The Devil in Details of Hospice Strategic Collaboratives

Nonprofit hospices are increasingly banding together in varying types of collaboratives to create workforce, operational and cost-effective synergies. As this trend picks up steam, hospices will need to fine-tune the details of these affiliations and choose partners carefully.

Collaborations allow hospices to share best practices, quality initiatives, staff education and volunteer resources, as well as back-office administrative functionality. Driving forces that can make these strategic affiliations attractive to hospices have included the potential to reduce overhead costs and also the ability to leverage their combined scale in value-based payment arrangements.

Without a basic agreement on the strategy that the potential partners intend to pursue, these collaboratives can fall apart before they begin or lead to chaotic times down the road, according to Sue Lyn Schramm, founder and managing principal of Schramm Consulting LLC, a consulting firm specializing in hospice and palliative care.

“Whether you’re selling to new ownership or you’re going to affiliate, doing your advanced research before you approach a potential partner is really important,” said Schramm, speaking at the National Hospice and Palliative Care Leadership & Advocacy Conference. “In addition, you need to find out at a very early stage whether you and your potential affiliates have broad agreement on the outcomes, because the outcomes are going to drive the structure.”

More partnerships among nonprofit hospice providers have been cropping up in recent years.

For example, four Florida-based hospices formed the Synthase Collaborative last month in part to boost their negotiating power with payers as well as work to build efficiency and improve cost control.

Last year brought similar nonprofit collaboratives such as the Colorado-based CareSynergy, Advanced Illness Partners and the formation of Wisconsin Hospice & Palliative Care Collaborative.

The California Hospice Network (CHN) and Ohio’s Hospice have also pioneered this model for several years.

Value-based initiatives launched in 2021 included the value-based insurance design model demonstration (or Medicare Advantage hospice carve-in) and several direct contracting models. The U.S. Centers for Medicare & Medicaid Services has since retooled the Global and Professional Direct Contracting payment demonstrations into an Accountable Care Organization (ACO) model with a program called ACO Realizing Equity, Access, and Community Health (REACH).

As hospices begin to explore these models, some smaller and nonprofit providers have recognized that they need to evolve to remain competitive against larger competitors.

“Nonprofit-freestanding hospices in particular are in for some very difficult years ahead,” Schramm said. “Reimbursement is not growing fast enough to support the small, freestanding hospice. [They] really are going to have to prepare to get bigger in a lot of ways in order to survive.”

In the midst of this changing environment came the challenge of maintaining sufficient staffing resources to keep with demand for patient care.

Workforce shortages worsened by the pandemic have caused some hospices to either temporarily or permanently halt their programs, with some even shutting down.

Though collaboratives can offer opportunities to battle these headwinds, hospices should tread lightly when it comes to developing their strategic affiliations, according to Schramm.

Hospices should consult legal advice early on in the process, Schramm suggested. This is largely due to varying state rules and regulations when it comes to compliance and payment. Hospices looking into collaborations should seek out legal health care insights at the earliest possible date, Schramm said.

Governance in these collaborations can also be a large and time-consuming hurdle to cross, according to Schramm. Dissonance can appear among the partners if they don’t see eye to eye on the composition of their collective’s board.

This can be challenging for independent hospice organizations working to come together but also looking to retain their individual entities.

“The most difficult part of every affiliation I’ve been involved in is deciding how to distribute governance controls,” said Schramm. “Prepare to spend plenty of time on those decisions about governance, structure, reporting and relationships. That’s the biggest reason these things tend to take six to nine months minimum.”