The year 2020 brought unprecedented disruption to the hospice space, mostly due to the COVID-19 pandemic. The outbreak strained providers ability to provide care, access patients in homes and facilities and to maintain a healthy bottom line in light of lost revenues and rising costs.
Despite these challenges and economic headwinds, hospices adapted, improvised and overcame many of the obstacles 2020 imposed on them, though a good proportion have come through it bruised and battered. The pandemic of course is not over, but hospices are applying lessons learned from the early days of the crisis to bolster themselves for the next phases.
While the industry had to shift many priorities in order to respond to the pandemic, hospices also made headway on efforts with the potential to reshape how they do business and care for patients, seeking to engage with patients long in advance of the end of life, experiment with new avenues of payment, adapt to new financial players in the space and consider new concepts about death and dying itself.
Telehealth is a Rising Tide
It may be premature to explicate the total impact the pandemic will have on health care at large and hospice and palliative care in particular, but we can be certain that telehealth will continue to grow.
Telehealth will be a cornerstone of future health care policy following the COVID-19 pandemic, with Medicare Advantage plans as one engine for growth. Expansion of telehealth services across the health care continuum accelerated rapidly due to efforts to stem the spread of the novel coronavirus. These developments will likely shape health care for years to come including for hospice and palliative care providers.
The U.S. Centers for Medicare & Medicaid Services (CMS) will be making permanent a number of the temporary flexibilities to expand telehealth that the agency implemented in response to the COVID-19 pandemic. The number of rules affecting hospices that would be extended remains to be seen.
As of now, hospices have made the investment, realized the efficiencies and are working to refine their telehealth practices and find the balance between virtual and hands-on care. However, questions about payment for virtual care abound. Hospices are waiting for payers, including Medicare, to indicate how these services will be reimbursed in the long term.
Some hospice leaders also furrow their brows about potential payment reductions. While no reductions have been proposed thus far, as data from 2020 come in the potential exists for the Medicare Payment Advisory Commission to argue that the efficiencies gained through telehealth have reduced hospice costs to the point that per diem payments should be cut. The commission recommended that payment remain unchanged for 2021, sticking to 2020 rates, but 2022 could be a different story.
Hospices Providing Care Further Upstream
Hospice providers will continue to reconsider their very identities as they adapt to social and financial change wrought by the prevalence of serious and chronic illness among the aging population, as well as the movement towards value-based payment in the health care system.
Hospice providers increasingly see a role for themselves in the lives of patients and families that extends far beyond the last months or weeks of life. Their challenge is to leverage their existing skill sets in patient-centered, interdisciplinary care and apply them further upstream — and to secure reimbursement that is sufficient to keep those programs financially sustainable.
Many providers are redefining themselves as stewards of chronic care management for seriously ill patients, with a mind to creating a seamless continuum of care in the home from diagnosis through the end of life.
The industry will see a wider range of services emerging from organizations that were previously focused on the last six months of patients’ lives. One thing we may see less of is the word “hospice,” as more organizations nationwide rebrand to reflect their expanding scope of services and to shed fear and stigma associated with that label.
This year Florida’s Community Hospice & Palliative Care rebranded into a larger entity, Alivia Care. Alivia is poised to launch home health care programs, private duty nursing services, personal care, PACE programs and advanced care management in 2021 and beyond.
While the organization is not rebranding, Ohio’s Hospice, a group of 10 affiliated providers located throughout that state, launched a new joint venture in 2020 called Pure Healthcare, featuring a three-story facility as well as an innovative care model designed to support quality of life and for seriously ill patients, allowing them to age in place. These are just a few examples among many.
The growing need to provide a seamless continuum of home-based care in order to remain competitive, maximize payment opportunities and better serve patients has prompted some organizations to join forces during 2020. This includes the mergers of AccentCare with Seasons Hospice & Palliative Care and of Empath Health and Stratum Health.
Evolving payment structures are both a cause and an effect of this trend. As CMS introduces new model demonstrations, hospices reconfigure their services in order to ensure their success within those payment systems.
Coming in 2021 are the direct contracting and Serious Illness Population payment models under the Primary Cares Initiative at the Center for Medicare & Medicaid Innovation (CMMI), through which opportunities will exist for hospices to expand their advanced illness care programs, as well as to offer hospice concurrently with curative care.
We can expect this trend to gain further momentum in 2021 with the founding of innovative programs and payer relationships to bring hospices into patients lives earlier in their illness trajectory
New Players Entering Hospice M&A Space
Private-equity firms have been investing heavily in hospice during the past few years, a trend that is not expected to slow. However, a new crop of investors are also moving into the space. Search funds and family offices seek to capitalize on rising demand and the promise of demographic tailwinds as the population ages.
A search fund is an investment vehicle through which investors financially support an entrepreneur’s efforts to locate, acquire, manage, and grow a privately held company, according to the Stanford Graduate School of Business. An estimated 198 search funds are operating currently in the United States, according to Stanford University. The search fund model emerged from faculty at Stanford in the mid-1980s.
Non-traditional buyers are beginning to realize the same potential in hospice investments that private equity recognized years ago. The hospice M&A market has been particularly resilient to headwinds brought on by the pandemic. While the larger health care market saw more disruption, hospice activity proceeded apace according to a report from Provident Healthcare Partners.
Among the various segments of the health care industry, hospice continues to be the one to watch, even as valuations soar and multiples continue to hit record highs.
Alongside search funds, family offices are also looking closely at hospice acquisitions. These are typically family units who incorporate, pool financial resources and purchase business assets, typically with representation by a banker or broker. While a search fund would likely assume management of a company, installing its own executive leadership, a family office is more likely to retain current management and offer them much more autonomy. Family offices are becoming more prevalent in the hospice market.
This emerging trend does not mean that interest among traditional private equity buyers is diminishing, and larger hospices will continue to strategically buy up smaller organizations. As the long term impacts of COVID-19 play out, the industry may see a surge of new transactions as hospices who suffered heavy financial losses due to the pandemic go up for sale.
Home Palliative Care To Flourish
Efforts have been underway among health care providers, state governments, advocacy groups and payers, among others, to make community-based palliative care more accessible to patients and families. Hospices are uniquely positioned to provide this care, evidenced by how many of those providers are already engaged in palliative care. The Center to Advance Palliative Care (CAPC) reports that at least half of the in-home palliative care providers in the United States are hospices.
The market is primed to provide this care on a wider basis. Stakeholders are increasingly recognizing the benefits to patients and the economic benefits through cost savings. The demand is rising and the clinical infrastructure exists, what remains is for payment to catch up with practice.
Currently Medicare reimburses for palliative care physician services through fee-for-service payment programs that do not sufficiently cover the full range of interdisciplinary care, but in calls grew louder during 2020 for Medicare to establish a dedicated community-based palliative care benefit.
Industry organizations such as the National Hospice & Palliative Organization (NHPCO), and the National Coalition for Hospice and Palliative Care have been pushing for CMS to establish such a benefit, arguing that the need is more critical than ever during the pandemic. This fall more than 60 organizations, including NHPCO and the National Association for Home Care & Hospice, wrote to federal health care officials requesting a palliative care demo.
Members of Congress also joined the call in 2020. Reps. Neal Dunn, M.D. (R-Fla), David Roe, M.D. (R-Tenn.), Jeff VanDrew (D-N.J.), and Sen.-Elect Roger Marshall (R-Kan.) wrote to CMS Administrator Seema Verma to advocate for a Medicare palliative care benefit demonstration.
The agency has experimented with palliative care payment through other models, though none reach the level of a national benefit.
CMS has allowed Medicare Advantage plans to offer palliative care as a supplemental benefit, for example. According to an analysis by ATI Advisory, 61 health plans nationwide are offering in-home palliative care as a benefit this year. This is up from 29 in 2019. More than 455,000 beneficiaries are enrolled in these plans. However, the plans that are offering in-home palliative care are concentrated in relatively small geographic areas.
The Primary Care First initiative includes a Serious Illness Population payment model that could yield some positive results in terms of increased access to palliative care. However, the program will not be available in all 50 states, at least during its first year. We can expect progress stemming from this model, but it likely would not go as far as a dedicated benefit.
CMS has already extended the Medicare Care Choices Model demonstration for an additional year, which allows patients to receive concurrent hospice and curative care.The agency found that thus far the program has saved Medicare more than $26 million to date.Word on the street is that CMS is developing a second iteration of the model, but the agency as a matter of policy does not disclose information about potential new models prior to their public announcement.
Efforts have also been underway at the state government level in recent years. Laws exist in 27 as of Dec. 2018 that are designed to promote palliative care, according to the National Academy of State Health Policy (NASHP). Though details of the legislation vary among the states, they each serve the goal of bringing palliative care to more patients with serious, chronic, or life-limiting conditions. Last year, Ohio, New Jersey and Kentucky pursued such legislation. In Jan. 2020, New Jersey passed a law designed to raise public awareness of palliative care. The state’s legislature is mulling over two more bills related to palliative care.
Community-based palliative care can reduce total health care costs by 36%, a Turn-Key Health paper indicated. These services can also reduce hospital admissions by 48%, resulting in 28% cost savings per patient day. In the outpatient setting, community-based palliative care has been shown to reduce emergency department visits by 35% and hospitalizations by 50%.
Home-based palliative care could reduce societal health care costs by $103 billion within the next 20 years, the nonprofit economic research group Florida TaxWatch said in a 2019 report.
Payment model demonstrations take time to develop and such a project may not materialize in 2021, but inroads have been made and the needle is likely to keep moving.
Movement to Rethink Death to Spur Hospice Growth
Hospice and palliative care providers are joining a wider conversation that has been building in the public space about human beings’ understanding of death and how that affects health care at the end-of-life. These discussions are moving outside the halls of medicine into the public sphere, including events such as Death Over Dinner and Death Cafes and popular offerings such as documentaries, feature films, books and even games.
Recent years have seen documentaries on end-of-life care build acclaim, including the Academy Award-nominated Netflix documentaries End Game and Extremis, with End Well Founder Shoshana Ungerleider, M.D., as executive producer. Recently, the comedy-drama the Elephant in the Room appeared on streaming services, depicting the work of an interdisciplinary palliative care team. A palliative care nurse practitioner, the late Bonnie Freeman, penned the screenplay.
A key component of this growing movement is to “demedicalize” the dying experience. This does not mean denial of medical care to the dying, but instead is a recognition that death is bigger than medicine. The call is to reorient care around the patient’s wishes and goals, taking into account the patient and family’s full range of social, emotional and spiritual experiences through the dying process — a goal that is consistent with longstanding values espoused by hospice providers.
Medical training and health care culture is oriented around the curing of disease, often with the perception that the most responsible clinical course is aggressive treatment until the patients’ last moments. This emerging movement is calling for the health care system to move away from that mentality and closer to the mindset that most hospice providers have traditionally held: That patients have a right to choose how they wish to live during their final days and that their care should reflect those wishes.
Widespread advancement of these concepts have the potential to significantly build hospice utilization as more people start to ask themselves how they truly wish to live and to die and as public awareness and understanding of what hospice actually is starts to improve.
Hospice utilization continues to rise nationwide, reaching 51% in 2019 according to the Medicare Payment Advisory Commission, a record high. These trends bode well for hospice providers as well as the patients and families in need of their services.
In the business space, a range of companies have emerged in recent years to offer services related to advance care planning, navigating the health care system and goals of care conversations. This includes start ups such as Vynca, Uphold Health and Iris Healthcare in the advance care planning space, and B.J. Miller and Sonya Dolan’s new venture Mettle Health.
As more families face difficult health care decisions due to the aging population, more entrepreneurs will likely develop new solutions to better meet their needs.
Companies featured in this article:
AccentCare, Alivia Care, ATI Advisory, Center to Advance Palliative Care, Community Hospice & Palliative Care, Death Over Dinner, Empath Health, Florida Tax Watch, Iris Healthcare, Mettle Health, National Academy for State Health Policy, National Association for Home Care and Hospice, National Coalition for Hospice & Palliative Care, National Hospice and Palliative Care Organization, Ohio's Hospice, Provident Healthcare Partners, Pure Healthcare, Seasons Hospice & Palliative Care, Stratum Health, Turn-Key Health, Uphold Health, Vynca