Operational and financial performance of publicly traded hospice companies

Background: The performance of hospices owned by investor-owned, publicly traded hospice companies has been largely ignored by the literature. Objective: The objective of this study was to perform a descriptive analysis that compares the operating and financial performance of hospices owned by publicly traded companies to private, for-profit hospices and to nonprofit hospices within small- and large-size categories based on patient days. Design: A nonparametric median test was conducted using comparisons of median values for each measure between comparison ownership groups within the small and large size categories. Setting: Financial and operational data for the three ownership groups included in our sample were obtained from the Centers for Medicare and Medicaid Services Cost Report Data over a 3-year period with the most recent fiscal year ending between September 30, 2002 and September 29, 2003. Measurement: We measured the operational and financial performance of hospices in three areas: utilization, services, and financial performance. Results: Small hospices owned by publicly traded companies incurred a longer length of stay, lower operating expenses, generated higher revenue per day and profit margin, and served a greater proportion of Medicare patients compared to nonprofit counterparts. Large hospices owned by publicly traded hospices served a greater proportion of Medicare patients, offered fewer noncore services, had higher revenue per day and profit margin and incurred lower salary and benefit expense per day. Conclusions: Results suggest publicly traded for-profit hospices, in comparison to for-profit and nonprofit hospices, are able to earn substantially higher profits.