New Data Shows Slight Reduction in Hospice Utilization for 2014
Represents First Decline in a Decade
April 14, 2016 11:23 AM
Editor’s Note: Special thanks to by Rich Chesney, President and Founder of Healthcare Market Resources (HMR) for permission to reprint the following blog posting that was authored by him and released under the title “Hospice Utilization: A new year but no new business.” We believe it provides valuable information about recent trends in hospice utilization and are reprinting it here. Please also note that HMR has historically tracked hospice utilization by the percent of Medicare beneficiaries receiving hospice services rather than the percent of Medicare patients that died on hospice care in a given year (a statistic tracked by the Medicare Payment Advisory Commission). Using the percent of Medicare beneficiaries receiving hospice services figure allows for consideration of patients with hospice services that were discharged live from hospice care.
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It may be a new year, but that doesn’t mean a lot of new business for hospices. We [Healthcare Market Resources] took a look at hospice (and home health, but that’s another blog) utilization over the last decade, only to find that, for the first time in ten years, hospice utilization has declined. Granted, the decline is only by 1%, but hospice has been at a pretty steady utilization rate of 2.6/2.7% for the last five years.
When you consider that we measure hospice utilization by dividing the number of hospice patients served by the total Medicare eligible population for each state (this ensures that we capture live as well as expired discharges), that number should be in a steady state if not slightly growing, given the increasing awareness of hospice services, the ubiquitous availability of its services and favorable demographics. Has all the regulatory scrutiny bent the utilization curve downward?
Worse yet, regardless of where you are in the country, all hospice growth is relatively flat or in decline.
Just three states experienced utilization growth in 2014 and that growth was only 0.1%.
Eight states experienced utilization declines in excess of 0.1% with the highest decline at 0.3%.
15 states experienced no change with the remainder declining at just 0.1%.
Still, breaking it down into quartiles, we do see that there is some variation from state to state, possibly indicating that there is room for growth at the individual state level.
2016 and Beyond
Overall, it’s a very flat market with no data to suggest any light at the end of the tunnel. So what does this all mean for the future growth of hospices? Not much in the way of new growth for hospice, unless something changes.
Unfortunately, the immediate prospects are not good. Increased regulatory pressure and a new payment system which dis-incentivizes long term patients could result in lower utilization rates, as length of stay shortens for these longer stay patients (180 days+). MedPAC and Medicare have gone on record as these type of patients are subject to questionable justification of services. Another ticking time bomb in the short term is the Senate Finance committee proposal to move the hospice benefit into Medicare Advantage. This added level of supervision at the micro level can only mean fewer patients accessing the benefits or stable patients being discharged sooner.
While long term prospects are strong given the need to control end-of-life (EOL) costs becoming more important as more providers go at-risk, this requires significant structural and attitudinal changes in the healthcare delivery system. The goal is achievable as seen by the experience of La Crosse Wisconsin and the Gundersen Health System which has shown that 30 years of community effort can pay off in lower EOL costs. However, hospice may not be the sole beneficiary of these efforts as Medicare is testing other forms of palliative care with the Medicare Care Choices Model.
If the prospects for organic market growth are poor, hospices can look to geographic expansion, taking away market share from competitors or adding complimentary services to increase their revenues. Each alternative poses its own challenges.
To understand what is happening at the local level, hospices must calculate the utilization for their particular service area by dividing patients served (found in the Market Share 2 Report) into the Medicare fee-for service enrollees (as found in the Managed Care/Dual Eligible report). Based on this figure, you can see if your market has upside or downside in its future.
State-by-State Utilization Chart
If you would like to see the 2005 – 2016 state-by-state utilization chart used for this blog, just contact Healthcare Market Resourcesto request a complimentary copy.