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Dying or Lying? For-Profit Hospices and End-of-Life Care

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Listed:
  • Jonathan Gruber
  • David H. Howard
  • Jetson Leder-Luis
  • Theodore L. Caputi

Abstract

The Medicare hospice program is intended to provide palliative care to terminal patients, but patients with long stays in hospice are highly profitable, motivating concerns about overuse among the Alzheimer's and Dementia (ADRD) population in the rapidly growing for-profit sector. We provide the first causal estimates of the effect of for-profit hospice on patient spending using the entry of for-profit hospices over 20 years. We find hospice has saved money for Medicare by offsetting other expensive care among ADRD patients. As a result, policies limiting hospice use including revenue caps and antifraud lawsuits are distortionary and deter potentially cost-saving admissions.

Suggested Citation

  • Jonathan Gruber & David H. Howard & Jetson Leder-Luis & Theodore L. Caputi, 2025. "Dying or Lying? For-Profit Hospices and End-of-Life Care," American Economic Review, American Economic Association, vol. 115(1), pages 263-294, January.
    • Handle: RePEc:aea:aecrev:v:115:y:2025:i:1:p:263-94
    DOI: 10.1257/aer.20230328
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    References listed on IDEAS

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    1. Taylor Jr, Donald H. & Ostermann, Jan & Van Houtven, Courtney H. & Tulsky, James A. & Steinhauser, Karen, 2007. "What length of hospice use maximizes reduction in medical expenditures near death in the US Medicare program?," Social Science & Medicine, Elsevier, vol. 65(7), pages 1466-1478, October.
    2. Howard, David H. & McCarthy, Ian, 2021. "Deterrence effects of antifraud and abuse enforcement in health care," Journal of Health Economics, Elsevier, vol. 75(C).
    3. Sabina Gandhi, 2012. "Differences between non-profit and for-profit hospices: patient selection and quality," International Journal of Health Economics and Management, Springer, vol. 12(2), pages 107-127, June.
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    6. Liran Einav & Amy Finkelstein & Neale Mahoney, 2022. "Producing Health: Measuring Value Added of Nursing Homes," NBER Working Papers 30228, National Bureau of Economic Research, Inc.
    7. Dalton, Christina Marsh & Bradford, W. David, 2019. "Better together: Coexistence of for-profit and nonprofit firms with an application to the U.S. hospice industry," Journal of Health Economics, Elsevier, vol. 63(C), pages 1-18.
    8. Atul Gupta & Sabrina T Howell & Constantine Yannelis & Abhinav Gupta, 2021. "Does Private Equity Investment in Healthcare Benefit Patients? Evidence from Nursing Homes," Working Papers 2021-20, Becker Friedman Institute for Research In Economics.
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    More about this item

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services

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