Palliative Care – Is the Current System Fine?

Many folks mistakenly believe that I am “anti-Palliative Care.” Not true. The fact is that it is needed, but it is a difficult business and I have found very, very few Hospices or organizations that have really done it to where it is successful in financial terms. The models for Palliative Care are all over the place…so much so that it is difficult to benchmark. We do know that the typical Palliative Care program (50th percentile) loss is -109.9% of revenues generated.  With this said, Hospices need to be doing Palliative Care, especially community Hospices as community support can be directed towards this program’s loss. There are several reasons that Hospices need to be doing Palliative Care. 

• Palliative Care is Needed. There is a “gap” between Hospice and traditional healthcare that Palliative Care fills. However, it is primarily a medical model. It is not a revolutionary idea like the holistic Hospice managed care concept. If the Hospice model were expanded to include Palliative Care, to me, it would be a far superior system. 
• Hospice IS Palliative Care! Years ago, Don Schumacher stated that “Hospices need to own the Palliative Care space.” I totally agree. Hospices need to dominate and control the Palliative Care space. To NOT do this threatens Hospice as it will be marginalized and will lose value in the Medicare system. Hospice IS Palliative Care. 
• To Not be at the Table is to be on the Menu. This is an old expression, but it applies here. Palliative Care is an intersection of Hospice and traditional healthcare. It must be viewed as an opportunity to engage and partner with other health systems on a material level. Managed care is a cost avoidance paradigm. A Hospice should be an “expert” managed care organization…so expert at managing cost that it is able to help other sectors of healthcare avoid costs. This requires Hospice leaders being (becoming) extraordinary business operators.   
• Hospices Can Afford to Support a Palliative Care Program. A well-managed Hospice can do a 14% profit (I never win when I state this as many Hospices think 14% is “unattainable” and those that do higher profit levels wonder why I put out such a “light-weight” percentage!). 14% is just what I know any Hospice can do if it does the Model reasonably well. With that said, this provides the funds for Palliative Care, which we recommend that a Hospice manage to a -2% of NPR (Net Patient Revenue) of Hospice Homecare. We manage ALL other programs as a percentage of Hospice Homecare NPR so that all rise and fall proportionally to the mother ship. This protects the mother ship and destroys “silos” that think they can operate independently of Hospice Homecare.   

With this last point, I want to make this comment… that the financial system, as it exists at present for both Hospice and Palliative Care, is just about ideal. It would be “more ideal” if only Hospices could provide Palliative Care, but the present system is pretty good. If Palliative Care ever obtains a significant revenue stream, Hospices will shrink faster than you can drop a rock. If this happens, most health systems will create their own program and Hospice will be marginalized to more of a “brink of death” service than it already is…  If a significant revenue stream is ever attached to Palliative Care, it will diminish Hospice. This is the biggest threat to the Hospice concept of care! Therefore, we need to “own” the Palliative Care space and be great at it. I realize that there are individuals with HUGE ideological investments in promoting a “stand-alone” Palliative Care system by trying to get more funding for it. But killing Hospices for something that is so “un-revolutionary”…when the palliation of suffering on a holistic basis is what Hospices do…seems like bad Karma to me!  Why create another health system when you already have a revolutionary one that could be morphed to fill this need gap? You may say “We are too far down the road now Andrew!” Perhaps. But that doesn’t not mean that the obvious should not be stated.

Palliative Care inherently has management challenges. Ask San Diego…it can eat your Hospice alive or cover you like Kudzu! It has to be well-managed just like any other segment of an organization. The revenue from Palliative Care is insufficient unless the Hospice has understanding and fair heath system partners. The equation is High Cost + Low Payments = Financial Loss. This management problem is compounded by the fact that most models use the most expensive discipline: physicians. This is a large part of the cost problem in the equation. The management problem is then exacerbated by the fact that most Palliative Care programs are run and are dependent upon physicians. Now there are GREAT and SUPER FANTASTIC physicians who serves managers. However, these are the exception. By and large, physicians are the most difficult clinical discipline to manage. The only way I know to manage this discipline consistently is via compensation…but that is beyond this article and is part of the Compensation & the Model Program. As I work with Hospices, the physician and NP questions are the most acute and common I address. I mean, every day the same issues are faced. “Our Docs feel that they are overworked”, “that they are not paid enough”, “that more physicians and NPs are needed”… you know the playbook as well as I. As a manager of physicians, these issues of low pay, too much work, the unquenchable hunger for more Docs will always be with you… they are insatiable. So just accept these mind-sets as reality… or make sure you hire truly “enlightened” physicians and NPs. I am poking at physicians here… I do the same for my own kind… the Bean Counters, CF-Nos also known as the Can-Crushing Anal-Retentives!

Another management problem is that Palliative Care patients don’t always “feed” the Hospice in the quantities we’d like or need to justify the program. Palliative Care is a complimentary service to a Hospice…a loss leader that is often justified on the idea that it “feeds” patients into Hospice…and that the “contribution margin” from the increased volume of patients makes it advantageous for the overall organization. This is true. It does…IF the conversion rate is 50% or higher and the LOS is high. Historically Hospice “internal” referrals from other programs are poor due to the reluctance of clinicians of one program to relinquish patients to another program. This happens with Home Heath as well as Palliative Care. Clinicians don’t want to give up their patients. This is overcome via Visit Design and Standards fused with Accountability. Yes, you can structurally fuse the results you want into your system. This is what the Model is all about. When we teach Visit Design for Hospice, the same structure is cross-walked to the Palliative Care visit. The results can be relatively easily monitored and there must be pain attached to non-standard performance or behavior. Standards must mean something. Otherwise, just call them suggestions! However, the fact is that many Palliative Care “empires” have been built where the Hospice is materially harmed with SHORTER lengths of stay! The Hospice’s census is actually diminished as the Palliative Care census grows! A CEO can’t allow this to happen. In addition, the Palliative Care programs may be run by powerful personalities that are difficult to confront. This is why I say the management of Palliative Care is difficult! It is not just financial, it is a matter of personalities as well!

So, we are pro-Palliative Care! But not so pro-Palliative Care that we sacrifice the dream…of a holistic, managed care system that is not just a medical model, but one that addresses non-physical suffering on a level uncommon in the contemporary healthcare environment, let alone in the human experience. We recognize Palliative Care as absolutely needed and that Hospices need to do it strategically. AND that its reimbursement problems may not be problems at all! The management of Palliative Care is the real challenge, but it is doable! The physician management part? Do it through compensation! And manage the entire loss to less than -2% of Hospice Homecare NPR!

~Your objective friend,
Andrew Reed, CPA