Study finds private equity hospices earn more while spending less on patient care.
A new analysis of hospice operations in the United States shows that private equity providers are earning the highest profits while spending the least on direct patient care. The findings, published in Health Affairs, raise fresh questions about how ownership structures affect the quality of care given to dying patients and their families.
The study looked at 2,989 freestanding hospices using 2022 Medicare cost reports. These were divided into four categories: private equity–owned, publicly traded company–owned, other for-profit, and not-for-profit. Nearly 18% were owned by private equity firms, about 11% by publicly traded companies, 54% by other for-profit organizations, and roughly 17% were not-for-profit. What stood out most was how ownership type seemed to influence spending patterns and profit margins.
Private equity–owned hospices showed the lowest spending on direct patient care and administrative services that were not tied to salaries. At the same time, they reported the highest profits compared to other ownership groups. Researcher Alex Soltoff noted that not-for-profit hospices spend about 20% more on direct patient care services than their for-profit counterparts, particularly in nursing salaries. That difference suggests more robust staffing and higher investment in the people directly caring for patients in nonprofit settings.
The study linked lower spending on patient care with higher use of hospital services. Hospices that spent less tended to see more hospital admissions, emergency room visits, and stays in intensive care units. Those trends suggest that cutting back on direct care spending can lead to more aggressive or costly care near the end of life, the opposite of hospice’s original intent—to provide comfort and dignity outside of hospital walls.
Another striking finding was the role of nursing facility room and board. Private equity–owned hospices reported greater expenses and revenue in this category than any other ownership type. That pattern reflects a profit strategy focused on enrolling patients who already reside in nursing homes, where care tends to be more stable and predictable. Seeing several patients in one facility allows staff to reduce travel time and costs, creating operational efficiency that also increases profit margins.
These room and board revenues are typically tied to Medicaid reimbursements, since Medicare does not cover the cost of room and board for hospice patients. Medicaid funding applies to those who qualify for both Medicare and Medicaid, a group often described as “dually eligible.”
Since hospice care became a Medicare benefit in 1982, the field has expanded rapidly. Today, more than 1.7 million people receive hospice care each year in the United States, amounting to roughly $23.7 billion in annual Medicare spending. Over time, the ownership mix has shifted heavily toward for-profit entities. At the start of the century, they represented about 30% of the hospice market. By 2022, they accounted for more than three-quarters of all providers nationwide.
Prior research has repeatedly found that for-profit ownership, including private equity involvement, is tied to lower quality scores, more patient complaints, higher rates of live discharges, and greater likelihood of hospitalization. In essence, while the financial performance of these organizations has strengthened, the care outcomes appear to have weakened.
Industry analysts and policymakers are paying attention to what these ownership patterns mean for end-of-life care. Hospice was created to bring compassionate support to terminally ill patients outside of hospital settings, focusing on comfort rather than cure. The steady entry of private investors and large for-profit firms has introduced new business incentives that sometimes conflict with that mission.
As the sector continues to grow and shift, researchers suggest that transparency and oversight will be key to maintaining standards of care. Families often choose hospice during a time of crisis, and few are in a position to compare providers based on ownership structure or financial performance. The current data offer a window into how profit-driven models can shape the experience of dying in America—raising questions about whether higher profits come at the expense of the care patients receive.
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Study: PE-owned hospices have highest profits, lowest spending on direct patient care
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