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How Much Do Hospice Business Owners Make Yearly? [Profit Margin]

Hospice Care Business

According to reports, successful hospice care business owners make about $120,000 to $175,000 a year in profit.

However, specifics vary depending upon: the number of patients the business cares for, the average billable hour rate for services provided. This figure, minus expenses and financing costs determines every hospice care facility total annual profit.

When there is no hope for a cure, providing the best possible comfort-care for a loved one is the best gift we can give them as they approach the final chapter of their life.

That necessity to provide a terminally ill loved one the opportunity of a dignified death – free of suffering and surrounded by family and friends at home or in a home-like setting – is the very foundation upon which the hospice movement started.

But irrespective of the varying notions, venturing into this business can be very lucrative especially when arranged well. This business is ideal for individuals who are passionate about helping others and can offer compassion.

In addition, owning a hospice care facility requires a leader who is ready to face the challenges that come with running a multi – faceted facility, meeting the needs of employees spanning several departments.

Although it might not be paramount, but experience in the healthcare industry would prove beneficial. If you’re lacking this experience, it is advisable you hire an administrator that can offer their expertise in operating a medical facility of this magnitude.

Estimated Profit Potential of Owning a Hospice Care Facility

It is pertinent to first note that both non – profit and for – profit hospices receive funds from multiple sources. For some, charitable donations and grants make up a great portion of their revenue.

In addition, they are reimbursed by private insurance, Medicare, and Medicaid for each terminally ill patient they care for.

Most facilities are reimbursed on a per diem basis, providing a set payment amount for each day the patient is enrolled in the program, irrespective of services required. For patients who require round-the-clock home nursing care, hospice is reimbursed on an hourly basis.

These care facilities are reimbursed a daily rate for each patient, irrespective of the level of service offered on that given day. Final payment amounts tend to vary each year, but the average for routine care is approximately $146/day. If continuous care is necessary, Medicare reimburses at an hourly rate of approximately $40/hour.

Who Pays for Hospice Care? How Do Hospice Agencies Make Money?

Note that over 85% of hospice care costs are footed by various government entities, including Medicare, Medicaid, and healthcare programs sponsored by the Veterans Administration (VA), the Department of Defence (DOD); private medical and long – term care insurance.

Meanwhile, hospice costs are paid for in the following manner: Medicare – 85.4%; Medicaid – 5%; managed care or private insurance – 6.9%; other (including charity and self – pay) – 2.7%.

  1. Medicare

Have it in mind that Medicare is mandated to pay for all medically necessary hospital and doctor care under Parts A and B, regardless of cost or the condition of the patient. Notably, of about 2.7 million Americans who died in the past year, 82% were Medicare beneficiaries at the time of death.

Note that Medicare Hospice Benefit has paid for the care of eligible patients since 1982. Medicare provides care for two 90 – day periods in hospice, followed by an unlimited number of 60 – day periods. Note that at the start of each period of care, a doctor must re – certify that the patient has six months or less to live.

  1. Medicaid

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

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

Note 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. Nonetheless, Medicaid policies can vary from state to state.

Coupled with covering hospice services, Medicaid also pays at least 95% 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 if the policy includes hospice, hospice care or palliative care, it will cover most of those costs.

Have it in mind that not all plans pay for hospice care, although most do since it is much less expensive than hospital treatment. Some policies that cover hospice care may have limits on hospice expenses.


TRICARE is a healthcare program sponsored by the U.S. Department of Defence 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 Veterans Affairs) is a healthcare program sponsored by the Veterans Administration that insures eligible beneficiaries of certain deceased or disabled veterans. This program covers most medically necessary care, including hospice.

  1. Individuals

Note that individuals without private health insurance, and who are not covered by a government policy, must pay for hospice care themselves. Some hospice care can be paid on a sliding scale, or through charitable or other donations.


Owing to changes in patient needs and preferences and a fast growing aging population, the hospice industry has grown to almost $19 billion over the last decade. The industry is expected to grow another 7.4% annually to keep up with the growing demand and need for hospice care.

Nonetheless, by leveraging strong marketing campaigns and cost – saving initiatives, many hospice founders attest to aggressive growth, beginning from their first year of business.

Savvy and innovative entrepreneurs have a unique opportunity to participate in a profession with virtually unlimited growth potential.