Are Rural Hospices at a Financial Disadvantage?

Evidence from California

Published In: Journal of Pain and Symptom Management, v. 37, no. 2, Feb. 2009, p. 189-195

Posted on RAND.org on January 01, 2009

by Sean Michael O'Neill, Susan L. Ettner, Karl Lorenz

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Concerns have been voiced about financial pressures faced by rural hospices, because of possible implications for hospice access in rural areas. To assess whether financial performance differs between existing urban and rural hospices, the authors used the 2003 California Office of Statewide Health Planning and Development survey to compare revenues, costs, and profitability (with and without charitable donations). The authors adjusted for factors related to financial performance, including agency size, years in operation, profit status, whether hospices were freestanding or chain-, home-health-, or hospital-based, and the proportion of patients by insurance type and referral source, race/ethnicity, and diagnosis. One hundred forty-four (91%) hospices were urban, and 14 (9%) were rural. Mean values per patient for total revenue, total cost, and post-tax profit were $7203, $7440 and -$256, respectively, for urban hospices and $6726, $6274 and $452, respectively, for rural hospices. Compared with urban hospices, rural hospices were at least as profitable per patient-day (+$33, P = 0.15). They were significantly more profitable (+$47, P = 0.05) when charitable donations were excluded. In summary, the authors found that in California, rural hospices fared no worse financially than urban hospices. These counterintuitive findings underscore the need to examine urban-rural hospice financial differences using a national sample.

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