In the business of dying: Questioning the commercialization of hospice

Journal of Law, Medicine and Ethics

Volumn 39, Issue 2, 2011, Pages 224-234

  Perry, Joshua E ^a   Stone, Robert C ^a  

^a INDIANA UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; ECONOMICS; HEALTH CARE COST; HEALTH CARE FACILITY; HOSPICE CARE; HUMAN; MEDICARE; NON PROFIT ORGANIZATION; TERMINAL CARE; UNITED STATES;

HEALTH EXPENDITURES; HEALTH FACILITIES, PROPRIETARY; HOSPICE CARE; HUMANS; MEDICARE; ORGANIZATIONS, NONPROFIT; TERMINAL CARE; UNITED STATES;

EID: 79955846047     PISSN: 10731105     EISSN: 1748720X     Source Type: Journal    
DOI: 10.1111/j.1748-720X.2011.00591.x     Document Type: Article

References (88)

1. S. Woolhandler and D. U. Himmelstein, "When Money Is the Mission - The High Costs of Investor-Owned Care, " New England Journal of Medicine 341, no. 6 (1999): 444-446, at 446. Making a similarly impassioned argument five years later, Woolhandler and Himmelstein highlighted concerns that are particularly salient in the context of hospice: "Investor-owned care embodies a new value system that severs the community roots and Samaritan traditions of hospitals, makes physicians and nurses into instruments of investors, and views patients as commodities." S. Woolhandler and D. U. Himmelstein, "The High Costs of For-Profit Care, "Canadian Medical Association Journal 170, no. 12 (2004): 1814-1815.
2. See A. S. Relman, "Medical Professionalism in a Commercialized Health Care Market, " JAMA 298, no. 22 (2007): 2668-2670
3. A. R. Jonsen, "A Note on the Notion of Commercialism, "Cambridge Quarterly Healthcare Ethics 16, no. 4 (2007): 368-373, at 369 ("In our culture, medicine has, for the most part, been a commercial activity [except when monks were its practitioners] and has, as such, always presented moral problems.");
4. J. J. Fins, "Commercialism in the Clinic: Finding Balance in Medical Professionalism, "Cambridge Quarterly Healthcare Ethics 16, no. 4 (2007): 425-432.
5. W. S. Andereck, "Commodified Care, "Cambridge Quarterly Healthcare Ethics 16, no. 4 (2007): 398-406 (examining the characteristics of healthcare commodification in the context of medical care and exploring its effects on the doctor-patient relationship);
6. L. R. Churchill, "The Hegemony of Money: Commercialism and Professionalism in American Medicine, "Cambridge Quarterly Healthcare Ethics 16, no. 4 (2007): 407 (exploring the cultural meaning attached to money and its pervasive force throughout medical research, education, and the delivery of health services);
7. M. A. Rodwin, "Medical Commerce, Physician Entrepreneurialism, and Conflicts of Interest, "Cambridge Quarterly Healthcare Ethics 16, no. 4 (2007): 387-397 (tracing the historical development of medical commerce in the United States from the late 18th century through the early 21st century, and arguing that the primary problem of commercialism in medicine today is the conflict of interest that arises when loyalty to patients and the exercise of independent professional judgment is compromised by physician entrepreneurship);
8. J. Needleman, "A Philosopher's Reflection on Commercialism in Medicine, "Cambridge Quarterly Healthcare Ethics 16, no. 4 (2007): 433-438, at 437 (2007) (advocating for reflection among physicians as to "how ... the money factor ... impact[s] the human values often assumed to define the art of medicine, understood as the work of always and in everything giving first priority to the health and well-being of the individual patient[.]")
9. J. H. McArthur and F. D. Moore, "The Two Cultures and the Health Care Revolution, "JAMA 277, no. 12 (1997): 985-989 (arguing that while traditions of commercialism and professionalism both share a central role in the evolution of social institutions in the United States, "threats" exist to the "quality and scope of medical care" when "the tradition of medical professionalism is overtaken by the commercial ethic and by corporations seeking profit for investors from clinical care of the sick.").
10. See also I. R. Byock, "Ethics from a Hospice Perspective, " American Journal of Hospice & Palliative Care 11, no. 4 (1994): 9-11, at 9 ("Ethical considerations are central to hospice practice. Unlike many areas of medicine in which it is the occasional case that presents an apparent ethical dilemma, care at the end of life is full of ethically poignant and emotionally charged situations." The potentially crippling impact of illness upon patients seeking information and making decisions about their health care is comprehensively summarized by M. A. Hall and C. E. Schneider in "Patients as Consumers: Courts, Contracts, and the New Medical Marketplace, "Michigan Law Review 106, no. 4 (2008): 643-689 ("Illness disables ... pains ... exhausts ... erodes control ... enforces dependence ... disorients ... baffles ... terrifies ... [and] isolates.").
11. See generally R. Herzlinger, Who Killed Health Care? ( New York: McGraw-Hill, 2007): at 211.
12. Eighty-five percent of all hospice care is paid by the government, either through Medicare or Medicaid reimbursements. J. Cetti, "Measure the Social Outcomes of Nonprofits, " Journal of Palliative Medicine 12, no. 1 (2009): 12-13. As of 2008, the Medicare benefit cost the government $11.4 billion. National Association for Home Care and Hospice, Hospice Facts and Statistics, September 2009, available at (last visited February 25, 2011).
13. See generally K. L. Cerminara, "Pandora's Dismay: Eliminating Coverage-Related Barriers to Hospice Care, " Florida Coastal Law Review 11, no. 2 (2010): 107-154, at 153 ("Hospice care costs less than curative care ...");
14. M. Ash and S. Arons, "Economic Parameters of End-of-Life Care: Some Policy Implications in an Era of Health Care Reform, "Western New England Law Review 31, no. 2 (2009): 305-332, at 315-320 (summarizing the literature)
15. D. H. Taylor Jr. et al., "What Length of Hospice Use Maximizes Reduction in Medical Expenditures Near Death in the US Medicare Program?"Social Science & Medicine 65, no. 7 (2007): 1466-1478, at 1474 (finding no cost differences between hospice users and controls when looking at the entire last year of life, but finding clear evidence of savings for Medicare attributable to hospice during the period of time in the last year of life that hospice is actually used in the Medicare program)
16. D. E. Campbell et al., "Medicare Program Expenditures Associated with Hospice Use, "Annals of Internal Medicine 140, no. 4 (2004): 269-277, at 275 (finding that hospice is cost-neutral to cost-saving for persons who die of cancer, but generally adds cost for those who do not die of cancer)
17. J. P. Harrison and D. Ford, "A Comprehensive Community-Based Model for Hospice Care, "American Journal of Hospice & Palliative Medicine 24, no. 2 (2007): 119-125 ("appropriate use of hospice could generate savings of 46.5% during the last month of life, 17% during the last 6 months of life, and 10.4% during the last year of life")
18. M. B. Buntin and H. Huskamp, "What Is Known about the Economics of End-of-Life Care for Medicare Beneficiaries, "Gerontologist 42, no. 3 (2002): 40-48 (summarizing the literature).
19. M. J. McCue and J. M. Thompson, "Operational and Financial Performance of Publicly Traded Hospice Companies, " Journal of Palliative Medicine 8, no. 6 (2005): 1196-1206.
20. K. A. Lorenz et al., "The Evidence for Improving Palliative and End of Life Care: A Systematic Review, " Annals of Internal Medicine 148, no. 2 (2008): 147-159
21. J. M. Teno et al., "Family Perspectives on End-of-Life Care at the Last Place of Care, "JAMA 291, no. 1 (2004): 88-93.
22. R. D. Brumley, S. Enguidanos, and D. A. Cherin, "Effectiveness of a Home-Based Palliative Care Program for End-of-Life, "Journal of Palliative Medicine 6, no. 5 (2003): 715-724.
23. L. T. Cotter, "Continuing the Spiritual Transformation of the Hospice Movement, " American Journal of Hospice and Palliative Medicine 24, no. 4 (2007): 257-258.
24. A. S. Relman, "The New Medical-Industrial Complex, " New England Journal of Medicine 303, no. 17 (1980): 963-970, at 963.
25. Although the hospice movement was gaining considerable traction by 1980, the concept of for-profit entities offering hospice services was not yet on the radar. This would begin to change in 1983 with the passage of the Tax Equity and Fiscal Responsibility Act of 1982.
26. Id. Although not as rapidly, the for-profit hospice industry would likewise experience dramatic growth during the decades following Congress's decision to create a Medicare hospice benefit. See infra notes 43-47 and accompanying text.
27. P. J. Devereaux et al., "Comparison of Mortality Between Private For-Profit and Private Not-For-Profit Hemodialysis Centers: A Systematic Review and Meta-Analysis, " JAMA 288, no. 19 (2002): 2449-2457.
28. M. Thamer et al., "Dialysis Facility Ownership and Epoetin Dosing in Patients Receiving Hemodialysis, " JAMA 297, no. 15 (2007): 1667-1674.
29. B. H. Gray, "An Introduction to the New Health Care for Profit, " in B. H. Gray, ed., The New Health Care for Profit ( Washington, D. C.: National Academy Press, 1983): at 8.
30. M. M. Hasan, "Let's End the Nonprofit Charade, " New England Journal of Medicine 334, no. 16 (1996): 1055-1057.
31. E. D. Kinney, "For Profit Enterprise in Health Care: Can It Contribute to Health Reform? American Journal of Law & Medicine 36, nos. 2 & 3 (2010): 405-435, at 428-29.
32. J. F. Blumstein, "The Fraud and Abuse Statute in an Evolving Health Care Marketplace: Life in the Health Care Speakeasy, " American Journal Law & Medicine 22, no. 2-3 (1996): 205-231, at 207. Professor Blumstein cites numerous studies confirming the overutilization that results from perverse economic incentives.
33. See, generally, Office of the Inspector Gen., Dept. of Health & Human Serv., Financial Arrangements Between Physicians and Health Care Businesses, Medicare & Medicaid Guide ¶ 37, 838, at 19, 933 (May 1989) ("The Medicare patients of referring physicians who owned clinical laboratories received forty-five percent more clinical laboratory services than all Medicare patients in general.").
34. General Accounting Office, Referrals to Physician-Owned Imaging Facilities Warrant HCFA's Scrutiny, GAO/HHS-95-2, at 10 (1994).
35. B. J. Hillman, quot;Frequency and Costs of Diagnostic Imaging in Office Practice - A Comparison of Self-Referring and Radiologist-Referring Physicians,"New England Journal of Medicine 323, no. 23 (1990): 1604-1608, at 1604 ("Studies of the use of diagnostic imaging equipment done in 1990 and 1994 showed that patients of physicians who had an ownership interest in such equipment utilized some equipment 400% more than the patients of nonowning physicians.").
36. J. M. Mitchell and E. Scott, "Physician Ownership of Physical Therapy Services: Effects on Charges, Utilization, Profits, and Service Characteristics, "JAMA 268, no. 15 (1992): 2055-2059, at 2057 ("Physicians having ownership interests in physical therapy clinics or radiation therapy centers similarly recommended patient visits to such facilities fifty percent more than did other physicians.") Additionally, Marc Rodwin's book, Medicine, Money, and Morals: Physicians' Conflicts of Interests (1993) includes copious evidence of ways in which physician self-interest results in Medicare abuse. For example.
37. see Rodwin at 97 (citing a December 17, 1987, personal letter from Jim Codo, a medical laboratory salesperson who claimed that "where a high percent of Medicare recipients reside, there is a correspondingly high percent of physicians invested in laboratory ownership arrangements. The government in allowing such [practices] ... might as well issue the physician owners their own money press. The physician controls the demand for services, owns the supply of the services, and is guaranteed payment for services by the government.") and 215 (citing to 18 published studies by academic researchers and government regulators between 1970 and 1992 as evidence "that physicians who make referrals to medical facilities that they either own or have a financial interest in recommend more (or more expensive) medical tests and procedures than do physicians without a financial interest.").
38. K. Eichenwald, "HCA Is Said to Reach Deal on Settlement of Fraud Case, " New York Times, December 18, 2002, at A1 (reporting on an agreement with the Justice Department to pay more than $880 million to settle a long-running inquiry into accusations of health care fraud). See also E. T. Wood, "Feds Win $19.4M in Lawsuit over Renal Care Group Medicare Practices, " website, March 23, 2010, available at (last visited February 25, 2011). The most egregious example of for-profit fraud specifically in the hospice industry would be that involving SouthernCare Hospice Press Release, Frohsin & Barger, LLC, Alabama Hospice Provider Settles Whistleblower Lawsuit for $24.7 Million, January 16, 2009) (on file with authors). As for fraud in the nonprofit sector, the False Claims Act Legal Center lists St. Barnabas Healthcare and its chain of eight nonprofit hospitals in New Jersey, as 23rd on its list of top False Claim Act fraud feasors since 1986.
39. See also E. T. Wood, "Feds Win $19.4M in Lawsuit over Renal Care Group Medicare Practices, " website, March 23, 2010, available at (last visited February 25, 2011). The most egregious example of for-profit fraud specifically in the hospice industry would be that involving SouthernCare Hospice Press Release, Frohsin & Barger, LLC, Alabama Hospice Provider Settles Whistleblower Lawsuit for $24.7 Million, January 16, 2009) (on file with authors). As for fraud in the nonprofit sector, the False Claims Act Legal Center lists St. Barnabas Healthcare and its chain of eight nonprofit hospitals in New Jersey, as 23rd on its list of top False Claim Act fraud feasors since 1986.
40. See (last visited January 20, 2011). For a specific hospice example, see also D. Frantz, "Hospice Boom Is Giving Rise to New Fraud, "New York Times, May 10, 1998, at A1 (reporting on an indictment of Joseph A. Kirschenbaum and his "not-for-profit" hospice Samaritan Care that allegedly defrauded Medicare out of $28.5 million).
41. See generally, J. E. Perry, "An Obituary for Physician-Owned, Specialty Hospitals, " Health Lawyer 23, no. 2 (December 2010): 24-34.
42. M. D. A. Carlson, W. T. Gallo, and E. H. Bradley, "Ownership Status and Patterns of Care in Hospice: Results from the National Home and Hospice Care Survey, " Medical Care 42, no. 5 (2004): 432-438.
43. 432 (citing W. E. Aaronson, J. S. Zinn, and M. D. Rosko, "Do For-Profit and Not-For-Profit Nursing Homes Behave Differently?"Gerontologist 34, no. 6 (1994): 775-786.
44. C. Harrington et al., "Does Investor Ownership of Nursing Homes Compromise the Quality of Care?"American Journal of Public Health 91, no. 9 (2001): 1452-1455.
45. E. H. Bradley and C. W. Walker, "Education and Advance Care Planning in Nursing Homes: The Impact of Ownership Type, "Nonprofit and Voluntary Sector Quarterly 27, no. 3 (1998): 339-357.
46. B. A. Weisbrod and M. Schlesinger, "Public, Private, Nonprofit Ownership and the Response to Asymmetric Information: The Case of the Nursing Homes, " in S. Rose-Ackerman, ed., The Economics of Nonprofit Institutions (New York: Oxford American Press, 1986).
47. S. Y. Chou, "Asymmetric Information, Ownership and Quality of Care: An Empirical Analysis of Nursing Homes, "Journal of Health Economics 21, no. 2 (2002): 293-311.
48. See generally V. R. Comondore et al. "Quality of Care in For-Profit and Not-For-Profit Nursing Homes: Systematic Review and Meta-Analysis, "BMJ 339, no. 7717 (2009): 381-384.
49. See R. E. Enck, "Hospice - Palliative Medicine: A Look Back and Into the Future, " American Journal of Hospice and Palliative Medicine 26, no. 6 (2009): 429-431.
50. E. Kubler-Ross, On Death and Dying ( New York: Scribner Classics, 1997): at 31.
51. D. S. Greer, "Hospice: From Social Movement to the Health Care Industry, " Transactions of the American Clinical and Climatological Association 97 (1986): 82-87.
52. D. S. Greer and V. Mor, "How Medicare Is Altering the Hospice Movement, " Hastings Center Report 15, no. 5 (1985): 5-9, at 5-6.
53. J. K. Iglehart, "A New Era of For-Profit Hospice Care - The Medicare Benefit, " New England Journal of Medicine 360, no. 26 (2009): 2701-2703, at 2701.
54. Medicare Payment Advisory Commission, Rep. to the Congress on Medicare Payment Policy, March 2009. But see supra note 8.
55. U.S. Gov't Accountability Office, GAO-05-42, Medicare Hospice Care: Modifications to Payment Methodology May Be Warranted 1 (October 2004).
56. MedPAC, "Report to Congress: Medicare Payment Policy, "Hospice, March 2010, at 141.
57. MedPAC, "Report to Congress: Reforming the Delivery System, Evaluating Medicare's Hospice Benefit, " June 2008, at 216.
58. Id. (MedPAC 2010), at 147. Approximately 1600 for-profit hospice programs currently operate in the United States compared to 1200 not-for-profit hospice organizations. C. F. von Gunten, "Profit or Not-For-Profit: Who Cares? Journal of Palliative Medicine 11, no. 7 (2008): 954.
59. D. Koehn, "The Business of Hospice Gets Corporate Attention, " Tampa Tribune, January 18, 2004, at 1. Such practices are reminiscent of pharmaceutical industry tactics. See infra note 51.
60. See also D. Frantz, "Hospice Boom Is Giving Rise to New Fraud, " New York Times, May 10, 1998, at A1.
61. B. Moos, "Business of Dying Undergoes Change: For-Profit Firms Enter Small Agencies' Turf as Hospice Care Grows, " Dallas Morning News, May 22, 2005, at 1D.
62. Prior evidence of a variety of unsavory marketing tactics employed by pharmaceutical company representatives provides a cautionary tale, well documented by Dr. Marcia Angel, former editor of the New England Journal of Medicine, in her 2004 book The Truth about the Drug Companies. The hard sell, questionably accurate information, and gift incentives can go a long way toward building market share, but not necessarily toward empowering a potential patient to make a decision that is in her best interest and consistent with the hospice philosophy.
63. See MedPAC (2010), supra note 45, at 144 and 147. The report notes that financial incentives "may have led to inappropriate utilization of the benefit among some hospices.".
64. Landis v. Hospice Care of Kansas, 2010 U.S. Dist. LEXIS 129484, *6 (D. Kan. Dec. 7, 2010) (alleging business practices at Hospice Care of Kansas that included "setting aggressive census targets for each HCK branch office; staff incentives and monetary bonuses for meeting the aggressive census targets; threatening staff with terminations or reductions in hours if the census fell below targets; instructing staff to inaccurately document the condition of patients to make them appear appropriate for hospice and to avoid detection ...; implementing procedures that delayed the discharge or made it difficult to discharge ineligible patients; challenging or ignoring staff and physician recommendations to discharge patients
65. disregarding or ignoring compliance concerns raised by an outside consultant" and resulted in "admission, retention, and submission of claims to Medicare for patients that were ineligible for the hospice benefit.".
66. See Iglehart, supra note 42, at 2702 (citing to Medicare Payment Advisory Commission, Rep. to the Congress on Medicare payment policy [March 2009]).
67. M. W. Wachterman et al., "Association of Hospice Agency Profit Status With Patient Diagnosis, Location of Care, and Length of Stay, " JAMA 305, no. 5 (2011): 472-479 (citing H. A. Huskamp et al., "Providing Care at the End of Life: Do Medicare Rules Impede Good Care?"Health Affairs 20, no. 3 (2001): 204-211).
68. Kaiser Health News, "MedPAC Approves Recommendation to Revise Medicare Reimbursement System for Hospice Care Providers, " January 12, 2009, available at (last visited February 25, 2011).
69. R. C. Lindrooth and B. A. Weisbrod, "Do Religious Nonprofit and For-Profit Organizations Respond Differently to Financial Incentives? The Hospice Industry, " Journal of Health Economics 26, no. 2 (2007): 342-357, at 344.
70. H. A. Huskamp et al., "Variation in Patients' Hospice Costs, " Inquiry 45, no. 2 (2008): 232-244, at 241 ("Our results suggest that average per day costs were markedly higher for stays of one or two days than for longer stays, and that total costs for longer stays increased at a decreasing rate as the length of stay increased.").
71. See Wachterman, supra note 54, at 477-78; K. A. Lorenz et al., "Cash and Compassion: Profit Status and the Delivery of Hospice Services, " Journal of Palliative Medicine 5, no. 4 (2002): 507-514.
72. See Lindrooth and Weisbrod, supra note 56, at 345; see also Wachterman, supra note 54, at 472 (citing A. Gruneir et al., "Hospice Care in the Nursing Home: Changes in Visit Volume from Enrollment to Discharge among Longer-Stay Residents, " Journal of Pain Symptom Management 32, no. 5 (2006): 478-487.
73. K. Carney et al., "Hospice Costs and Medicare Reimbursement: An Application of Break-Even Analysis, "Nursing Economics 7, no. 1 (1989): 41-48.
74. N. Nicosia et al., "The Medicare Hospice Payment System: A Consideration of Potential Refinements, "Health Care Financing Review 30, no. 4 (2009): 47-59.
75. L. Cheung et al., The Costs of Hospice Care: An Actuarial Evaluation of the Medicare Hospice Benefit (New York: Milliman USA, 2003).
76. See Wachterman et al., supra note 54, at 478 (finding that hospice agencies, depending on profit status, do differentially enroll patients with dementia and other noncancer diagnoses, resulting in patterns of patient selection that leave "nonprofit hospice agencies disproportionately caring for the most costly patients - those with cancer and those tending to begin hospice very late in their course of illness.
77. See Lindrooth and Weisbrod, supra note 56, at 351-355. See MedPAC (2010), supra note 45, at 151 ("[P]roviders that exceeded the hospice cap, appeared to have a higher prevalence of long-stay patients across all diagnoses, suggesting some patient selection may be at work.").
78. See generally S. Ohri, Essays in Health Economics (2007) (unpublished Ph.D. dissertation, Univ. of CA, Irvine) (on file with authors).
79. D. H. Taylor Jr. et al., "What Length of Hospice Use Maximizes Reduction in Medical Expenditures Near Death in the U.S. Medicare Program, " Social Science & Medicine 65, no. 7 (2007): 1466-1476.
80. K. L. Cerminara, "Hospice and Health Care Reform: Improving Care at the End of Life" (unpublished manuscript on file with authors at 32-33) (summarizing literature justifying longer patient stays).
81. B. M. Kinzbrunner, "For Profit vs. Not-for-Profit Hospice: It Is the Quality That Counts, " Journal of Palliative Medicine 5, no. 4 (2002): 483-485.
82. M. D. A. Carlson, W. T. Gallo, and E. H. Bradley, "Ownership Status and Patterns of Care in Hospice: Results from the National Home and Hospice Care Survey, " Medical Care 42, no. 5 (2004): 432-438.
83. See Lorenz et al., supra note 58, at 511-512. See also S. M. O'Neill, S. L. Ettner, and K. A. Lorenz, "Paying the Price at the End of Life: A Consideration of Factors That Affect the Profitability of Hospice, " Journal of Palliative Medicine 11, no. 7 (2008): 1002-1008. This follow-up study published in 2008 found that for-profit hospice providers incur lower costs than non-profit providers and that some of these cost savings may be attributable to differences in staffing. However, differences in quality outcomes could not be identified, and the researchers called for future research examining "variation in [length-of-stay, nursing intensity, and provider skill mix] with patient clinical outcomes."Id., at 1007.
84. E. J. Cherlin et al., "Interdisciplinary Staffing Patterns: Do For-Profit and Nonprofit Hospices Differ? Journal of Palliative Medicine 13, no. 4 (2010): 389-394.
85. See Cherlin et al., supra note 74, at 393. These findings are echoed by empirical data in "Economic Incentives in the Hospice Care Setting: A Comparison of For-Profit and Nonprofit Providers, " an unpublished manuscript by K. Noe and D. A. Forgione dated December 17, 2009 (on file with the authors).
86. D. E. Foliart, M. Clausen, and C. Siljestrom, "Bereavement Practices among California Hospices: Results of a Statewide Survey, " Death Studies 25, no. 5 (2001): 461-67.
87. C. F. von Gunten, "Profit or Not-for-Profit: Who Cares? Journal of Palliative Medicine 11, no. 7 (2008): 954. Accord R P. Gates, "Where Do We Go from Here?"American Journal of Hospice & Palliative Care 14, no. 2 (1997): 95 ("Many people thought, and still believe, that 'for profit' hospice cannot remain true to the hospice visions. I believe those people have been proven wrong.").
88. See Cerminara, supra note 66 (discussing provisions of The Patient Protection and Affordable Care Act that will require stricter monitoring processes designed to hold hospice providers more accountable, but which may also result in compliance burdens too great for small, rural hospice providers to satisfy).