Hospice: An Industry overview and market analysis for Roanoke, Virginia

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RUNNING HEAD: HOSPICE: AN INDUSTRY OVERVIEW

Hospice: An Industry overview and market analysis for

Roanoke, Virginia

Nia S. Llenas, B.S.

University of Maryland University College



Hospice: An Industry overview

Abstract

Llenas, N. (2008). Hospice: An Industry overview and market analysisfor Roanoke, Virginia. University of Maryland, University College.

The demand for hospice care in America is projected to doubleby 2018 and communities must be prepared to care for patientswith terminal illness. This paper addresses the importance andfuture of hospice in Roanoke, Virginia and the issues to beaddressed concerning reaching the underserved communities,future opportunities and competing with area hospices.

Research analysis details the lack of African-Americanacceptance of hospice services, relative quality perceived byfamily and patients of hospice, as well as, cost-efficiency of hospice over inpatient care. The data reveals that patientpopulations are similar in Roanoke to the national demographic;and outlying counties are projected to grow up to 20% withsubstantial older populations. These findings suggest that theRoanoke hospice community has a solid system which should bereplicated in the at least two outlying counties, with specialconsideration for diversifying Roanoke’s patient population andrecruiting younger talent in the interim.

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Introduction

Hospice care provides patients at the end of life with supportive

and palliative care while providing families with comfort and

preparation for a family member’s death. This branch of healthcare

began in America in the early 1970’s at Connecticut Hospice as a

privately funded sector, quite independent of modern medicine

(Hospice Association of America, 2008). By 1983, hospice was granted

public reimbursement from Medicaid Part A, known as Medicare

Hospice Benefit (MHB), and now provides comprehensive physical,

emotional and spiritual care, in a cost-effective manner, for patients

with terminal illness (Taylor, 2007).

Patients

Hospice patients suffer from a wide range of diagnoses, the most

memorable being cancer or HIV, but in contrast, today’s hospice

patient is more likely to carry the burden of chronic illnesses such as

congestive heart failure (CHF) or chronic obstructive pulmonary

disease (COPD). In 1998, The Centers for Medicare and Medicaid

Services (CMS) included six cancerous pathologies in the top ten

hospice diagnostic codes; in 2005, only three were considered. Cancer

diagnoses fell 2.8% between 2006 and 2007 (NHPCO, 2008),

complimented by increases in Alzheimer’s, dementia and failure to

thrive (FTT) (CMS).

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Patient demographics are generally consistent each year. The

National Hospice and Palliative Care Organization (NHPCO) (2008),

found that in 2007, out of 1.4 million patients, 94.9% identified

themselves of non-Hispanic or Latino ethnicity, while 81.3% considered

their race to be Caucasian, 7.8% multiracial and 9% African-American.

Also, over 66% of patients were older than 75 in 2007.

Providers

Aforementioned, is the principle that hospice is a comprehensive

service, not fragmented much like home health or nursing home care.

Hospice benefits include:

• Nursing care

• Medical social worker

services

• Physician services

• Counseling

• Inpatient care, respite

care, palliative

• Home health and

homemaker services

• Durable medical

supplies

• Physical and

occupational therapy

• Speech-language

pathology

• Bereavement services

for families (continuing

for 13 months after

death)

(Hospice Association of

America, 2008, p. 1)

Hospice has grown significantly since the 1970’s and as of 2007;

there were an estimated 4700 providers in operation, up from 3300 in

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2003. A typical agency, in 2007, served between 151 to 500

admissions per year and over 58% of hospices are free-standing or

independent of a larger agency/hospital, 20.8% are hospital based and

19.7% are home health based, the remainder are housed in nursing

homes. Each of these organizations falls into one of three tax

designations. In 2007, 48.6% filed as non-profit, 47.1% as for profit

and 4.3% were government owned (NHPCO, 2008).

Financing/ costs

In 2005, 70.8% of MHB were directed towards freestanding

hospices (HAA, 2008) and total expenditures were $8.15 billion (CMS,).

In 2007, MHB spending topped $10 million and Medpac (2008, p 186)

projects that MHB spending will reach $21 million by 2018, showing

room for growth in services and patient admissions in the future.

Also, hospice is considered the most efficient form of healthcare,

especially when substituted for inpatient care during the last stages of

life. Since hospice coverage is presumably available for 180 days,

maximal savings can be attained if the referral is timely. The cost-

effectiveness varies by diagnosis, but in general saves Medicare $2300

per hospice patient death, with cancer patients admitted to hospice

garner the most savings possible at $7000 if admitted 58 to 103 days

prior to death (Taylor et al, 2007). Consequently, the decrease in

cancer admissions has been accompanied by the propensity to exceed

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the MHB cap (Medpac, 2008, p. 191) and increase length of stay

(Mathews & Gaumer, 2008, p.8)

Current Issues

The hospice industry faces many challenges today. Barriers to

access, perceived quality of care, lack of patient and staff diversity,

staff turnover and the stigma associated with death and dying are a

few of the issues that hospice organizations must overcome.

Minority access

One of the starkest disparities in hospice care is the lack of

minority patients and staff. One would expect a higher saturation of

African-American patients than Hispanic or Asian, but unfortunately,

ratios are not reflective of Cencus (2006) estimates that blacks

comprise 12% of the population. Cort (2004) attributes this problem to

long-held “cultural mistrust” of the healthcare system, disenfranchising

organizations and an overwhelmingly Caucasian workforce. Cultural

mistrust “is taken to mean the fear that African Americans, because of

their ethnicity, will receive experimental or inferior care at the hands of

whites”. Gibson (2001), also noted that the African-Americans’ and

poor Americans’ sentiment towards both palliative care and hospice, is

a product of the continual barriers they have endured to proper

preventative care and pain management.

When African-Americans are admitted to hospice, the prevailing

diagnosis is cancer. As mentioned before, overall admissions of cancer

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patients have steadily declined, but reports from the largest hospice

provider in the US between 1999 and 2003, show a significant increase

in African-American cancer patients (Johnson, 2007). Indeed, this

matches the increase of 28% in cancer deaths from 1990 to 2005,

compared to a 1.6 % increase in deaths caused by heart disease, the

number one killer of African-Americans (CDC, 2007).

Quality

Many agencies have joined together to assess the quality of care

in hospice. The National Association o f Home Health and Hospice

developed a patient and family satisfaction survey, while CMS has

contracted with the Carolinas Center for Medical Excellence to form the

PEACE project for hospice quality. The PEACE project resulted in a “list

of scientific instruments necessary for proper care, quality measures to

improve quality and organizational tools for quality improvement and

care assessment” (Schneck, 2008).

Overall, patients and families, tend to be quite happy with their

hospice experiences. Staff turnover is a concern and is similar to staff

experience in home health and nursing homes. Staff is generally

happy with their role, characterizing it as rewarding, but feel that

communication between teams and educational development should

be emphasized (Haitt, et al., 2007).

Thoughts/Solutions

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Hospice care is a unique specialty and a departure from curative

medicine. It requires a shift in thinking and learned behavior on the

part of staff, patients, families and communities they serve. Of course,

this requirement of change is one of the most significant deterrents of

future acceptance, but despite the challenges, hospice capacity is

projected to double in the next ten years.

Personally, I find hospice to be the best possible solution for

patients and families facing terminal illness and the most-efficient for

society. “The Medicare program appears to have a rare situation

whereby something that improves quality of life also appears to reduce

costs” (Taylor, et al., 2007, p. 1475). That said, there are still

problems that persist as with any industry.

First, the lack of minority patients is troublesome. The industry

has failed to reach out to the very communities that will drive their

business in 2020 and beyond. The barriers and resistance can be

broken with cultural competence training, proper marketing to

churches and community organizations, reaching out to minority

students for volunteering and creating a community presence. Cort

(2004) also suggests that staff ethnic percentages match that of the

target community.

Secondly, staff turnover must be addressed. Hiatt (2007) found

that staff members cite lack of knowledge, stigma, underfunded care

services, communication and barriers to effective care as the

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weaknesses of the hospice industry. This can be addressed through

mentoring, continuing education opportunities, quality assessments

and the formation of interdisciplinary care teams.

Conclusion

Hospice has, for nearly 40 years, provided death with dignity for

the many terminally ill patients in the United States. It has progressed

from a privately funded organization with few options to a

comprehensive Medicare benefit that is both cost-effective and

supportive for the families involved.

The future of hospice depends on its ability to reach the masses,

the minorities, the poor and the disenfranchised and it is a challenge

that is being addressed by organizations such as the Harlem Palliative

Care Network and Hospice by the Sea’s “Abriendo Puertas” program.

Market Analysis

The hospice industry in Roanoke mirrors national trends for

growth and demand. There are 7 hospice providers currently in the

area, two of whom claim non-profit status; one is government-run and

the remainder claim for-profit status. Until recently there were only 6

providers, the last to establish an office here is the national provider

Southern Care.

Each of these providers offers standard hospice services (please

see the list on pg 1-2), as well as, coverage as far as Montgomery and

Franklin counties. Also, there are 8 major non-governmental medical

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centers within a 50 mile radius of Roanoke, 18 nursing homes, 12

home health agencies (CMS, 2008) and patient homes are largely

within the Roanoke City and Roanoke County lines with few patients

living beyond Bedford and Botetourt.

Demographics

Roanoke County:Population………………………..90420Aged 45+………………………….45.7%Aged 60+…………………………..22.2%

Caucasian………………………….91.3%African-American………………5.0%

Roanoke City:Population………………………..92600Aged 45+…………………………..42.2%Aged 60+…………………………..22.3%

Caucasian………………………….68.0%African-American………………25.7%

Census Bureau (2007)

Roanoke hospice current patient profile

Age:60-70 yearsold…………………….12.8%

70-80 yearsold……………………..20.4%80-90 years old………………………33.6%90 + years old…………………………21.4%

Race:Caucasian……………………………….90.8%African-American……………………5.9%

Other………………………………………3.22%

Religion (as defined by thepatient):Christian…………………………………..9.9%Baptist………………………………………30.2%

Methodist…………………………………..5.9%Catholic…………………………………

……7.4%Nopreference……………………………..20.6%

Gender:Female………………………………………...67.5%Male…………………………………………….32.5%

Diagnosis:

Neoplasm……………………………………31.5%Mentaldisorder……………………………14.3%Respiratory…………………………………..7.2%Nervoussystem…………………………….6.5%

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Circulatory/ blood………………………28.5%Debility/FTT…………………………………5.9%

Payer:

Medicare…………………………………….86.6%

Commercial…………………………………8.8%Medicaid……………………………………….3.4%Charity………………………………………….1.2%

Data courtesy of email from Alyson Lawson and Sue Moore-Ranson, (2008)

Industry in Roanoke:

Currently, close to 32% of hospice referrals in Roanoke are generated

by nursing homes (Lawson & Ranson, 2008). Roanoke and its

surrounding counties are rich in nursing homes and the estimated bed

total is 2536 (CMS, 2007). The entry of another national for-profit

hospice into the market feels like over saturation, but it remains to be

seen what the impact of Southern Care will be as they have yet to

begin full service in the area. Undoubtedly, they will target the nursing

home and hospital referrals as well as the physician base here.

No company has yet to break into the aging African-American

community. Reports from Hospice A, detail the efforts made to engage

ministers and church boards or send chaplains as an ambassador to

community events. (Lawson, personal interview, 2008) The efforts are

futile and many feel that addressing this population is a profitable

marketing strategy.

Target Communities for future hospice expansion

According to the Virginia State Data Center, the population in Roanoke

will shift significantly by 2020 through 2030, from Roanoke City to

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Roanoke, Botetourt, Bedford and Franklin Counties. This may signal an

opportunity to establish a community presence in the County center

and outlying areas.

Bedford County population will increase 19% between 2010and 2030

Currently, persons ages 45 and over comprise 40.3% of thetotal

Franklin County population will increase 16.07% between 2010and 2030

Currently, persons aged 45 and over comprise 41.5% of the total

(Census Bureau, 2007) (Virginia Employment Commission, 2007)

Marketing

1. Schedule meetings with the local nursing homes and home

health agency executives to probe their referral process and

case mix.

2. Meet with the county Chamber of Commerce to discuss working

with them to advertise and meet other local business owners.

3. Engage in community outreach, school events, elderly

associations, church events

4. Advertise in the local newsletters, nursing home and home

health resident and family pages, recreational facilities, online

and on local radio.

Competition

1. Representatives from the two oldest non-profit agencies in

Roanoke agree that Roanoke has reached its limit.

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2. Carilion Hospice may siphon some patients off of their hospital

Franklin Memorial (37-bed), but they employ full disclosure to

patients and do allow them to choose which hospice they

would like

3. Hospice of Franklin County is 4 years old and depends on a

variety of sources and has a good reputation as a non-profit.

4. Carilion Hospice also serves Bedford Memorial hospital and

houses Oakwood Manor (111-bed) long-term care facility, but

Carilion manages Bedford and full disclosure applies.

5. Amedysis, Home Recovery and Gentiva are the largest and

most visible home health agencies in both Bedford and

Franklin counties with no strict allegiances to any hospital but

they do operate their own home-health agencies.

Conclusion

Roanoke is not an option at this time for hospice expansion. While it is

the center of Southwest Virginia, population shift are trending towards

Bedford and Franklin counties. Currently, both counties have reached

their saturation points for end-of life care and Carillon’s full-disclosure

is an opening for a new agency to attract patients from a hospital

setting in the next 3-10 years as populations grow. Payer mix should

prove profitable, the high senior population suggests Medicare or

private pay and median incomes are quite similar to that of Roanoke

and an early impact is needed.

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Hospice: An Industry overview and market analysis for Roanoke, Virginia

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