Hospice nurses perform one of the most difficult jobs: Caring for people in their final months of life. But for-profit hospice and palliative care companies, many of them well-capitalized, are entering New York state and upending the marketplace. 

“The issue is, we don’t want to reproduce the problem that most of the nation is experiencing, which is issues of quality, fraud, abuse, threats to workforce, etcetera,” said Dr. Christopher Kerr, CEO and chief medical officer at Hospice Buffalo, one of the oldest hospices in the nation.

Those issues have been detailed in multiple national exposes, including one in December 2022 by The New Yorker and Pro Publica which you can read here.

In 2019, the National Partnership for Healthcare and Hospice Innovation (NPHI) partnered with Milliman, a global actuarial and consulting firm, to also conduct a study comparing the differences and similarities in financials and quality of care between nonprofit and for-profit.  A few takeaways:

• Results show that overall, for-profit hospices place more focus on a higher net margin than the nonprofit hospices (19.9 percent versus 3 percent).
• Nonprofit hospices provide patients with 10 percent more nursing visits, 35 percent more social worker visits and twice as many therapy visits versus for-profit hospices, per patient day.
• Nonprofit hospices admit more critically ill patients immediately after a hospital stay than for-profit hospices. This means nonprofit hospices are caring for individuals who have significantly more needs requiring more visits, supplies, medication and more.
• For-profit hospices report spending more than 300 percent more on advertising costs than nonprofit hospices.
• For-profit hospices report spending less than half what nonprofit hospices report on grief support services.

According to Kerr, Hospice Buffalo is a “mission-driven” organization, but the mission of hospice and the profit motive don’t mix.

“Our community puts in $8 million to our operational budget above and beyond what the hospice benefit pays,” Kerr explained. “They do that because they see a need. There are stakeholders, and they value what we provide.”

The problem, according to Kerr, is that for-profit hospices and palliative care entities will spend less on caring for their patients and more on some nursing staff, which can gut a community’s workforce.

“The easy way to do that is pay 10% to 20% above market so the draw from our organization is one of our biggest fears and we’re seeing that within palliative care,” he said. 

For years, New York has been home to two well-operated for-profit hospices, but the majority of hospices in the state are not-for profit, which provide a better standard of care, according to a 2023 report by the Rand Corp. “Patients receiving care from for-profit hospices have substantially worse care experiences than patients who receive care from not-for-profit hospices."

In 2022, Gov. Kathy Hochul vetoed a bill that would have banned for-profit hospices in the state (grandfathering in the two for-profits already operating, but not allowing them to expand). Almost a year later, there is a sense of urgency among nonprofit hospices that are feeling pressure from for-profits.  

Kerr told Capital Tonight that he gets called every month from for-profit entities seeking to purchase Hospice Buffalo. 

“It’s a regular occurrence,” he noted.

Another new issue for New York is the proliferation of unregulated palliative care providers. These organizations are like hospice, but they don’t care for people at the very end of life, which happens to be the costliest form of palliative care. 

Instead, they send dying patients to hospice.

“The best way to describe it is the new margin is basically cost avoidance,” Kerr said. “When margins are so significant, again approaching 20%, it’s a pretty attractive offering.”

According to Kerr, the opportunities in palliative care are ahead of the regulation.

“Anyone can hang a shingle…and that’s what we’re experiencing,” said Kerr. 

But New Yorkers are the lowest users of the hospice benefit in the nation. Some lawmakers say that, and the lack of access to not-for-profit hospices, leads them to believe that for-profit hospice could answer a need. 

Hochul cited the state’s low-utilization rate in her veto memo. 

“Data suggest that hospice care is underutilized in New York compared to other states, straining other elements of the health care system.  There are currently only two for-profit hospices operating in the state, both of which are under the supervision of the Department of Health, which has not found issues with fraud or quality of care at either.”

But Kerr disagrees with Hochul’s solution to underutilization. 

“The problem of access is undeniable, but it’s structural and policy based. You can solve one problem without creating another,” he said. “We would rather work with our government to address the legislative and policy issues that make access problematic.”