Background: The performance of hospices owned by investor-owned, publicly traded hospice
companies has been largely ignored by the literature.
Objective: The objective of this study was to perform a descriptive analysis that compares
the operating and financial performance of hospices owned by publicly traded companies to
private, for-profit hospices and to nonprofit hospices within small- and large-size categories
based on patient days.
Design: A nonparametric median test was conducted using comparisons of median values
for each measure between comparison ownership groups within the small and large size categories.
Setting: Financial and operational data for the three ownership groups included in our sample
were obtained from the Centers for Medicare and Medicaid Services Cost Report Data
over a 3-year period with the most recent fiscal year ending between September 30, 2002 and
September 29, 2003.
Measurement: We measured the operational and financial performance of hospices in three
areas: utilization, services, and financial performance.
Results: Small hospices owned by publicly traded companies incurred a longer length of
stay, lower operating expenses, generated higher revenue per day and profit margin, and
served a greater proportion of Medicare patients compared to nonprofit counterparts. Large
hospices owned by publicly traded hospices served a greater proportion of Medicare patients,
offered fewer noncore services, had higher revenue per day and profit margin and incurred
lower salary and benefit expense per day.
Conclusions: Results suggest publicly traded for-profit hospices, in comparison to for-profit
and nonprofit hospices, are able to earn substantially higher profits.
