with dementia, and a larger percentage of beneficiaries in nursing facilities relative to non acquired for profit hospices. Our adjusted estimates from a Difference in Differences Estimator show that after the PE acquisition, registered nurse minutes per thirty days per beneficiary declined roughly 5%, social worker minutes declined 12%, and home hospice eight minutes declined 6%, compared with non acquired for profit hospices.
Jiebing Wen:After PTC acquisition, registered nurse minutes per thirty days per beneficiary declined 4%, and home hospice aid minutes declined 9%. Similar declines in registered nurse social worker and home hospice aide visits were observed for care provided in the last seven days of the life, and after post acquisition by the PE and the PTC. In terms of changes in higher intensity care, this type of care is also more costly. The overall percentage of beneficiaries receiving any general inpatient care or continuous home care decreased like twenty seven percent and fifty eight percent after PE and PTC acquisition, respectively. And the percentage of beneficiaries receiving those two types of higher intensity care within the seven days before DAS also declined 2137% after PE and PTC acquisition.
Rob Lott:So basically, there were a couple big players who were responsible for some of the significant portion of the changes that you identified. Is that fair?
Jiebing Wen:Yes, exactly. That's why I said that the takeaway of our study is not every acquired hospice is the same. So there might be some nuances. We did not significant changes in other measures such as life discharge rates, length of stay, and total Medicare reimbursement for hospice services. And we did examine a broad process based hospice quality measures.
Rob Lott:Got it. Okay. Now, one of the key sort of threads running through, I think, some of your findings, correct me if I'm wrong here, is sort of this measure of care intensity. Can you say a little bit about sort of how you measure care intensity? Is it just the number of times a nurse visits a patient, or is there more going on there?
Jiebing Wen:Yeah, I like this question, because I think that's another of our contributions to measure, is to examine the impact on care intensity. So care intensity is important in hospice because the goal of hospice is not to provide more treatment for its own sake. But to provide timely, goal concordant care that relieves symptoms and support patients and families psychologically. So in our study, we measured intensity using registered nurse, social worker, and hospice aide visits per thirty days and during the last seven days of life, and registered nurse or social worker visits on at least two of the final three days of life, and the use of general inpatient care or continuous home care. These are process based indicators of how much support patients receive, particularly near the end of their life, when symptoms and caregiver needs often intensify.
Jiebing Wen:They're not direct matters of outcomes, such as symptom relief, caregiver experience, or patient satisfaction. But they can serve as proxies for whether hospices are providing sufficient clinical and psychological support. Reductions in care intensity are therefore not necessarily good or bad on their own. Lower intensity could reflect more efficient individualized care when patients have fewer needs. However, systematic reductions, especially in nursing, social worker or higher intensity care near the end of life, may raise concerns about under provision of care when they are not explained by changes patient needs.
Rob Lott:Got it. Okay. Well, let's imagine a policymaker, perhaps a state legislator or a member of Congress reads your paper, and they want to act on the findings, where might they begin? What what do you think a policymaker should take away from your work?
Jiebing Wen:So the first place policymakers can begin is by recognizing that PE firms and PTCs and the acquisitions they make are highly heterogeneous. Our findings show that the effects were not uniform across acquired hospices, and instead reductions in care intensity were concentrated among certain large highly acquisitive platforms. That's just that we should avoid treating all PE and PTC ownership as the same. Instead, consider oversight on a firm by firm and deal by deal basis. CMS has already taken a major, although broad step.
Jiebing Wen:In May 2026, CMS issued a Federal Register Notice establishing a six month nationwide moratorium on new Medicare hospice enrollments, effective May 13. So during this period, new initial enrollment applications are denied. The moratorium also restricts new hospice practice locations and non exam changes in majority ownership that require enrolment as new providers. It does not, however, prohibit Aerie hospice acquisition or affect continued participation of existing injured hospices. CMS could use this pause not only to address fraud concerns, but also to strengthen ownership transparency and develop a more targeted risk based approach to oversight.
Jiebing Wen:Last but not least, policymakers should consider whether Medicare payment and accountability mechanisms adequately ensure that reimbursement remain aligned with services provided and the quality of care patients actually receive.
Rob Lott:Thank you, Doctor. Jiebing Wen, for taking the time to be with us here today on A Health Podyssey.
Jiebing Wen:Oh, thank you again for having me.
Rob Lott:Absolutely. Thank you so much for taking the time to be with us. Really appreciate it. And to our listeners, if you enjoyed this episode, please recommend it to a friend. Leave a review, and, of course, tune in next week.
Rob Lott:Take care, everyone.