3 Key Gauges of Hospice Business Performance

Today’s health care environment is flooded with data, but hospice leaders should keep three types of indicators in mind as they assess their performance.

Numbers like costs-per-day, payer-specific margins, and measures of community support can paint a picture of an organization’s position, executives told Hospice News. They should also be prepared for unexpected costs, such as those associated with regulatory audits or wage increases.

Staying on top of spending

Rising expenses caused widespread margin compression among hospices during 2022, particularly those associated with wages and salaries, recruitment and retention, fuel and general inflation.

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“We’re on a fixed, per-day price. For that day, we have to monitor costs because it has to include everything. Just think about it all the pharmacy needs, the nursing needs, the clergy needs, the supply needs, the equipment needs. When a person first comes to us, we usually provide a hospital bed, oxygen, medications and then the staff. So it’s just a lot of things to take into consideration.”

— Debbie Johnston, founder, Ask Nurse Debbie and Serenity First Hospice, author of The Hospice Handbook

“One of the numbers that are of concern is the indirect costs — the complexity of running a company and all the regulatory things that have been added one little drop at a time. [Medicare Administrative Contractor (MAC)] audits and those sorts of things add overhead expenses, and those indirect costs are going to be something that we all will have to deal with. Because as more [Accountable Care Organizations (ACOs)] Medicare shared-savings health plans negotiate with hospices, they’re going to want a discount.”

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— Susan Ponder-Stansel, CEO, Alivia Care

Examining per-payer margins

The Medicare benefit covers the vast majority of hospice care in the United States, but in coming years providers find themselves working with a more diverse mix of payers. This may include Medicare Advantage plans, ACOs and other entities.

Hospices that offer other services like home health or palliative care, among others, must also consider how payer mix among those business lines will impact their organization’s overall performance and sustainability.

“As you prepare for more than just Medicare, you need to know what your margins are per-payer, including Medicare Advantage. Utilization-per-payer as well is something that we’re really exploring with our technology partners. How can we more effectively, in real-time, be able to identify resource utilization based on the payer?”

— Kenneth Albert, president and CEO, Androscoggin Home Care + Hospice

“We look at the payer mix. Medicare is the most reliable payer [for hospice]. And certainly, just as in home health, you want to make sure that you have enough Medicare patients to help you with the unfunded services and all the other stuff that goes with it.”

— Ponder-Stansel

Gauging community support

A community’s support for a hospice can be measured in terms of philanthropic donations, particularly among nonprofits. Other key indicators include volunteer recruitment rates and market share, as well as patient and family feedback on a provider’s services.

“We actually look at the community support — are we attracting community support? And for a nonprofit, that is not only with your donors but your volunteers. We look at how are we demonstrating leadership in our market and whether we are the preferred provider or have the largest market share.”

— Phillip Ward, CEO, Community Hospice & Palliative Care

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