Health Systems Expanding to Hospice May Shrink the Competitive Playing Field

As healthcare and hospital systems show increased interest in home care, the competitive landscape for hospices may change in terms of both market share and employee recruitment.

According to Craig Dresang, CEO of YoloCares, the main concern is that hospices will see a decrease in referrals, admissions and ultimately revenue.

“In most markets, hospitals will both refer patients to an independent hospice and compete for patients with a local hospice provider,” Dresang told Hospice News. “Because they both appeal and compete, we need to find ways to partner and compete for patients in a friendly and collaborative way at the same time.”

Some hospice providers feel this represents a conflict of interest for health systems, Dresang said. This is largely due to the potential for revenue from both sides of the compensation coin.

The California-based hospice provider is among those seeing an uptick in health system and hospital M&A activity. Earlier this year, for example, Adventist Health expanded its footprint into Mendocino County.

Last year, Hoag Memorial Hospital Presbyterian created a home care and hospice facility in California – rebranded as Hoag at Home.

California isn’t the only market seeing an increase in this activity.

In 2021, Wisconsin-based Aspirus Health System expanded into Michigan’s Upper Peninsula with hospice and palliative care programs. That same year, EmpRes Healthcare subsidiary Eden Health began offering hospice and palliative care in Idaho Falls.

Leaders of some hospices and other providers expect disruption in the M&A space.

According to Stan Massey, partner and chief strategist at Transcend Strategy Group, some hospices fear that competition from health and hospital systems could have negative financial and operational impacts. However, strengthening a hospice collaboration and partnership with them can improve patient access and ease some of the workforce pressures.

“Some hospices feel a competitive threat from health systems,” Massey told Hospice News. “But he’s looking for ways to partner with them and provide real quality, end-of-life care. Some hospices have succeeded in becoming partners in filling gaps in research, education, and care. The bottom line is that by helping to provide the right care, it really is about providing great education and support to family caregivers, because ultimately this staffing shortage will affect all health services.

Several factors are driving facility-based healthcare organizations toward home-based care, including the increasing age-related preference among the elderly. More hospitals and health systems are investing in hospice in response to increased demand and current strains on acute care services. Health systems are looking to expand into community-based hospice and palliative care to complement existing offerings while creating new care delivery channels.

According to David Huffstutler, president and CEO of St. David’s HealthCare, more health systems involved in hospice can have a positive impact when it comes to patient access and the ability to process requests quickly.

“When other health systems invest in services like hospice care, everyone benefits,” Huffstutler told Hospice News in an email. “It allows us to discharge patients when they’re ready and allows patients to choose the setting they’re most comfortable in—whether that’s in an assisted living facility or in their own home.”

Texas-based St. David’s HealthCare is a partnership between hospital operator HCA Healthcare (NYSE: HCA) and two nonprofits—St. Formed through a partnership between David’s Foundation and the Georgetown Health Foundation. The recent expansion of services has its roots in HCA’s $400 million acquisition of an 80% stake in Brookdale Senior Living’s home health and hospice segment last year.

The health care system has recently acquired Home Health and St. David’s HealthCare and St. Started a home health and hospice business branded as David’s Hospice & Family Care.

“Adding home health and hospice services to our healthcare network allows us to expand access to care and improves our ability to meet the needs of our patients,” said Huffstutler. “Home health and hospice are essential to continuity of care. They will improve care coordination and integration of hospice services when patients leave our hospitals.

According to Stan Massey, partner and chief strategist at Transcend Strategy Group, one of the biggest motivators for hospitals is to expand their continuum of care. Part of that motivation is driven by capacity constraints as hospitals see increased demand for inpatient care, he said.

“Some of our health-based system customers have really turned to hospice and home health as a pressure relief valve to save hospital beds. They don’t have enough funds to meet the demand,” Massey told Hospice News. “While we are no longer in a hospital capacity crisis due to COVID, there are still many hospitals with capacity issues. Healthcare systems have yet to understand the mix of patients they receive from their hospital systems, who are often highly acute and do not really have long to live.

The impact on patient choice, quality and understanding of end-of-life care services is at the root of hospice providers’ concerns, according to Dresang.

Hospital-based hospices have made the market more competitive and more confusing for health care consumers, he said.

“On the one hand, it seems like an increase in competition. But it actually limits competition because the health care system will either intentionally or unintentionally limit a patient’s choice regarding hospice,” Dresang said. “It turned out not to be good for patients. This has undermined public understanding of end-of-life care and challenged independent organizations that have long been integrated into their communities and serve as a safety net.

But according to Massey, there is plenty of room for health and hospital systems to coexist with hospices.

Health and hospital systems need the expertise that hospice providers bring when it comes to providing serious illness and end-of-life care beyond their walls in home and community-based settings.

“Home hospice care is a different ball game,” Massey said. “They can’t just wave a magic wand and become experts at providing it or hiring people with experience without some experience. That’s part of the appeal. For hospices that have been serving their communities for 30-40 years, primarily based on home-based services, they are truly experts, and I think they will have an advantage in experience over hospital systems for some time. .”

But questions remain on the minds of hospice providers about whether hospitals and health systems will work with or against them to further expand a limited pool of staffing resources.

A number of hospice leaders previously told Hospice News that the poaching of employees from larger health systems and other providers is becoming a greater source of tension in the industry’s recruitment and retention turf war. This often comes with promises of higher wages, broader benefits packages, or sign-on bonuses.

Health systems are in a better position than hospices to offer higher compensation to workers.

That means hospices are struggling even more to hire and retain enough staff to provide end-of-life care amid widespread workforce shortages, according to Dresang.

“Most hospices will never be able to pay their nurses the same rate as a union hospital,” Dresang told Hospice News in an email. “However, we win candidates with organizational culture, benefits and work-life balance.”

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