Potential referral partners and investors often see palliative care as a value-add for a hospice, home health agency or other provider.
Palliative programs are difficult to manage as a standalone business due to the lack of a robust reimbursement model. Most palliative care programs are reimbursed through fee-for-service Medicare, which only covers physician or nurse practitioner services and does not include the full range of interdisciplinary care.
Some palliative care is also paid for through Medicare Advantage plans and Accountable Care Organizations (ACO), where care and payment models often vary. But in many cases, providers see those services as a loss leader or as a “feeder” for their hospice programs, Eugene Goldenberg, managing partner from the investment bank Edgemont Partners, said at the Hospice News Elevate conference in Orlando, Florida.
“I have yet come across a palliative care program that stands profitably on its own. The reality is that’s really not the goal, even though, from a financial perspective, when investors are looking at it, that’s one of the first things they kind of hone in on,” Goldenberg told Hospice News. “If a hospice has a palliative care arm, they want to know how much it is losing. If it’s losing X amount of dollars, but it serves as a feeder into the primary kind of hospice offering, then you have to evaluate that on a combined basis.”
About 50% of palliative care programs in the United States are operated by hospices, according to the Center to Advance Palliative Care. Health systems comprise most of the remainder, though other players such as home health agencies and primary care organizations increasingly are moving into the space.
Given the difficulties of making palliative care sustainable from a business perspective, efficiency is a key concern, according to Goldenberg. This includes examinations of sales representatives’ performance in terms of referrals and benchmarking that against other business metrics, such as referrals and revenue.
When marketing palliative care, or making a case for it to investors and other stakeholders, education is critical, Goldenberg said. Many payers, investors and even other providers in the continuum do not fully understand the nature of those services and how they differ from hospice care.
Despite the challenges, palliative care does add value to a business, particularly as a differentiator in the marketplace. Providers can also leverage data on the cost savings that palliative care generates, primarily through reduced hospitalizations and emergency department visits.
“[Palliative care] is also a differentiator that we’re seeing in the market, predominantly with new referral sources, especially if you’re trying to get into a new market,” Goldenberg said at Elevate. “We’re increasingly seeing as hospice companies come to market, particularly ones of scale, that there is absolutely a palliative care component to them. Not everybody has been able to figure it out just yet, but it is certainly a differentiation factor oftentimes when it comes to marketing to a new referral source.”
