Cornerstone Hospice Affiliates with Chapters Health System

Florida-headquartered Chapters Health System and Cornerstone Hospice & Palliative Care have reached an affiliation agreement that promises to make the combined organization the nation’s largest nonprofit hospice provider and the sixth largest overall.

An affiliation is essentially an acquisition in the nonprofit space. During 2020, Chapters unveiled two affiliation strategy programs designed to bolster its affiliates’ ability to remain competitive in the face of widespread industry consolidation.

The Chapter Health Managed Service Organization (MSO) program is oriented around hospices. A second model, Chapters CareNu, is geared toward companies with a goal of engaging patients further upstream in the course of their illnesses. These programs are oriented towards supporting legacy non-profits that may be struggling to compete against larger organizations.

“We have a pretty exciting and kind of unique value proposition in the market in terms of how we promote nonprofit legacy hospices. It’s predicated on keeping leadership intact, keeping legacy and brand intact, foundation, board and governance, all those pieces,” Andrew Molosky, president and CEO of Chapters Health System, told Hospice News. “But more importantly, it’s about positioning organizations for continued success. Cornerstone is another leading hospice organization that shares similar ambitions as well as realizations of the business world around us.”

Approximately 4,840 hospices provided care to Medicare beneficiaries in 2019, according to the Medicare Payment Advisory Commission (MEDPAC). Of these, about 71% were for-profit companies. This is a sharp difference from the early 1980s when the Medicare Hospice Benefit was established. At that time, the vast majority of hospices were nonprofit organizations.

Cornerstone will not rebrand following the affiliation. This is Chapters’ third affiliation as well as its fifth overall expansion in the hospice space, in addition to similar growth in the company’s other business lines.

Chapters Health System provides hospice, palliative care and home health services throughout Florida, as well as durable medical equipment and pharmacy services. Hospice and palliative care brands affiliated with Chapters include Chapters Health Palliative Care, Good Shepherd Hospice, Hospice of Okeechobee, HPH Hospice and LifePath Hospice.

The affiliation seemed like a natural fit, according to Molosky. Chapters and Cornerstone have a largely adjacent geographic footprints and share common payment sources. The Chapters CEO also pointed to synergies in organizational culture and mission, as well as performance metrics on patient outcomes and regulatory compliance, as factors in the decision to join forces. 

“Both organizations being very large, very innovative and forward thinking, and we found ourselves sort of pondering the same questions. All those conversations continually put [Cornerstone CEO Chuck Lee] and I, and others of our peers, in the same rooms tackling the same problems,” Molosky said. “Over the course of time, it became more and more apparent that we were doing a lot of this work together and combining our resources would strengthen our position.”

Post-affiliation Lee will serve as Chapter Health’s chief administrative officer and president of hospice services.

Bringing Cornerstone into its fold also expands Chapters’ reach into some new markets, including four additional Florida counties and a presence in the Atlanta region of Georgia. 

Demographic tailwinds are strong in the Sunshine State. A 2014 report from the Florida Assisted Living Federation of America (FIFA) projected that the state’s population would increase by 4.8 million between 2010 and 2030, with adults 60 and older representing more than half of the growth. A little more than 10% of Orlando’s overall population was 65 and older in 2019, according to the U.S. Census Bureau.

Hospice utilization runs high in Florida, reaching a rate of 57.9% of Medicare decedents during 2018, the fourth highest rate in the country, according to the National Hospice & Palliative Care Organization (NHPCO). Only Utah (60.5%), Delaware (59.4%) and Arizona (58.8%) saw higher utilization.

Hospice utilization among Medicare decedents in Georgia reached 51% during 2018, which is in line with that year’s national average of 50.3%, NHPCO reported.

“Our affiliation with Chapters Health will support the Cornerstone Hospice legacy, and I am confident our common, not-for-profit mission will guarantee more patients coping with serious illnesses will have opportunities to access compassionate care at a challenging time in their lives,” said Lee. “We will retain our long-established identity, foundation and connection to the communities in all the counties we serve.”