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A study of 191 for-profit hospices acquired by private equity firms found Medicare spending per stay rose 5.9% compared with matched, non-acquired hospices. The increase was mainly associated with stays averaging 6.3 days longer and a shift in admissions, while researchers found no increase in care visits.
Medicare spending per hospice stay rose 5.9% after private equity firms acquired for-profit hospices, compared with similar hospices that were not acquired, according to a study published in the November issue of Health Affairs. Researchers linked most of the increase to stays averaging 6.3 days longer, not to more visits or time spent providing care.
The researchers analyzed Medicare fee-for-service claims for 191 for-profit hospices acquired by private equity firms between 2018 and 2022 and compared them with 1,305 matched for-profit hospices that remained outside private equity ownership. They examined changes during the two years before and after each acquisition and compared them with changes at the control hospices.
After acquisition, patients were less likely to have stays of under a week and more likely to remain in hospice for more than six months. They were also more likely to be discharged alive. The share of admitted patients with dementia increased from 22.6% to 23.8%, while that share did not change at control hospices. The study describes dementia and cancer patients as the two largest groups in hospice.
Researchers found no significant increase in total visits or visit time per week, including physician, nurse and home health visits. Social work visits decreased. The authors said a shift toward patients who may need less ongoing care was a more likely explanation for the longer stays than increased services that prolonged patients’ lives.
Longer Stays, Higher Medicare Costs
The findings matter because Medicare pays hospices a set daily fee, rather than changing the payment to reflect how much care a patient needs each day. Under that system, longer stays can raise spending, while the costs of visits and other services are paid from the daily fee. Researchers said a patient with dementia who needs relatively few services can bring the same daily payment as a patient with cancer who may need frequent visits and complex pain management.
The results point to a potential mismatch between the payment structure and the range of care needs among hospice patients. They also raise questions about how admissions and lengths of stay change after ownership shifts. The study identifies associations after acquisition; it does not, by itself, establish that private equity ownership caused individual clinical outcomes or that every acquired hospice changed its practices in the same way.
Hospice is a significant part of end-of-life care and Medicare spending. The source report notes that nearly half of people who die in the United States are Medicare beneficiaries who use hospice, and up to a quarter of Medicare spending occurs in a person’s last year of life. Changes in hospice use and payment can therefore affect both patients and the public program’s costs.
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Study Compares Acquired Hospices
The study focused specifically on hospices that were already for-profit before being acquired. That comparison let researchers ask whether private equity ownership was associated with changes beyond those at other for-profit hospices serving the same population under the same payment system. The results were published in Health Affairs in November 2026.
The report describes a wider ownership shift: U.S. hospice providers were once mostly nonprofit, but nearly three-quarters are now for-profit, and private equity firms are a growing owner group. In a typical private equity deal, buyers use investor money and borrowing; the acquired company may be responsible for repaying debt and interest. That financing structure is background, not evidence that debt caused the study’s findings.
Senior author Zirui Song, an associate professor of health care policy at Harvard Medical School, has published prior research on private equity ownership in other parts of health care. This study addressed a distinct question: what changed when private equity firms bought hospices that were already operating for profit.
“The goal of hospice is to provide respectful, person-centered care that helps terminally ill people approach end of life with dignity, while minimizing pain and suffering.”
— Zirui Song, senior author and associate professor of health care policy at Harvard Medical School
What the Study Cannot Establish
The analysis reports differences associated with acquisitions, but the source material does not establish the reasons for each patient’s longer stay or live discharge. Researchers said the admission shift toward patients who may need less care was the more likely explanation; that interpretation should not be treated as proof of intent by hospice operators.
The report also does not specify the total dollar increase in Medicare spending, how the findings varied among individual hospice owners, or whether changes in patient outcomes resulted. It does not establish whether the same patterns apply to nonprofit hospices or acquisitions outside the study period. The supplied material says payment reform may be warranted but does not provide a complete account of the study’s limitations or the effects of any proposed policy.
Payment Policy Under Review
The researchers said changes to Medicare’s hospice payment system may be warranted. One option they identified is adjusting the daily payment according to a patient’s clinical needs, potentially using diagnoses in a way similar to hospital payment systems.
The authors also cautioned that risk adjustment could create incentives to code diagnoses in ways that increase payments. The source material does not identify a specific policy proposal, implementation schedule or agency decision. Any next step would require weighing whether a revised payment better reflects care needs while limiting incentives that could distort admission or coding practices.
Key Questions
How much did Medicare spending rise after the acquisitions?
The study found 5.9% higher Medicare spending per hospice stay at acquired hospices compared with matched for-profit hospices that were not acquired. The source does not give a total dollar amount.
What was linked to the spending increase?
Researchers said longer stays were the main driver: the average stay rose by 6.3 days after acquisition. Patients were also more likely to be discharged alive, and the mix of admitted patients shifted.
Did patients receive more care visits?
No significant increase in total visits or time spent on visits per week was found. The study reported fewer social work visits, rather than more services overall.
Does the study prove private equity caused the changes?
The study found changes associated with acquisition by comparing hospices over time with matched controls. Its findings do not prove why each change occurred or establish that private equity ownership caused an individual patient’s outcome.
What payment change did the researchers discuss?
They identified adjusting Medicare’s daily hospice payment for a patient’s clinical needs as one possible option. They also warned that risk adjustment could create incentives for coding practices that raise payments.
Source: medicalxpress.com
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