Corporate America and the monetizing of a movement

Corporate America and the monetizing of a movement

By: Craig Dresang, CEO, YoloCares

Madalon Amenta, a founding mother of hospice in the United States and a 93-year-old YoloCares board member, has often said, “Our agency’s roots stem from the civil rights movement.  Hospice itself was a powerful grassroots movement long before it became an industry.”

End-of-life care, as we know it today, grew out of a great American crusade for social change. It was birthed from a force that intended to challenge and reshape the national culture.  What began as a struggle for social justice in the 1950s and 60s evolved into a fight for the rights of people who were living with a life-limiting illness.  The voices and wishes of the dying, and of those who were caring for them, needed to be heard.

Hospice became an organized effort to gain equal access to care and to infuse end-of-life care with the power of choice, quality of life, respect, compassion, and dignity.  At the time, health systems from coast to coast were failing in their attempts to properly care for patients who were dying … imposing ineffective and often unwanted treatments that robbed patients of precious time and any say about how or where they would spend their final days.

In brief, people’s values were not being aligned with their care. The things that were most important to this population of patients were not taken into consideration with the delivery of care at the end of their lives. The nonprofit hospice movement changed all of that.

Over time, corporate America figured out how to hijack and monetize a model of care that was designed to be benevolent and charitable at its core.  In 1990, just five percent of the nation’s hospice providers were for-profit companies. By the early 2000s, for-profit companies dominated the industry and now represent close to 70 percent of all hospice providers. For-profits account for nearly 100 percent of newly established programs.  As a result, over-saturated competition has become a real challenge for the nonprofit organizations and agencies that first gave life to, and shaped, the industry in the first place.

This matters because nonprofits have never lost their founding spirit … a charitable energy singularly focused on the assurance of a comfortable and dignified last phase of life to which every American is entitled. As a family of providers, nonprofits are distinguished by their commitment to people, mission, and community — they are innovations driven by patient and family needs, not profit.

The difference between the tax status of hospice providers can be clearly seen in a recent transcript of an April 22, Chemed Corporation (NYSE:CHE) earnings conference call. Chemed is the parent company of both Roto-Rooter and VITAS which is the country’s largest hospice provider.

During the call, company officials toggle back and forth, discussing the company’s performance with both its plumbing and hospice lines of business. After reviewing the transcript, a YoloCares board member commented, “Something that struck me is how easily they can switch between discussing how to take care of dying patients and how to take care of a clogged toilet. I still can’t grasp how these two businesses can exist under the same umbrella. They explain that their Roto-Rooter technicians are paid on a commission-based manner.”

Printed below are portions of Chemed’s earnings conference call:

“Our first quarter 2022 operating results released last night reflect very solid performance for both VITAS and Roto-Rooter. Both operating segments’ financial results exceeded our internal estimates despite the continued disruption triggered by the pandemic. For VITAS, this disruption remains elevated with regard to the hiring and retention of licensed health care professionals. U.S. News & World Report has estimated as many as 20% of licensed health care workers exited the labor market during the pandemic. This has impacted turnover within VITAS’s licensed staff and our turnover rate continues to be above our pre -pandemic rate in several of our professional classifications.

“For Roto-Rooter, our most significant challenge has been to increase manpower. We increased technician headcount by 8% in 2021 … The April 2022 headcount has expanded 3.3% when compared to our average manpower in the fourth quarter of 2021. Based on current service demand levels, Roto-Rooter continues to remain understaffed in many of our markets.

“VITAS’s net revenue was $299 million in our first quarter of 2022, which is a decline of 5.3% when compared to the prior year period.”

The report includes nearly 60 paragraphs and 5,000 words of narrative describing financial and performance measures, but no mention of the impact of care on patients or families. In stark contrast to nonprofit hospice organizations — the founders of this very industry — there is no discussion related to the quality of care, fulfillment of mission, patient or family satisfaction results, commitment to local communities, innovative approaches to care, or meeting the needs of the under-served.

The California Hospice Network (CHN) and its affiliate, YoloCares, is working to change the national narrative from profitability to quality of care and fulfillment of mission. While the age-old adage, “No margin, no mission,” rings true, nonprofits have a decades-old track-record of simultaneously operating with sharp business acumen and serving a more noble purpose. Nonprofits generally carry the highest quality scores in the country, and re-invest any profit margins back into their care and not into the pockets of investors.

In the words of Cathy Conway, CEO of Hospice of Santa Cruz County (another CHN affiliate), “Not all hospices are the same. You have to ask for your local nonprofit by name.”

— Craig Dresang is the CEO of YoloCares