Death and Profits

When Hugh Westbrook pioneered hospice care, his organization saw to the needs of the dying. Fifteen years later nothing has changed -- except the politics and the profit margins.

Some people find it difficult to understand how a company like HCI can be so profitable, especially when the bulk of its income derives from Medicare and Medicaid claims designed to barely cover the costs of proper health care for the terminally ill.

The financial success of HCI (now known as VITAS) can best be described with one word: volume. "That's the only way you can make a profit in hospice," laments Bernice Wilson, executive director of the Ohio Hospice Organization, who watched Westbrook's company expand into Cincinnati earlier this year. "You have to have a very large 'census' [of patients]. It's sort of the McDonald's philosophy applied to dying. You're not going to make very much profit on each item, so you have to sell a lot of items."

To accomplish this, Westbrook employs a large staff of marketing representatives and admission counselors charged with persuading doctors, nursing homes, and hospitals to refer their terminally ill patients to Westbrook's company. Emphasis is placed on increasing the overall number of patients -- "raising census," in the parlance of hospice administrators.

"Everything was based on census," says one former HCI executive who asked not to be identified. "This is a for-profit company. Salaries are based on your success with census. Commissions, bonuses, pay for performance was all based on census. It was the organization's goal to be the largest hospice in the country and to dominate the [geographic] area that you are in."

Until recently a special bonus program rewarded admission counselors for the number of patients they recruited. With 300 patients a counselor received a bronze medal and a $1000 bonus. For 500 patients the counselor was given a silver medal and a $2000 bonus. At 750 patients the admission counselor was awarded the company's gold medal and a $4000 bonus. And after recruiting 1000 patients into the program, the counselor would earn what was called the Founder's Medal and a bonus of $10,000.

"I invented that," says HCI founding partner Don Gaetz, referring to the bonus system. "I'm a great believer in pay for performance."

Adds Esther Colliflower: "Recognition is part of any employee service. You can look at it and say, 'Well, yeah, right A you want to get a thousand patients in here.' Suppose you were to say, 'There were a thousand patients who otherwise wouldn't be provided good comprehensive hospice services.' And you know, we think that's great."

Hospice officials nationally say this emphasis on numbers is risky, as counselors may try to recruit patients for whom hospice care is not appropriate. "It blows my mind that they would pay a $10,000 bonus on the 1000th patient!" exclaims Audrey Gordon, the Chicago hospice expert. "I don't know of any other hospice in the country that does that."

The specific medals-and-money system created by Gaetz has been abandoned, but company officials acknowledge that bonus incentives are still in place. "Our bonuses and commissions are determined by the numbers. We have quotas to fill," confirms Anita Knowles, who worked for Westbrook's company as a Dade County admission counselor until this past week, when she was fired for reasons unrelated to quotas. Knowles says she was required to enroll at least nineteen new patients every week, which she did, though she says the pressure to produce was stressful. "We aren't really 'admission counselors,' we're considered salespeople," she asserts. "That's what we do A sales, just like any other business." Those who can't meet the quota, Knowles says, are terminated. "I don't think people should be fired because they didn't bring in enough dying people for them to make money on," she complains. "But this is a very, very aggressive company, and what they care about is money. It's business. And to many, the patients become numbers, not people."

Such emphasis on numbers became a public embarrassment in 1990 at Westbrook's Chicago hospice operations. "If you didn't produce, you didn't have your job for more than six months," recalls Debi Dunlap, a former HCI patient-care administrator in Chicago. "They went through administrators, general managers, and sales managers all the time. There was no retention in that company. They would rather replace than develop the people that they had. That's what the company has always been about -- the pump and the grind. If you don't produce, you're out. That was nationwide.

"It's the same with any for-profit company. It's just that when you grow the business on people who are dying, the community finds it very distasteful," Dunlap adds. "We used to go to the state hospice organization yearly convention, and people, when they ate their meals, would turn their backs to us and refuse to talk to us. It wasn't me, it wasn't personal. It was the company that I worked for."

Pressure to "grow the business" stems in part from the same federal legislation that allowed hospices to collect Medicare fees in advance, based on projected patient census. The down side to that otherwise favorable law is this: If a hospice brings in fewer patients than anticipated, it is required to refund the difference. HCI was facing that very problem in 1990.

On April 4, 1990, Neil Bennett, HCI's former corporate president based in Miami, sent a message to company officials in Florida, Texas, and Illinois. The confidential memo, a copy of which was obtained by New Times, was titled, "Cash Flow."

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