Hospice should be a place in U.S. health care with clear goals: ease discomfort rather than chase recovery, honor andrespect rather than rush patients through systems, and focus on loved ones more than paperwork. Under Medicare funding, those facing serious illness receive help managing symptoms, regular nurse check-ins, and emotional support. Services are tough to quantify yet clearly meaningful.
This is the goal. Yet, in practice, things are more complicated.
In recent years, hospice care has become a stable source of income: backed by public funding, scattered small operators, and minimal investment requirements. That’s precisely what draws private investors, keen on scaling operations, and equally prone to shift focus from support to profit once rewards outweigh duty.
Federal inspectors have long pointed out flaws in how hospice care is paid for, leading some providers to cut corners. Fraud sometimes means signing up patients without approval, or those who don’t qualify. Private equity doesn’t create these issues; however, once involved, it may amplify risks, expand its reach while masking problems more effectively.
This is the hospice boom: bigger earnings, yet also a slow shift, guided by what earns most, spreads easiest, while staying hidden from loved ones until harm’s done.
Why Hospice Appeals to Private Equity
Private equity isn’t drawn to hospice because it’s harmful; it’s attracted to hospice when it delivers steady revenue while offering room for efficiency gains. A predictable income stream paired with operational improvements makes it appealing.
1) Medicare pays, and the payment is predictable.
Hospice care mainly relies on Medicare funding. Instead of generating interest like in retail, need comes naturally from population trends and health conditions. After setting up referrals plus meeting approval steps, income tends to stay consistent.
2) Hospice is fragmented.
Splitting markets helps fuel acquisition strategies. Private equity may purchase regional hospice providers, merge administrative tasks through shared services, shift promotional efforts to a unified hub, while building a standardized structure suitable for eventual sale.
3) The unit economics reward long stays.
This point matters. MedPAC, which advises on Medicare payments, has clearly pointed out the financial motive: hospice firms may seek patients expected to stay longer, since extended care means higher revenue. Extended periods account for a large share of costs; in fact, data show that almost 60% of Medicare’s 2022 hospice funds went toward cases lasting over half a year.
This doesn’t mean it’s fraud by default. However, it strongly encourages shaping a company’s approach toward keeping patients longer.
The Over-Enrollment Problem: When “Hospice Eligible” Becomes a Revenue Strategy
Hospice fraud tends to show up like a joke. Phony clinics, made-up people, and obvious tricks. That kind of thing does happen. Still, the usual issue runs deeper yet quieter: signing up folks who don’t qualify or doing so too soon just because it helps revenue.
HHS’s Office of Inspector General (OIG) identified scams such as enrolling patients without permission, along with improper billing practices overall. Yet federal legal actions often focus on one key claim: charging Medicare for hospice care when individuals weren’t actually terminally ill, a basic qualification rule.
In May 2024, the DOJ revealed a $4.2 million settlement with Elara Caring and its affiliates; this addressed claims that Elara Caring billed Medicare for hospice patients in Texas who were ineligible because they were not terminally ill, and that Elara Caring kept excess payments. This situation is significant beyond one firm since it highlights how officials view misuse: using patient qualification decisions to drive expansion.
In mid-2024, the DOJ revealed a deal worth nearly $19.43 million with Gentiva, formerly known as Kindred at Home, for charging federal plans for hospice care given to people who didn’t qualify. While this resolved claims of improper billing, it highlighted ongoing scrutiny in end-of-life service oversight. Reading these enforcement steps collectively reveals the practical form of “over-enrollment,” requiring no fabricated clients. What’s needed is a setup where qualification rules are unclear, supervision falls short, and profits rise with longer enrollment periods.
Longer Stays Than Medically Appropriate: The Profit Logic of Time
Hospice qualification assumes six months or less left. Yet in reality, numerous individuals survive beyond this period, particularly those managing ongoing conditions that follow unclear paths. It’s not about whether extended stays occur. What matters is if operations begin favoring such cases.
MedPAC’s figures reveal an unusual trend. Profit-driven hospices keep patients far longer than nonprofit ones: 113 days compared to 70 in 2022. Furthermore, MedPAC notes these providers can predict which patients will stay longest; such extended stays heavily influence overall costs.
This is when private equity’s approach matters. A well-established firm doesn’t have to ask doctors to commit illegal acts to shift results. Instead, it adjusts who they target, shifts referral networks, or focuses on a specific care environment, all within unclear medical guidelines.
Fewer Nurse Visits: The Cost-Cutting Edge Shows Up in Care
Hospice care quality usually ties closely to staff levels. When nurses visit regularly, evaluations are thorough, pain control adjusts quickly, and families receive help during worsening symptoms.
This is the costly portion as well.
New research links private equity ownership to cuts in patient care spending, thereby affecting the number of staff hired. While some facilities boost profits, a 2025 study (Soltoff et al.) shows they cut back most on hands-on care, raising concerns about service quality and adding strain to health systems. Instead of investing more in care, funds often go elsewhere; one analysis finds that nurse pay is reduced the most under this model.
This is the awkward truth: cutting staff workload, where families expect full care, is a simple way to boost profit margins.
OIG’s hospice webpage shows actual lapses, such as patients enduring avoidable suffering, poor worker preparation, and significant issues across numerous facilities. Private equity isn’t behind every case. Yet if investors demand profits, there’s a pull toward cutting staff under the label of “productivity,” despite care relying directly on people being present.
“Live Discharges” and the Whiplash of Eligibility
A different overlooked sign involves people leaving hospice while still alive, sometimes because their condition improves, sometimes because their eligibility is questioned, or simply because the care team aims to reduce liability.
CMS’s Hospice Monitoring Report indicates a gradual rise in live discharge rates between FY2020 and FY2024. A patient leaving care alive does not necessarily indicate wrongdoing. However, growing numbers prompt concerns about early enrollment practices. Some wonder if estimated survival timelines are being extended beyond reason. Others question whether transfer processes cause avoidable stress for individuals and their loved ones.
This situation may lead to harsh instability: relatives get urged toward hospice care, shift their outlook, yet soon face upheaval, sometimes after just weeks, if qualification is questioned or the service adjusts its approach due to internal policy shifts.
DOJ Whistleblower Cases: Where the System Leaks Truth
If you’re curious about how such rewards work within companies, DOJ announcements usually offer the clearest clues; not only do they outline official claims, but many stem directly from internal reports.
The Elara Caring case stands out because the DOJ clearly stated it settled a suit under the False Claims Act’s whistleblower provision, filed by a former employee, with language urging others aware of Medicare fraud to act within their legal protections. That’s the system admitting, indirectly, that oversight often depends on insiders.
This is how the system quietly shows that monitoring usually relies on those within.
The Gentiva case also involves claims that it charged patients who didn’t qualify for years. Not just isolated mistakes. Instead, they show how profit-driven pressures, such as patient eligibility or treatment duration, often raise red flags. Enforcement tends to uncover issues right there.
DOJ’s yearly False Claims Act data shows healthcare dominates recovery totals, proof that it’s an ongoing focus, not just a temporary issue.
So What Happens to Care Quality?
Hospice quality means more than comfort. When symptoms worsened, did the nurse arrive on time? Was medication handled well by the staff? Did relatives get instruction, breaks, and someone to talk to? Could the patient skip emergency trips thanks to strong hospice care?
OIG sees oversight in simple terms: hospice brings real relief, yet reviews show spotty, occasionally dangerous care tied to built-in motives to cut back on support. Where private equity runs programs, lower spending on hands-on care may come from paying nurses less; this shift could explain how standards dip even as profits climb.
The issue? “Quality” becomes hardest to check exactly when it counts: during a late-night symptom emergency, a sudden flare-up on Saturday, when a relative can’t tell which pill is safe, or when someone just needs more personal care rather than rigid rules.
Can PE Bring Scale Without Sacrificing Dignity?
It might work in practice. Large-scale efforts may streamline training while boosting adherence by improving record keeping and expanding care options where services are lacking. Meanwhile, hospice faces growing pressure due to population changes. An efficient system could help unify a scattered sector.
But the incentive structure makes the optimistic version fragile. In hospice, the easiest path to margin expansion is also the easiest path to moral failure:
- enroll patients earlier
- prioritize the diagnoses and settings that yield longer stays
- reduce nursing intensity and direct patient care spending
- rely on process metrics and documentation to defend decisions
- treat whistleblowers as a legal risk rather than a quality signal
Once Medicare’s daily payments align with private equity’s profit goals, a key issue arises: does the focus shift to patient care or financial gains?
Conclusions:
Hospice ought to be part of care systems where profit plays a minor role. In practice, though, it has become an industry driven by financial motives.
MedPAC points out that long stays account for most costs and also highlights how providers may identify patients at risk of extended use. The OIG cautions that the payment model might encourage cutting back on care, which could be linked to poor outcomes and fraudulent practices identified in reviews. Studies now show that profit-driven hospices spend less on hands-on care, partly because of lower nurse pay. Meanwhile, Justice Department probes keep uncovering similar misconduct: charging for patients who didn’t qualify, typically revealed by insiders coming forward. Here’s the hospice boom summed up: a trusted service reshaped into a profitable model.
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