A Health Affairs study found private equity-owned hospices had longer lengths of stay and admitted more low-intensity patients, raising concerns about profit-driven care decisions.

U.S. hospices have been rapidly transitioning to for-profit structures, with three-quarters of facilities under for-profit ownership by 2022. At the same time, PE firms have gobbled up hospices: The firms owned 15% of hospices in 2026, compared to 3% in 2012.

Medicare’s payment structure makes hospices an attractive target for PE firms. The government reimburses the facilities at a flat, daily rate for each patient, regardless of the volume of services they receive. PE firms can capitalize on this arrangement by shifting focus toward longer-stay populations, such as patients with dementia.

The Health Affairs study found that this rang true for the PE-owned hospices in its analysis, which examined fee-for-service Medicare claims from 2016-2022 across 191 for-profit hospices acquired by PE firms. A control group included 1,300 for-profit control hospices without PE backing.

The share of patients with dementia increased by 4% from baseline among PE-owned hospices. Meanwhile, control hospices experienced no change during the period.

Patients with dementia and Alzheimer's disease typically require fewer specialized services or expensive daily medical equipment compared to those with terminal cancer, which is another major patient population for hospices.

Additionally, more hospice patients were discharged alive from PE-owned hospices, according to the study.

Hospices can pocket more of the daily rate when they care for less resource-intensive, longer-stay patients. This may mean PE-owned facilities are cherry-picking healthier patients who end up outliving the hospice eligibility window, the study suggested.

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