Sunday, November 2, 2014

Ruining Hospice One Management Interaction at a Time

Anonymous (from Gentiva),

Who turned hospice into a mere shadow of its former self?  Who twisted the love and caring of volunteer clinicians into massive profit oriented enterprises, where the greatest returns come from closing hospice sites or selling out completely?  This toxicity sprouted Generic Hospice blog with my heading:

When hospice reverts to the lowest common denominator and leaders obsess about metrics, it's time to speak. Self-inflated leaders assume clinicians give until their backs break, given no raises for years. A clinical ladder is a rainbow’s pot of gold. Others have a sorrier job and must be motivated by money. Abysmal leaders dangle extrinsic rewards for admission, hiring and EDBITA targets. “Sign on” bonuses entice people into a poor work environment. Employees’ voice equals their raise, zero.
Hospice became a business.  Mission and service became words on paper, nothing more.  You informed me of Gentiva CEO Tony Strange's confession earlier this year, before inking the deal that will make him over $50 million.

We all hope that will subside over time and we'll get back to focusing on the patient need, patient care and the industry will start to climb again.

Hospice owners-investors include Kohlberg & company, Clearview Capital, Wellspring Capital Management, Pouschine Cook Capital Management, KKR, Fulcrum Equity Partners, GTCR, Sentinel Capital Partners, Summit Partners, GE Capital and Cressey & company.  The Wall Street Journal reported:

Investments in home health and hospice services have been going through a phase of consolidation that saw the merging of operators and closing of branches that have lower profitability.
Law and lobbying firm McGuire Woods wrote in a white paper:

Private equity investors have continued interest in the hospice sector, shifting the industry from nonprofit control to for-profit dominance. Between 2000 and 2009, 80 percent of new hospices that began participating in Medicare were for-profit. In 2011, more than 1.2 million Medicare beneficiaries received hospice services from more than 3,500 providers, and Medicare expenditures totaled around $13.8 billion. See MedPAC Report to Congress 2013 . Further, in 2011, 45.2 percent of Medicare beneficiaries who died that year used hospice services. See MedPAC Report to Congress 2013 . The hospice sector is benefiting from an aging population and remains ripe for consolidation, creating opportunity for investors to gain market share and make profits as the demand for hospice services increases. However, the significant increase in Medicare spending on hospice services caused t he OIG to focus on activities relating to hospice services in 2013, namely inspection of hospices’ marketing materials, practices and financial relationships with nursing homes. See Office of Inspector General, Work Plan Fiscal Year 2013 . Additionally, while there has been a steady increase in the percentage of Medicare beneficiaries who receive hospice services, the rate of increase has slowed. Among private equity funds, the number of mergers and acquisitions for hospice providers declined in the first ha lf of 2012 after seeing a substantial increase in 2009 - 2011. See MedPAC Report to Congress 2013 . Investment in hospice was present but slow in 2013. For example, Summit Partners, a private equity firm, acquired a minority interest in Heart to Heart Hospice in March 2013. We expect investment in hospice to continue at a steady pace, but it will likely not have the significant growth we expect to see in other sectors.
The language of hospice today is that of Wall Street. Hospice pioneers and founders, those still living, must be appalled at the complete distortion of their vision and rue the deformation of the service they birthed. Plain and simple, hospice itself is on hospice. Teamwork has been replaced with autocracy.  Genuine caring goes unrecognized.  Surface level imagery is all that matters.  Management offers flowery and fluffy language, but scratch the surface and staff hear leaders shouting shallow, hollow and contradictory messages. 

Hospice is actively dying.  For that, so many of us grieve.



  1. Why was the Medicare Hospice Benefit created? As a cost reduction effort!! It's about money! At the same time helping patients and families and compensating clinicians and their companies for doing so...

  2. Within 14 days following March 31, 2015, the Company shall pay Diaz a cash payment in the amount of $6,011,244.

  3. For more on private equity and executives who follow such practices:

    This is the same mentality described under the Generic Hospice banner.

  4. A hospice shouldn’t have to fear that a private equity firm will come in, cut staff, siphon cash flow, pay itself big fees, and walk away from the smoking corpse.

  5. Kindred is selling its home health, hospice and community care division to Humana and two private equity firms, TPG Capital and Welsh, Carson, Anderson and Stowe. The PE firms will control 60% of Kindred at Home. This portends a continuation of Kindred's no raise regime. Cash will be used to enrich executives, the board and our new private equity owners.