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Invited Commentary
Health Care Policy and Law
May 3, 2021

Hospice Tax Status and Ownership Matters for Patients and Families

Author Affiliations
  • 1Brookdale Dept of Geriatrics and Palliative Medicine, Icahn School of Medicine at Mount Sinai, New York, New York
JAMA Intern Med. Published online May 3, 2021. doi:10.1001/jamainternmed.2020.6300

The increase in ownership of hospices by private equity (PE) firms and publicly traded companies (PTCs) documented by Braun and colleagues1 follows almost 2 decades of steady growth of for-profit ownership of hospice agencies, from one-third of hospices in 2000 to almost two-thirds by 2017.1 Why is this noteworthy? It is difficult to identify a health care sector more detrimentally affected by the mismatch between profit maximization incentives and quality of care than hospice. Whereas some have argued that tax status (ie, whether a hospice is for profit or nonprofit) is unrelated to hospice quality, an increasing body of evidence suggests otherwise. The requirement for for-profit organizations to distribute net income to shareholders provides strong incentives to generate consistent profits over short time periods. These pressures are further magnified when the owners are PE firms or PTCs who seek to sell acquisitions for considerably more than they paid for them over relatively short time periods (3-5 years) rather than regard them as long-term investments.

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