Owing to changes in patient needs and preferences and a fast aging population, the hospice industry has grown to almost $19 billion over the last decade. The industry is expected to grow another 7.4 percent annually to keep up with the growing demand and need for hospice care.
Hospice, according to reports, originated with small non-profit groups, most of them made up of devoted volunteers. However, presently, it seems this grass-root movement to provide compassionate hospice care is becoming a lucrative platform for big business.
According to reports, these non-profits now have to contend with large, for-profit providers, which often are publicly traded and are governed by corporate boards. Currently, of the nearly 4,300 hospices in the U.S., over 68 percent are for-profit, with dozens in the Dayton area alone.
Note that the growth, or rather the increase of for-profit companies into the hospice arena has been beneficial to patients especially due to the huge investments made in technology, a focus on efficiency, and making care more accessible.
Even though some experts believe that for-profit hospices create a loss of local control, less financial accountability to the community, and shifting of Medicare and Medicaid dollars to shareholders, resulting in patient care that ultimately suffers.
However, regardless of these different opinions, starting and running this business can be very profitable especially when arranged well. This business is best suited for individuals who are passionate about helping others and can offer compassion and understanding to their clients.
Even though it might not be deemed necessary, but experience in the healthcare industry tends to prove beneficial. If you’re lacking this experience, it is imperative you hire an administrator that can offer their expertise in operating a medical facility of this magnitude.
Due to the sensitive nature of the business, it’s very crucial that you possess strong interpersonal skills. Aside from patients and family members, you are expected to be able to clearly communicate with staff, pharmacists, healthcare professionals, religious clergy, and funeral directors.
7 Smart Ways Hospice Companies Make Money
It is important to point out that both non-profit and for-profit hospices receive funds from multiple sources. Most facilities are reimbursed on a per diem basis, providing a set payment amount for each day the patient is enrolled in the program, regardless of services required.
For patients who require around-the-clock home nursing care, hospice is reimbursed on an hourly basis. These care facilities are reimbursed a daily rate for each patient, irrespective of the level of service offered on that given day.
Final payment amounts tend to vary each year, but the average for routine care is approximately $146 per day. If continuous care is necessary, Medicare reimburses at an hourly rate of approximately $40 per hour. Here are the basic ways companies in this business generate revenue.
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Grants
For some, charitable donations and grants make up a great portion of their revenue. Most of them are supported by third-party donors and grant makers. The funding necessary to cover essential Hospice care services usually exceeds the financial means of many developing companies in the industry. Healthcare services may have to be complemented by non-governmental organization grants.
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Medicare Hospice Reimbursement
Medicare reimbursement pays for 84 percent of patients in hospice care. Medicare reimburses hospice agencies for hospice care at a per-diem rate, meaning every patient receives the same amount of reimbursement per day despite their diagnosis or individual care needs.
This reimbursement system may be creating incentives for hospice agencies to select patients with fewer care needs and longer hospice stays. By doing so, for-profit agencies may be conserving money by providing less intensive care.
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Medicaid
In the United States, children with disabilities or adults who meet Medicaid’s financial eligibility criteria are fully catered for in terms of hospice care. Medicare beneficiaries who are dual-eligible for both programs (approximately 20 percent of all Medicare beneficiaries) can have Medicaid cover costs that Medicare doesn’t cover, such as outpatient prescription drugs and long-term care.
Have it in mind that Medicaid and Medicare’s hospice eligibility requirements are almost identical: A patient must be certified to have six months or less to live and must receive services from a Medicare-certified hospice facility or agency.
Nonetheless, Medicaid policies can vary from state to state. Coupled with covering hospice services, Medicaid also pays at least 95 percent of room and board costs for hospice patients in a nursing home. Funds are allocated to the hospice agency, which then pays the nursing facility.
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Private Insurance
It’s important to note that private insurance plans vary widely in terms of coverage. But if the policy includes hospice, hospice care, or palliative care, it will cover most of those costs. Have it in mind that not all plans pay for hospice care, although most do since it is much less expensive than hospital treatment. Some policies that cover hospice care may have limits on hospice expenses.
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Individuals
Have it in mind that individuals without private health insurance, and who are not covered by a government policy, are expected to pay for hospice care themselves. Some hospice care can be paid on a sliding scale, or through charitable or other donations.
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TRICARE
TRICARE is a healthcare program sponsored by the U.S. Department of Defence that provides health benefits for active military personnel and retirees, and their dependents. Hospice care is covered through this program.
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CHAMPVA
CHAMPVA (Civilian Health and Medical Program of the Department of Veterans Affairs) is a healthcare program sponsored by the Veterans Administration that insures eligible beneficiaries. This program covers most medically necessary care, including hospice.
Conclusion
At that point where there is little or no hope for a cure, providing the best possible comfort for a loved one is the best gift you can give them as they get to the last lap of their life. That need to provide a terminally ill loved one with the opportunity for a dignified death – free of suffering and surrounded by family and friends at home or in a home-like setting – is the very basis upon which the hospice movement was started.
Dedicated and innovative entrepreneurs have a unique opportunity to participate in a profession with virtually unlimited growth potential.