Hospice Inpatient Services Provision, Utilization, and Financial Performance

Abstract

Background: Hospice performance is an overlooked area in the health care field due to the nature of hospice care and the infrequent hospice quality inspection. Purpose: The objective of this study is to explain differences in the financial performance of hospices with regard to hospice inpatient services provision when considering the average length of stay (LOS) in the relationship. Methodology/Approach: A longitudinal secondary data set (2009 to 2013) was merged from three sources: (a) Hospice Cost Reports from the Centers for Medicare and Medicaid Services (CMS), (b) the Provider of Services (POS) files, and (c) the Area Health Resources Files (AHRF). The dependent variable in this study was hospice financial performance measured by total margin (TM) and return on assets (ROA). The independent variable was hospice inpatient services’ offering. Mixed effects regression models were used in the multivariate regression analyses. The mediation effect of hospice average LOS in the relationship between hospice inpatient services’ provision and two financial performance measures was also tested. Results: The presence of hospice inpatient services was negatively related to average LOS (ß =-0.050; p<0.01), total margin (TM) (ß =-0.028; p<0.01), and return on assets (ROA) (ß =-0.059; p<0.01). However, average LOS was positively associated with TM (ß =0.077; p<0.01) and ROA (ß =0.177; p<0.01). The relationship between hospice inpatient services’ offering and financial performance was partially mediated by hospice average LOS. Conclusion: Hospice inpatient services provision and average LOS were associated with financial performance. Practice Implications: Offering the inpatient services to patients decreased average LOS and lowered the hospices’ overall profitability. Hospice agencies need to seek strategies to maintain their financial sustainability but not to compromise their quality of services.