Humana Is About to Become the Hospice Industry’s Biggest Player, Report Says

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Nothing says big profit margins like a massive health insurer buying up two large hospice chains to turn the business of dying with dignity into a moneymaking venture.

Following a strategy announced last year to seek profits from the aging, elderly, and chronically ill, insurer Humana has teamed up with two investment firms to acquire two hospice chains that, according to The New York Times, “would create the industry’s biggest operator with hundreds of locations in dozens of states.”


According to the report:

In short, Humana, which provides Medicare Advantage plans to about 3 and a half million people for their medical needs, also wants to dominate care for those at the end stages of life, whether it provides aid in a home setting or in a facility.

But a spate of government lawsuits charging negligence and malfeasance against some hospice providers underscores the risks of profiting from the dying: Companies have been accused of signing up people who are not terminally ill, denying visits from a nurse or even refusing a needed trip to the hospital.


With the help of private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe, Humana plans to acquire hospice provider Kindred Healthcare for approximately $4.1 billion in cash, according to an announcement by Kindred last December. Humana also wants the privately held Curo Health Services, which operates 245 locations in 22 states. The two equity firms and Humana plan to buy Curo for $1.4 billion, and Humana will have a 40 percent minority interest, according to a press release last April.

One of the dangers of this risky venture is when “the focus is more on profits than on quality,” health services researcher Joan Teno told the Times. Both Curo and Kindred have been in the middle of lawsuits brought by the federal government for overbilling Medicare—one of the primary drivers of hospice care growth in the U.S.—and giving doctors and nurses kickbacks in exchange for patient referrals, among other charges, the report said.


It added:

Kindred, whose hospice business Humana hopes to buy, was penalized $3 million in 2016 by federal officials and closed some facilities after the government said it could not ensure that it was not overbilling Medicare. The hospice outfit now owned by Kindred had paid $25 million in penalties in 2012 to settle accusations of improper billing.

Curo, the other hospice business, has also had its share of run-ins with federal officials. Last year, it paid $12 million to settle accusations that it handed out kickbacks to reward doctors for sending patients to its hospices.


One obvious incentive for Humana to make this move is that it would much rather have its Medicare patients in hospice care than in more costly end-of-life treatment plans. Here’s why:

After giving consent, dying patients can be shifted to the hospice program, and while an insurer would lose out on money it received from Medicare to cover that person, a company like Humana could count on the revenue generated by its hospice business. “Your other pocket is filled by Medicare,” [Capital Alpha Partners analyst Rob Smith] said.


Given all of this, a statement Humana CEO Bruce Broussard made at a stockholder meeting last year makes a lot more sense. “As you look at the societal problem around chronic conditions and our ability to affect those chronic conditions, it presents a great opportunity for us as an organization,” Broussard said.

Read the entire report.