A growing share of for-profit hospice agencies are owned by private equity firms and publicly traded companies, which now care for over a quarter of the more than 1.7 million people who receive hospice care annually in the US. New research findings raise concerns about the impact that these agencies have on hospice patient care, nurse staffing and salaries, and Medicare spending.
With funding support from the National Institute on Aging and National Institutes of Health, a recent study used 2022 Medicare cost reports to compare revenue and expense data of 2,989 freestanding hospices across four ownership models: private equity (PE) firm, publicly traded company, other for-profit, and not-for-profit. The study’s article was published last month.“Private Equity-Owned Hospices Report Highest Profits, Lowest Patient Care Spending Compared With Other Ownership Models,”Alexander Soltoff, et al, Health Affairs, Vol. 44, No. 10 (Oct. 2025).
The study found that not-for-profit hospice ownership was associated with the greatest spending on direct patient care services. By contrast, all for-profit ownership models spent significantly less on direct patient care, with PE-owned hospices spending the least. The study estimated that the difference in direct patient care spending between the not-for-profit and the three for-profit models was driven by spending on nursing salaries. Not-for-profit agencies spent an average of $43.3 per patient day on nursing salaries, while PE-owned spent 20.6% less ($34.4), publicly traded spent 23.6% less ($33.1), and other for-profit hospices spent 19.2% less ($35). The findings could reflect that for-profit hospices either staff fewer full-time nurses per patient day or pay lower salaries per nurse.
The research also reflects that for-profit hospices apply certain operational strategies that maximize profitability under Medicare’s payment structure, which reimburses hospice agencies a flat rate for each patient-day regardless of the services delivered. Strategies employed to grow profit margins include prioritizing enrollment of nursing home residents and individuals with a primary diagnosis of dementia – two patient populations that generally require less intensive and less costly hospice services, and tend to have longer lengths of stay on hospice. The authors suggest that to promote Medicare savings and better align payment with care delivery costs, policy makers could modify the per diem model of hospice payment to reduce reimbursement when beneficiaries are co-located in nursing facilities.
Among the for-profit ownership models, PE-owned hospices reported the highest total margins. This is not surprising since PE firms “raise capital from sources such as pension funds, sovereign wealth funds, high-net-worth individuals, and university endowments, and they typically seek annual returns of approximately 20 percent over the course of a three-to-seven -year period.” Publicly traded companies, which are owned by shareholders and accountable for quarterly earnings reports, also face pressure to “continuously maximize profit.”
The study’s results reinforce concerns raised by prior research finding that for-profit ownership is associated with “lower consumer-reported quality, higher rates of complaints, a higher number of live discharges, and a higher hospitalization rate compared with not-for-profit ownership.” Past research has found that not-for-profit hospice agencies maintain higher nursing staffing levels, even despite their need “to rely on charitable donations to avoid operating at a loss.” The investigators surmise that this investment in direct patient care is a key factor behind not-for-profit hospices’ higher quality ratings, given that “patient-centered outcomes such as timely care and effective symptom control rely on adequate staffing and clinical resources.”
To help beneficiaries and their families better understand the Medicare hospice benefit, CMA has prepared a handy Quick Guide explaining when care is coverable under the hospice benefit, and offering other information and advocacy tips.
November 13, 2025 – W. Kwok