How Hospice Companies Make Money
Most hospices receive their revenue from third-party insurance companies such as Medicare. The hospice mergers and acquisitions environment has never been more robust, with valuations reaching record levels and buyers hungry for assets of all sizes. Buyer interest in hospice agencies will likely remain high over the next several months.
Target Audiences for Hospice Programs
One way hospice businesses can narrow down their target patient and family audience is by looking at the demographics in their area. The second target audience for hospice programs is medical professionals.
Profit Margin for Hospice Agency
The profit margin for hospice care providers can range from 2% to 25%. Smaller hospice care providers with fewer resources and a smaller patient base may have lower profit margins, while larger hospice care providers may have higher profit margins.
Are Hospice Businesses Profitable?
Hospice care can be a profitable business, but it is less profitable compared to other healthcare services due to its focus on providing comfort for the patient’s last weeks or months of life. For-profit hospices are more likely to provide lower quality care compared to non-profit hospices.
Additional Insights
- Length of hospice patient stays varies widely, often weeks to months, with a maximum length of days.
- Profit margins for hospices have decreased from 50% to 30-40% due to competition.
- For-profit hospices have significantly higher Medicare margins compared to nonprofits.
- Referrals from clinics and physician groups are a health system’s largest revenue source.
- Nearly 75% of hospices are now for-profit, leading to growing complaints of fraud and profiteering.