How Hospices Can Adapt to a Changing Competitive Landscape

Hospices are operating in a changing competitive environment, and some are rolling with the punches better than others.

Several forces are driving the change. One is value-based payment models, coupled with the entry of new types of organizations in the home-based care space and the rise of more educated, health-literate consumers.

With these trends stirring the pot, hospices must find ways to adapt, according to Kara Justis, vice president of strategic consulting for Trella Health.


“Some organizations know how to go out and present information in a way that’s meaningful to referral sources, and others don’t. You’ve got some that have grown with the changes and adapted their approach to a more data-driven kind of messaging,” Justis told Hospice News. “There’s some, unfortunately, that are probably still dropping off cookies and donuts. That just doesn’t really work anymore. Relationships are being built on more objective criteria than ever before”

Data a key differentiator

In this new landscape, quality data is an essential tool. Payers and referral sources want to know more about a hospice’s performance before they decide to work together, Justis said.

This includes publicly reported quality metrics and long-standing measures like Consumer Assessment of Health Care Providers and Systems (CAHPS) scores and the Hospice Item Set.


But more and more, potential partners want to know about a hospice’s track record on reducing hospitalizations, readmissions and emergency department visits among their patient population.

“You’ve got to be able to articulate the outcomes that make your service uniquely valuable and, why hospice is a superior approach,” Susan Ponder-Stansel, CEO of Florida-based Alivia Care, told Hospice News. “You’ve also got to really understand your cost structure, particularly indirect overhead. In any risk situation, even if you’re accepting the premium dollars directly, overhead matters now, and it can’t be high.”

You’ve got to be able to articulate the outcomes that make your service uniquely valuable and, why hospice is a superior approach.

-Susan Ponder-Stansel, CEO, Alivia Care

New contenders in the ring

In the midst of this, new players are coming into the space that can impact hospices’ market share. Among them are organizations that operate within risk-based models and take on the total cost of care, such as Accountable Care Organizations (ACOs) that focus on high-needs populations, among others,

Oftentimes, those types of entities refer patients to hospice very late in the game or not at all.

“A lot of new organizations are getting started with delivering care in the home in some manner. There are paramedicine programs that operate with primary care or with other risk-based types of providers,” Ponder-Stansel told Hospice News. “They try to help people have the maximum number of days at home before they pass away, and a lot of the organizations that are either taking the risk directly or are part of a larger system taking risk are either not referring to hospice or sending patients very late.”

Innovations in the home-based care space are also transforming the ways hospices compete.

Hospices have always had to compete not only with each other, but also with different entities in the larger health care system, rarely have they had so many players muscling in on their home turf.

Programs like hospital-at-home, home-based primary care and even palliative care can siphon away or delay referrals, according to Justis. Many hospices have tried to counter some of these trends — and create new revenue streams — by launching their own versions of those types of services.

“The ability for an agency to take a much more difficult, much sicker patient home on a hospital-at-home program versus hospice, that’s definitely a big one,” Justis said. “There’s a lot more palliative care than there was in the past. A lot of those folks are eligible for hospice, but palliative care is a whole lot easier to suggest to somebody than hospice. You’re not just competing against other hospices, you’re competing against other post-acute care options.”

You’re not just competing against other hospices, you’re competing against other post-acute care options.”

-Kara Justis, vice president of strategic consulting, Trella Health

Preferred provider networks

These days, hospices are also competing not only for market share and referrals, but also for contracts with Medicare Advantage plans, ACOs and some health systems. Many of these organizations are building preferred provider networks 

Providers can get an inkling of how this might play by observing the hospice component of the value-based insurance design model (VBID).

Often called the Medicare Advantage hospice carve-in, the VBID demonstration project took effect Jan. 1, 2021. The carve-in is designed to assess payer and provider performance related to hospice within Medicare Advantage. Participation in the demonstration is voluntary for both payers and providers.

Joining an MA plan’s network will help hospices stay ahead of the game if and when value-based payment expands. Even currently, some VBID benefits are limited to patients aligned with in-network providers. These include palliative care, transitional concurrent care and additional supplemental benefits.

Also, as the demo progresses, the rules governing how plans manage those networks will change.

During the first year that an organization participates in the carve-in, CMS requires MA plans to pay 100% of the fee-for-service per diem whether the patient chooses an in-network or out-of-network provider.

MA beneficiaries can elect to receive care from the provider of their choice, regardless of network status, though as of their second year the plan can have a consultation with the patient prior to their selection.

For the final two years of the program, MA plans will have more leeway when it comes to managing payment and patient access to hospices that are in-network versus those that are not. Over time, gaining entry into the networks could become more difficult or restricted for providers.

“You’re going to see in-network and out-of-network become a big deal and the criteria by which Medicare Advantage plans decide who is in-network,” Ponder-Stansel said. “The hospices that can really articulate their outcomes and can really manage their overhead costs so that they can accept the contract price — those will be the ones that will continue to exist.”