Medicare pays more after private equity buys hospices

Clinical takeaway: Watch for longer hospice enrollments and live discharges among patients referred to private equity hospices. Consider asking who owns a hospice before referring a patient. 

About half of people who die in the US are Medicare beneficiaries who use hospice, and PCPs are often the ones who raise it with patients and families. The ownership behind that care has changed: over two decades hospice shifted from mostly nonprofit to majority for-profit, and private equity is now the fastest-growing owner type. 

In primary care, private equity acquisition came with more services billed and larger clinical teams, which ran counter to the staffing cuts reported in other settings. In hospice, the evidence was cross-sectional: private equity hospices reported higher profits and lower caregiver satisfaction than other owners, and earlier work linked acquisitions to more patients with dementia. This quasi-experimental analysis examined what changed at hospices after private equity acquisition. 

Medicare paid $993 more per hospice encounter, a patient’s continuous enrollment with one hospice, after private equity acquisition than at matched for-profit hospices that private equity did not buy. That represented a 5.9% rise from a baseline of $16,922. The increase tracked longer stays, which lengthened by 6.3 days against a baseline of 91.8. 

Stays under a week became less common at the acquired hospices, and stays beyond six months became more common. Live discharges rose 11.5% from a baseline rate of 19.7%. 

Services did not rise in the main analysis. Total weekly visits, weekly visit time, and visits in the last week of life did not change significantly, and social work visits fell. The share of patients admitted with dementia rose by 0.91 percentage points relative to controls, while the share with cancer held steady. 

“The goal of hospice is to provide respectful, person-centered care that helps terminally ill people approach end of life with dignity, while minimizing pain and suffering,” said Zirui Song, senior author and associate professor of health care policy at Harvard Medical School. “For patients and their families, this comes at a stressful time in their lives, and we have a responsibility to make sure the system works well for all of the people who need it and that it is financially sustainable for our aging population.” 

Investigators analyzed all fee-for-service Medicare hospice claims from 2016 to 2022, excluding Medicare Advantage enrollees. They identified 191 for-profit hospices that private equity firms acquired between early 2018 and mid-2022 through PitchBook deal records. Each was matched to up to eight for-profit hospices without private equity owners on state and average daily census, yielding 1,305 controls. A difference-in-differences analysis compared each group’s change over the two years before and after acquisition. 

Medicare already reduces the daily hospice payment rate after 60 days and requires recertification after 180 days. Live discharges at the acquired hospices did not change around either threshold. The authors argue that payment design may be a more effective policy lever and highlight two potential options. Adjusting the daily rate by principal diagnosis, as Medicare does for acute care hospitals, could reduce the incentive to favor patients who need less care but could invite coding to raise payment. Aligning rates with what care costs in each setting could temper selection for particular sites of care. 

“That makes sense from the point of view of a for-profit facility that looks to generate revenue under this payment system,” Song said. “The bigger question is whether that is the best payment model for meeting the needs of people who need hospice, or of ensuring that Medicare spending is sustainable.” 

Source: Kannan S, et al. (2026 Nov 2) Health Affairs. Changes in hospice use, Medicare spending, and patient outcomes after private equity acquisition