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- [00:00]
Diana Franchito
Foreign.
- [00:10]
Ray Spadoni
Welcome to Leading Organizations that Matter, a podcast about leadership, organizational culture and how we find meaning and purpose in our work. I'm your host Ray Spadoni and today's topic is the Rise of the For Profit Hospice An Interview with Diana Franchito in episode 45, I spoke to Woody Hungarter, CEO of the Karen Ann Quinlan Hospice, about the important trends taking place in the hospice industry and the fact that it is becoming largely a for profit oriented one certainly came up in the conversation. Listeners of this podcast will know that this is a topic not just for hospices, but for all of healthcare that I've discussed here before. In a nutshell, I'm concerned about this trend and suggest that you should be as well. Check out episode 27, which is entitled Six Reasons for Profit Medicine is bad for your health. Today I discussed this topic with Diana Franchito, President and CEO of Hope Health, which is one of the nation's preeminent hospice organizations. Yes, it's a nonprofit and we're going to take a deep dive on this very issue. Diana leads Hope Health, which is based in Providence, Rhode island and is a strong and leading voice in hospice and palliative care. Hope Health is one of the largest organizations of its type in New England, and there she developed an academic affiliation with the Alpert Medical School of Brown University, making Hope Health the teaching affiliate for hospice and palliative care for Brown. Earlier in her career she held a variety of positions with the Caritas Christie Healthcare System and she received her MBA and undergraduate degrees from Bentley University in Massachusetts. Diana has served on a number of local and national boards, including the Rhode Island Quality Institute, Delta Dental of Rhode Island, CareLink, and perhaps most notably, the National Partnership for Healthcare and Hospice Innovation. She's the incoming chair in fact, so she's no stranger to the issues we will discuss. Let's get into it.
- [02:46]
Diana Franchito
Hello Diana, thank you for being here and for your willingness to be interviewed on my podcast. I'm very much looking forward to our conversation. So to get started, why don't you just tell me a bit about Hope Health, its history, and in particular its mission.
- [03:05]
That's good. Well Ray, thanks so much for having me as a guest on your program and really happy to be here. So Hope Health has the legacy of being the second oldest hospice in the United States. As you may know, the modern day hospice movement started in London, England with Dame Cicely Saunders and shortly thereafter jumped across the pond and the Connecticut hospice was the first hospice in this country and it just went up 95 and we had the privilege of serving as the center second oldest hospice in the country. Hope Health is the major teaching affiliate for hospice and palliative medicine of the Warren Alpert Medical School of Brown University. And that means we have the training responsibilities for all Brown learners in palliative and end of life care. We train medical students, interns, residents and fellows and in fact we are the lead sponsor of the palliative care Fellowship at the medical school. Hope Health is currently caring for over 1500 hospice and palliative care patients and have a very large group of providers and over 600 employees.
- [04:16]
Great. That's fantastic. Thank you. And again, thank you for being here. One of the things that I'm finding and maybe didn't completely anticipate when I started this podcast is that folks are interested in the guests and how they got to where they they are. So I did give listeners a snapshot of your bio, your background before hitting the record button. But Hope Health is a mission driven organization. So do you mind telling us a bit about how you became its leader and then what your path was to your current role?
- [04:49]
Sure. The first half of my career was spent at the former Caritas Christie Healthcare System based in Boston, Mass. It's an acute care. It was an acute care healthcare system, the predecessor organization to the now defunct steward healthcare system. And I was primarily at norwood Hospital in St. Elizabeth's Hospital. And the positions that I held were externally facing largely marketing, communications, public relations, community relations and network development. And then the second half of my career focused on hospice and palliative care and home health, all here at Hope Health, which is headquartered here in Providence, Rhode Island. And that was pure accident coming over to the world of hospice. It wasn't the intent and got a call from a recruiter and said, thanks but no thanks. It's all about death and dying. And then 10 minutes later called the executive recruiter back and the rest is history. And it's been almost 20 years. I'm also a fellow of the American College of Healthcare Executives and very recently became, or I am, the incoming chair of the National Partnership for Healthcare and Hospice Innovation, which is the nonprofit hospice and palliative care member organization based in D.C. that's great.
- [06:11]
I bet you're glad you decided to call that recruiter back.
- [06:16]
Most definitely.
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Awesome. Awesome. Well, recently I interviewed Woody Hungarter, who's the CEO of the Karen Ann Quinlan Hospice and they're based in New Jersey, and we talked about preserving the legacy of long standing nonprofit organizations. And he mentioned that the hospice Industry has changed quite a bit from around 30% for profit to now closer to 80%. Why has that happened?
- [06:44]
Yes, he's right. There has been a significant shift in the percentage of for profit versus nonprofit hospices in the US and before we begin, let me say that I am not at all opposed to making a profit. Whether you are for profit or not for profit, you must make a profit profit because it is going to give you the ability to execute on your mission. And so I want to say right at the outset that having a profit is important. I think how that happened, that switch from majority nonprofit to the majority for profit is the lure of profiteering and excessive profiteering. And by that I mean over 30% profit margins. But we can see it in healthcare. Hospice is not the only sector within healthcare that has been influenced by profit making. You see it within hospitals, various specialties within medicine, whether it's gi, dermatology, orthopedics, primary care, dental care, and even veterinary care for our pets and animals, are now part of the for profit industry. I think when it comes to hospice, there have been several important milestones and distinctions that relate to the hospice reimbursement model that has fostered the entry and the growth of for profit hospice care. So to set context, the hospice reimbursement model is different from many other sectors of healthcare. And hospices receive a daily rate. When a patient receives is on hospice, whether they have received care that day or not. Hospice is responsible for all care related to the patient's terminal illness and the reimbursement. It's a per diem reimbursement model. And just by way of background, most hospices in this country, 90% of the payer, your payer's 90% is really is Medicare. So Medicare is the primary payer for all hospices. And then when hospice came into being, it's called the Medicare Hospice benefit. Back in 1982, it was an actual act of Congress that allowed the Medicare Hospice benefit to be born. And it was born so that Medicare beneficiaries would not have to worry about care or finances related to their healthcare at end of life. And it was a real watershed moment in the way this country views the importance of caring for patients at end of life. However, I will say that it was originally intended to care for patients who are in their home at end of life and giving them the ability to be surrounded by those that they love and have good care in their home so they wouldn't have to go to the hospital. Back when the Medicare Hospice benefit was created. However, in the 1990s, Medicare made a decision that it could expand the provision of hospice care not only to patients in their home, but also to patients who were living in nursing homes. That's why nursing home patients are called residents, because they live in nursing homes. When this new setting of care was expanded for hospice patients, you can see a significant growth of the for profit sector within hospice. And the reason is, from a provider perspective, it's a very efficient model of care. If you have a critical mass of patients in a nursing home, a nurse or a social worker doesn't have to get in their car and drive down the road and have an awful lot of windshield time going to visit their patients. They just walk down the hall and see all of their hospice patients. And so it allows for more efficiency when you care for patients in a nursing home. When that expansion happened, you saw a significant rise in the number of for profit hospices in this country. And so having an efficient model, less labor costs, less drive time costs, and which we will get into a bit, having less costly patients, all made for entrepreneurs and the money making profit motive expand, great.
- [11:30]
So from a macroeconomics perspective, it sounds as though it's a function of the payment model and the significant market increase based on what happened in the 90s. And you put those two together and, and here we are though. That said, I'm sure there are folks who are listening to this podcast and I've certainly heard this argument throughout my career, that for profit nonprofit, it's a tax designation. And that, you know, in terms of the implications of that, well, you know, the work, the quality of the care that's provided, the focus of the organizations and even their mission can be quite similar and maybe even identical. Do you agree with that?
- [12:15]
Not at all. And the reason is tax status is a tax designation. And your tax status allows you to channel your profits in a variety of ways. So if you are a for profit, your profits go to go to owners and corporations mostly. And what we're talking about is private equity firms and publicly traded corporations, companies. The orientation of that for profit status is toward profit maximization. The priority is to generate short term and above market returns for your investors. There has been recent substantive literature that also talks about quality of care across for profit and not for profit hospices. And hopefully we can get into that in a little bit. And then when you're on the nonprofit tax status, I view it as the nonprofit hospice organizations are really, they're assets of the community and it means that the organization belongs to the community. And as such, the profits are not distributed back to, back to owners, but back into the community and services for the community or if they're, they're returned back into the organization. It's to strengthen its balance sheet. So I think the visceral reaction that people may have is that when a family member is on hospice, that is one of the most vulnerable times in the life of a family. Their loved one is dying. And so there is the profiteering and exploitation of the most vulnerable time in the life of a family that I think raises concerns in the health care sector at large.
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No question. Well, profiteering during a vulnerable time is. That's saying a lot in terms of this shift and how it's impacting the industry. John Oliver did a segment not too long ago, I'm going to put a link to it in the show notes. But it was about the hospice industry and to say it was critical is an understatement for sure. He discussed aggressive tactics, withholding of care, fraudulent activities of the bad apples that are out there. So it's one thing to profite here, but it's another thing to really take advantage of people and to do so with these aggressive tactics that are quite inappropriate. So thinking about the John Oliver segment, I suspect you've seen it, you know, was that just, you know, typical sort of sensationalization, you know, for laughs, you know, or is this happening?
- [15:14]
Sadly, it's truly happening and we can get to the quality piece related to the difference between non profit and for profit. But let me address the John Oliver piece. Yes, he is hysterical. It's funny, he always brings a great laugh. But at the same time it was searing to the hospice industry. And his comments about for profit hospice were absolutely right on. Let me give you a few other examples of how the for profit hospice industry has manipulated the reimbursement system. So in 2022, ProPublica published an article on how hospice. The title of the article was How Hospice Became a For Profit Hustle. And with that they went on in great detail about the aggressiveness with which the for profit hospice industry was in my words, trolling for patients very aggressively looking for what was hopeful hospice patients. And some of the examples in the article and that we've learned were they would have marketing representatives collect church bulletins and look at the prayer lists of the names of individuals that were sick and then they would go and try and find those patients to enroll them on. Hospice representatives canvassed birthday parties at housing projects where there's a high propensity of older Adults, they would follow the Meals on Wheels vans and look for recipients of who's receiving Meals on Wheels. Some very, you know, deliberate activities took place. There are parts of this country where there is such a proliferation of hospices for profit hospices with, again, some very unsavory practices. And the parts of this country that really are feeling this, most significantly, California, Texas, Arizona and Nevada. And for example, in Van Nuys, California, at the same address, there were 93 hospices listed at the same address, all for profit. Some of the other addresses were as an auto body shop, a banquet company, a burrito restaurant. In Phoenix, there were 29 Medicare certified hospices at one address, but no hospices were listed in the building directory. So there are some very, you know, inappropriate, very inappropriate practices here. I think the thing that John Oliver got right on was this issue of live discharges. And so by live discharges, I mean that, you know, when a patient comes on to hospice, you expect them that at some point they will die, whether it's weeks or months, potentially years, but they will pass away on hospice. And what John Oliver keyed in on, there are some hospices who have a 100% live discharge rate, meaning those patients will be discharged from hospice alive. So what that means is they have such a high percentage of live discharges that were those patients originally even eligible for hospice. And in the meantime, there's a reimbursement model that's supporting them. And so what, what we often see as well is higher rates of hospitalizations because the hospices will live discharge their patients just in time before a regulatory review comes on. And they will live discharge them. They will discharge them to hospitals so that they don't have to be under the scrutiny of the regulatory environment. So it's really sad what happens to patients when this type of behavior takes place.
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Yeah, I'm borderline speechless. I mean, that's pretty grim. I think using prayer lists for lead generation sounds particularly devious. But. Yeah, I'm just going to pause and think about that for a minute. But given that we are targeted towards the leaders, and that could be executives, it could be board members, it can be supporters of the nonprofits, and a fair number of students. Listen to this as well. For those who are on that side of it, the, the decreasing portion of the industry, what advice do you have for them?
- [20:10]
Well, let me go back first to talk about what kind of an impact this has on patients and families, because leaders and board members and others need to understand how the for profit, not for profit hospice industry impacts patients and families. So as an example, you know, some patients don't even know they're on hospice and for profit hospice. And so it's a lack of communication, even a lack of communication about their, that they are even enrolled in a hospice. And I think there's an awful lot of patient selection that takes place. We had talked earlier about, you know, for profits having a very high percentage of care in nursing homes. You know, obviously in nursing homes there are many patients that are dementia patients. It has been proven that dementia patients are less costly than other types of diagnoses in hospice. So for example, often nonprofit hospices end up caring for more oncology patients because oncology patients are much more expensive than dementia patients to care for on hospice. So it's really important before we get into what should leaders and board members do to also understand what's the difference between quality of care as well. Is there a difference between quality scores in terms of hospice and palliative care? And there absolutely is. And there have been two research articles of late that have absolutely shined a light on the difference. So in jama, the Journal of the American Medical association, In November of 2024, all across the CMS measures, the CAHPS measures, private equity firms and and publicly traded companies demonstrated the lowest performance and not for profit hospices, the highest performance in terms of quality. And then right before that in the American Journal of Hospice and Palliative Medicine, there was a study that reviewed the top 50 largest hospices in this country. And the conclusion was caregivers and employees had better experiences with nonprofit than for profit hospices. So the level of anger and frustration expressed toward the for profit industry has hit kind of an all time high. And then I would also say for board members and leaders to be aware that we are required, all hospices are required to provide grief support. There are vast differences in the level of grief support from for profit versus nonprofit hospices. And then I will also share before we talk about what leaders should do is kind of my personal pet peeve is the in lieu of flowers donations, so many families are very grateful for the care that they received from their hospice team. And yet they don't know that they are giving to a for profit organization, either private equity or a publicly traded company who may have established a kind of educational foundation that's a nonprofit educational foundation, but they should be doing, educating their staff anyway. And so I would just, that is I think an area that needs further exploration. So you asked about what leaders should do. I think it's really important that leaders and board members of nonprofit hospices communicate about their nonprofit status. In essence, it's people over profits. And it's again, this organization, like many other nonprofits, not against making a profit. It's about taking care of the community that they serve in a way that's deep and meaningful.
- [24:17]
Okay, great. Well, I'm glad you brought it to the patient level. And you know, I often talk here about mission driven organizations. And mission driven organizations are pretty, pretty well focused on the patients, their families, communities they serve. And as you mentioned earlier, when a loved one is entering into hospice care, that's a big moment. It can be very emotionally charged and it can be confusing. And so deciding which hospice to choose can be a difficult one. And you know, sometimes speaking from some personal experience here, especially if you have a loved one who's in a nursing home, you may just be told, this is someone who should go into a hospice, and here's what the next steps are. And there is no point of choice or no obvious point of choice. So thinking about those who are in this moment of time or confronting this, what advice do you have for them who find themselves in this situation and who need to advocate and to choose wisely?
- [25:33]
Happy to talk about that. Consumer Reports many, many years ago released a. It was a one page article on what to look for in a hospice. And you know, that piece is still very relevant today. And they basically had six tips. Number one, choose a nonprofit hospice with 20 or 20 years or more experience. Number two, make sure that their providers, their doctors and nurse practitioners are board certified and that many of their nurses are certified by the Hospice and Palliative Nursing association and that they are available 24 hours per day. The third suggestion was that make sure your hospice also has a palliative care consultation arm, because there may be some folks who may not be ready for hospice, or they may not be clinically eligible for hospice, but that the palliative care arm of that organization can start to, to care for them. The fourth is make sure that they have an inpatient unit where patients can go if the symptoms can't be managed at home. A hospice inpatient unit I often describe as the ICU of hospice. And it's so important to have access to a good, strong hospice inpatient unit. The fifth, I would say, is the ability to provide care in every setting so that as your loved one transitions from home to assist assisted living to a nursing home or to a hospital or an inpatient center, that they have the ability to follow that patient. And finally, you would think it'd be obvious. But it really is important to make sure that the hospice is Medicare certified because as many of your listeners who are familiar with Medicare and being Medicare certified, there are certainly rules of the road that a hospice has to follow along with a very robust grief counseling and grief support team. So that I think is still a very relevant guide for families who may have to start searching for a hospice.
- [27:38]
Okay, that's great advice. So the status of, you know, whether they're not for profit or whether they have a palliative care program, good old fashioned web searches are like, how does a. How, how does your average person out there again in a difficult moment, probably very emotionally charged. How do they find out this information?
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I would do several things. One is Medicare always has its care compare website where they compare hospitals, nursing homes, whatever provider you are looking for, and hospice is part of that. And they rank them from one to five stars. And that is an important way. It also lets the consumer know that this company is a for profit company or a not for profit company. The other piece is word of mouth. That's important. And you can also do some Google reviews, look at, you know, Glassdoor and see what the employees are saying as well. So I think it's getting a holistic picture of the organization. As social media becomes more, more and more prevalent, people are not shy about sharing what, what they have felt about the organization that they had an experience with.
- [29:02]
That's great. So this information is out there. You, you know, it may sound strange to apply this term to this particular decision, but pays to be a good shopper, pays to do a bit of homework because you can learn a lot. And I think as this conversation has pointed out, not all hospices are the same. That is certainly for sure. So, you know, we've talked a little bit about the history and you know, going back to London and you know, things that have happened to create the benefit and then to expand the benefit. This is all what has led us to this moment and certainly the major shift from non to for profit. So now a little bit of crystal balling here, but as you look up ahead into the future, care to offer any predictions about where this is all headed?
- [30:03]
Absolutely. So hospice will continue to grow. And I would say that there are several factors leading into that. One is purely the baby boomer generation. You know, the statistic in the United States is that every day for the next 15 years or so, 10,000 people are turning 65 every day. So not that, not that one is needing hospice the minute you turn 65. But you're getting into an age category that at some point you will need access to hospice services. Secondly, I think I know for sure that hospice is being much more socialized and people are much more acceptance of it. You know, I think when I first entered the hospice field, when people asked what I did and I said, oh, I work for, you know, hospice. Oh, great, and bolt for the door. Now it's, oh, my goodness, what a wonderful service. Let me tell you about my experience. So as more families have experience about hospice, they are becoming more familiar and really understanding the wonderful benefit that hospice provides not only to the patient but, but the family unit, which is really, really important. And there are some other factors as well. People are living longer, but it means that people are going to need access to hospice services. I think there will be growth. So my recommendation is be vigilant and understand that if it's a for profit, profit is the motive, particularly with private equity and publicly traded companies and nonprofit. The motive is patients and families in the community that they serve. And it's really hard just to serve. You know, as the old saying goes, two masters and it's either the pocketbook or the patient.
- [31:56]
Well, you know, it sounds as though while it may not have been a great conversation starter at cocktail parties, times change and there's been a, you know, it's been demystified a bit and, you know, there's some sort of stigma associated with being in this. And now I think people have a better understanding and appreciation for the great help that hospice can provide to individuals and to those around them who care about them during this, during this process. So super helpful. Thank you so much, Diana. I really appreciate you being on the podcast. Lots of information here to think about, most particularly some of those practices of the for profits. That's enough to make you pause and to, I think, take notice of the distinctions and to take the time to do a bit of research and to understand this better and to think about this maybe even in advance of when it's most intense and you're in the midst of it. If people are interested in learning more about you and what you do in the organization where you work, how do we direct folks to you?
- [33:07]
They can go to our website, hopehealthcove.org and they can find a lot of information there. If they're interested in the nonprofit hospice community, I would suggest that they go to. NPHI.org stands for the National Partnership for Hospice and healthcare innovation. NPHI.org and yeah, it was a pleasure to be here with you. Ray and glad to have this opportunity to chat about something so important.
- [33:34]
Fantastic. Thanks so much.
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Ray Spadoni
Thanks for listening. I hope you'll consider leaving a five star review on Apple Podcasts or your platform of choice that will help others find us here. My mission is to help empower organizations that matter by supporting those who lead them. Feel free to learn more about me and my work atredsail advisors.com.