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Hospice Business Model [How Hospice Works and Make Money]

A hospice which is also known as palliative care is a business that offers clients a safe and caring environment as they prepare to pass on. Here, terminally ill patients are kept comfortable while receiving round-the-clock medical attention. Family members are offered support and education as they prepare for the passing of their loved ones.

How Does the Hospice Business Work?

Hospice Care Company offers a variety of services. Some may differ from others, so it is recommended that you choose the best service that suits your needs. The list below contains the most common services that hospice companies provide.

  1. 24/7 Round-The-Clock Care

Hospice care is said to be comparable to having a doctor’s office in wheels because service is available 24/7, patients can call the service if they need assistance with anything. Often it is used for activities that require physical labor such as going up and down the stairs, taking a bath, cooking for meals, etc.

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Hospice care companies can offer a “comfort kit” that contains medicines to treat symptoms that come with end-of-life care. Fever, breathing problems, dizziness, and pain are some of the symptoms the kit can alleviate.

  1. Access To Healthcare Experts

To ensure that patients receive the best care, hospice services hire medical experts. They are tasked with keeping the patients comfortable with the right kind of medication to alleviate the pain.

  1. Accomplishing Bucket Lists

Everyone has a list of things they wish to do before they die. When patients are in a hospice facility, the glaring truth of what they are facing can lead to depression. Hospice services aim to combat that by providing unique programs to help patients forget the reality they face and just have fun.

  1. Spiritual Support

Most people at end-life care start to question the way they have lived their lives. This is when existential questions can come churning out. Leaving them unanswered could affect the patients’ health negatively. That is where spiritual counselors come in. Most services offer a spiritual counselor (or an appropriate alternative for religious patients).

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Spiritual support tends to ease the patient’s spiritual burden. It fills an emotional hole most patients don’t realize they had and allows them to embrace the afterlife without regrets. It also relieves stress that comes from major life changes associated with hospice care.

  1. Medical Equipment

Dealing with terminal illness could mean the need for equipment that assists with a patient’s quality of life. This may include a hospital bed, oxygen equipment, blood pressure monitors, and lifts.

  1. Physical Therapy

To avoid developing harmful health conditions that could affect the quality of life, physical therapy is often recommended for most patients. It keeps them as healthy as they can be despite their conditions.

  1. Volunteers For Company

Being at the end stage of life comes with limitations such as lesser time outdoors or even having fewer people over to visit. Hospice services can include sending in volunteers to entertain the patient within the comfort of their home. Humans are social creatures and studies show that patients do better emotionally if they have someone to talk to.

  1. Respite Care

It is understandable that a family caregiver would want to take a break from taking care of a terminally ill loved one. Hospice companies can take over for a few days to give them time to rest. This benefits both the caregiver and the patient because the caregiver comes back fresh and well-rested. It eases the physical and emotional burden significantly and puts everyone at ease.

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 How Does Hospice Businesses Make Money?

Hospices spend more money at the beginning and the end of a patient’s care. They profit most in the days when a care routine has been established. This has led to some hospices enrolling patients who are healthier and therefore give the hospice fewer expenses to deal with while still receiving the $160 per day of the patient’s stay. Hospice make money from the following sources;

  1. Grants

Charitable donations and grants make up a great portion of their revenue. Most of them are supported by third-party donors and grantmakers.

The funding necessary to cover essential hospice care services usually exceeds the financial means of many developing companies in the industry. Health care services may have to be complemented by non-governmental organization grants.

  1. Medicare Hospice Reimbursements

Medicare reimbursement pays for 84 percent of patients in hospice care. Medicare reimburses hospice agencies for hospice care at a Par Diem rate, meaning every patient receives the same amount of reimbursement per day despite their diagnosis or individual care needs.

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The reimbursement system may be creating incentives for hospice agencies to select patients with fewer care needs and longer hospice stays. By doing so, for-profit agencies may be conserving money by providing less intensive care.

  1. Medicaid

In the United States, children with disabilities or adults who meet Medicaid’s financial eligibility criteria are fully catered for in terms of hospice care.

Medicare beneficiaries who are dual-eligible for both programs (approximately 20 percent of all Medicare beneficiaries) can have Medicaid cover costs that Medicare doesn’t cover such as outpatient prescription drugs and long-term care.

Have it in mind that Medicaid and Medicare’s hospice eligibility requirements are almost identical, a patient must be certified to have six months or less to live and must receive services from a Medicare-certified hospice facility or agency.

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Coupled with covering hospice services, Medicaid also pays at least 95 percent of room and board costs for hospice patients in a nursing home. Funds are allocated to the hospice agency which then pays the nursing facility.

  1. Private Insurance

It is important to note that private insurance plans vary widely in terms of coverage, but it usually includes hospice care since it is much less expensive than hospital treatment. Some policies that cover hospice care may have limits on hospice expenses.

  1. Individuals Payment from Their Pockets

Have it in mind that individuals without private health insurance who are not covered by a government policy are expected to pay for hospice care themselves. Some hospice care can be paid on a sliding scale or through charitable or other donations.

  1. Tricare

Tricare is a health care program sponsored by the U.S. Department of Defense that provides health benefits for active military personnel and retirees and their dependents. Hospice care is covered through this program.


CHAMPVA (civilian health and medical program of the department of veteran affairs) is a health care program sponsored by the veteran administration that insures eligible beneficiaries. This program covers most medically necessary care including hospice

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How to Start a Hospice Business

To start a hospice business there are detailed steps to consider.

  1. Business Plan

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important things to consider are:

  • What are the startup and ongoing costs?
  • Who is your target market?
  • How much can you charge customers?
  • What will you name your business?
Cost Involved in Opening a Hospice Business

Startup cost varies depending on the type of Hospice care you wish to provide and which country and state your business is located in.

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If your business plan includes opening a licensed home health non-Medicare facility, start-up costs are estimated within the range of $60,000 to $100,000 while Medicare-centered hospice agencies should budget for $150,000 to $350,000.

Investment includes:

  • Licensing for faculty and staff
  • Computer hardware and software
  • Commercial space for office and/or medical facility
  • Accreditation
  • Website, logo, business cards, and other printable material
  • Marketing strategy and materials
  • Insurance
  • inventory

Due to strict regulations many looking to enter the hospice industry choose to invest in consulting services or a franchise. While this requires additional start-up capital, entrepreneurs receive guidance throughout the process. Profits are maximized as time and resources are properly allocated from the moment the facility’s doors open.

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Ongoing Expenses for a Hospice Business

In addition to the standard operational expenses, you will face several ongoing costs ranging from $375,000 to $425,000 (and higher).

Exact numbers vary depending upon the size of your facility and the services you offer. Payroll will consume the greatest portion of your budget with fees and licenses coming in second. Business owners should also budget for travel and continuing education for employees which will ensure the highest level of care for each patient.

The Target Market for a Hospice Business

Hospice care is reserved for terminally ill patients with a life expectancy of 6 months or less. If an individual lives beyond that time frame, the medical director or physician must re-certify that they are terminally ill.

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Companies Operating Hospice Business

  4. Hospice of the Valley