Open access can provide financial rewards for enterprising organizations
Experts in open access offer tips for success
(Editor’s note: Hospice Management Advisor presents in this issue the second of a two-part series on how increasing numbers of hospices are adopting an open-access policy, in which all eligible hospice patients are welcomed, regardless of treatment status and ability to pay. The March issue of HMA featured an article on how the trend of open-access hospice has grown and what open access looks like in practice. This month, pioneers of open access tell how they’ve made open-access policies work financially.)
Skeptics may view the open-access hospice philosophy as certain death for hospices, but there are a number of examples across the country of not-for-profit hospices that have weathered the transitional days and turned open access into a resounding success. And if that isn’t enough to convince the doubters, there is one other example to consider: The for-profit hospice chain VistaCare of Scottsdale, AZ, has an open-access philosophy.
VistaCare initially embraced an open-access policy for philosophical reasons, says Roseanne Berry, MS, RN, co-founder of VistaCare and chief compliance officer. "We knew there was a great need to provide hospice care to more patients for a longer period of time than what traditionally is done," Berry says. "So how do you do the economies of scale and negotiate the right contracts?"
Acknowledging that some open-access patients will cost considerably more than the typical hospice patient, Berry says the key was to attract enough patients to spread out the risk and cost. "Being a for-profit company allowed us the ability to grow into it," she says. "A nonprofit might have to raise money to cover costs, but we were able to grow into it and go into new communities that didn’t have hospice or open-access services and not rely on the community to raise the funds."
Although having an open-access philosophy feels like a risk, it isn’t a blind risk, says David Rehm, MSW, senior vice president for VistaCare. "Hospice in some ways is funded on an insurance model," Rehm explains. "We should lose money on care for some patients, and we should make it up on the care of other patients."
While a longer length of stay (LOS) increases costs, the most expensive care is at the beginning of the stay, so longer stays actually help financially, Rehm notes. Also, the broader the hospice’s patient base, the better its chance to offset unusually expensive patients, he adds. "It’s a financial risk to do open access, certainly," Rehm says. "Our experience over time is that even with relatively small programs, the profit-and-loss side will work."
The Hospice of Michigan in Detroit has shown that it’s possible to survive with an open-access policy even in highly competitive areas where other hospices aggressively try to cherry-pick patients.
"For some areas without as much competition, when you do open access it awakens the health care community and public, so hospice utilization appears to be up," says Greg Grabowski, senior vice president of external affairs and chief marketing and community relations officer of Hospice of Michigan.
"In areas where you have extensive competition, like we do here, it becomes more interesting," Grabowski says. "For patients who don’t have a caregiver but who would like to die at home, we’re one of the few hospices that will handle that situation, so open access to a certain extent does create challenges, but it’s part of our mission."
Within Hospice of Michigan’s greater metropolitan Detroit area, there are 53 hospices within seven counties, says Dottie Deremo, RN, MSN, MHSA, chief executive officer. "So there’s tremendous competition for less expensive patients, such as non-hospitalized, longer-LOS patients whom you would find primarily in nursing homes and assisted living arrangements," Deremo says.
For instance, the least expensive patients might be those with Alzheimer’s disease, congestive heart failure (CHF), failure-to-thrive patients, and end-stage emphysema patients, who tend to be in a hospice program longer and have less expensive treatments than cancer patients, Deremo explains.
The advantage an open-access hospice has is its ability to market a philosophy that is very attractive to the community and patients, she says. "We pride ourselves as following through on our mission, and because of that, we’ve garnered a tremendous amount of trust within the communities and with physicians within the community," Deremo says.
Hospice of Michigan provides around-the-clock service and support with an admissions policy that would be challenging for a small hospice to follow, Grabowski says.
But a hospice that is able to quickly decide to take on a new referral and has the resources to get a nurse out to visit the new patient within an hour or two is likely to be the first choice for referrals by hospitals and physicians, Grabowski and Deremo say. "If someone can get staff to a patient quicker, then that’s who the referral source will go with because response time is significant in a competitive environment," Deremo says.
Hospice of Michigan has an overall LOS of 47 days and a median LOS in southeastern Michigan of seven days or less. This is because the southeastern area contains many academic medical health systems, Deremo notes. "Thirty percent of our patients die within 36 hours of signing on to the program," Deremo says. "In Western Michigan, where there are fewer academic medical centers, we have a median LOS of 14 days, and in northern Michigan the median LOS is 20 days."
The hospice’s overall case mix is about 40 percent cancer patients, Deremo says. The large hospice has made open access work financially in a highly competitive environment through economies of scale with regard to indirect costs and corporate overhead, and through fundraising, Deremo says.
"I spend a lot of my time fundraising, because we have from four to five million dollars we need to raise every year to pay for open access and to cover patients without any kind of insurance and to cover robust grief support services and more in-depth spiritual care services," Deremo says. "We have a quality-of-life fund where we assist patients and families when, for example, a brother is too poor to fly up to be at a patient’s bedside. We’d often be able to pay for that ticket."
The hospice even provides services to homeless patients, including having volunteers pick up the patient’s friends from under the bridge where they’d lived for years and take them to the hospice home to visit him, Deremo says.
For hospices in less competitive areas, open access can be an easier strategy to employ.
Hope Hospice of Fort Myers, FL, has flourished under an open-access philosophy, growing from 50 patients a day to an average daily census of 800 since switching to an open-access mission, says Samira K. Beckwith, LCSW, CHE, president and chief executive officer. The hospice owes part of its success to a strategy of developing a network of provider partnerships, including having contracts with a dialysis center, medical oncologists, IV therapy companies, and other providers, Beckwith says. "We understand that everybody has to make money," she says. "So we try to strike a deal that will be fair to both parties."
For example, when a radiation oncologist wanted to charge Hope Hospice its top rate, managers asked the provider to lower the cost, just as the oncologist already had done for managed care companies, Beckwith says.
When negotiating with hospitals, the hospice explains the benefits the hospice will provide as follows: "If we’re partners in care, here’s the benefit to you: less people coming through your emergency room and costing you money," Beckwith explains. "So let’s find a rate we can agree to for inpatient and outpatient services."
Hospices need to stress the benefits of fewer emergency admissions and shorter LOS when discussing rates with hospital administrators, Beckwith adds. Another strategy is to continually assess the hospice’s case mix as a measure of how well the hospice is doing under open access, she says.
Educate referrals to adjust case mix
When the case mix is unbalanced, hospice administrators will consider educating referral sources to encourage admissions of lower-cost patients, Beckwith says. For instance, the hospice began working with Alzheimer’s disease associations early on so they would know how hospice could provide services to their dying members. The hospice even offered the association some office space in its building for several years, Beckwith notes.
The result is that the hospice now cares for more than 80 percent of the people who die from Alzheimer’s disease within the community, Beckwith says.
The hospice also has contracts with nursing facilities and assisted living facilities, always marketing its services as benefits to the health care provider, she adds. "We’ve continued to grow and take care of more people every year, and we’ve continued to increase our length of stay, which is really great because we take short-term patients who bring down our average LOS," Beckwith says.
The hospice routinely will take patients who may have only hours to live, but even with that short amount of time, the hospice can provide support to the patient and family, she says.
To mitigate financial risk under open access, hospices need to have a financial reserve to carry them through the months in which they have a concentration of high-cost patients who will hurt their profitability, Rehm explains. "A nonprofit entity would have to resort to funding the balance through contributions over time before they can carry that risk," he says.
Open-access hospices typically will need a large risk pool with both expensive and inexpensive patients, says Carolyn Cassin, MPA, president and chief executive officer of Continuum Hospice Care of New York, NY. "We take patients out of very aggressive acute care hospitals, and we have patients who have intact families and are at home and don’t take an enormous amount of resources," Cassin says. "If you only have one kind of patient, a risk pool doesn’t work."
Continuum Hospice Care’s average LOS is 54 days, and the median LOS is 17 days. The organization has improved its referral base considerably in the few years since moving to an open-access philosophy, Cassin says. "We’ve expanded into caring for many more patients in nursing facilities and taking care of patients with diseases other than cancer, such as Alzheimer’s disease, chronic obstructive pulmonary disease, CHF, and end-stage renal disease," she says.
The hospice’s daily census has grown from 100 patients to 450 patients because of the change to open access, Cassin adds.
For those who question how carefully a for-profit hospice might select patients, Rehm notes that VistaCare has a broad range of patient diagnoses. "About 40 percent of our patient population are facility-based, including hospitals, assisted living, and nursing homes," Rehm says. "Just recently we discovered that as a company our patient diagnostic mix reflects the Medicare precedent diagnostic mix. We’re serving the actual, eligible Medicare population, and I attribute that to open access."
It’s also important to help patients make the transition from treatment to palliative care, even if they are continuing to receive chemotherapy or other treatments, Cassin says. For instance, hospice nurses will say to patients, "You are undergoing chemotherapy. What has been the outcome? Has the tumor shrunk? Do you feel better because of the chemotherapy?"
If there appears to be no productive reason to continue the chemotherapy, the hospice staff might ask the physician what he or she hopes to accomplish. If the doctor believes the tumor can be shrunk, then the hospice staff will advocate for the patient to continue the chemotherapy, Cassin says. "If not, then I go back to the patient and say, I’m not sure this is having the value you think it is, and we should re-evaluate the cost-benefit of this treatment," she says.
"Open-access hospice is the best service that anyone at the end of life can be offered," Cassin says. "I believe in open access because I believe everyone facing the end of life can and should have hospice, and they shouldn’t have to give up treatment to get it."