Different perspectives add completely different insights and opinions. With Medicare reimbursement for hospice patients getting tighter and tighter, hospices are forced to cut spending in all areas of their care. As a hospice, you can only cut spending by so much before it affects the quality of patient care. Because of the low reimbursement rates, hospices are always looking to cut spending on unnecessary things, which poses the question, “What is the single biggest waste of money in hospice?” The SONO team took this question to 6 different people from completely different perspectives. The team asked a hospice owner, a pharmacist, a DME management provider, a PBM, and a medical supply company. All of the answers we received are their words, NOT ours. However, the sources of these answers will remain anonymous.
What is the single biggest waste of money in hospice?
According to a DME management provider:
“The biggest waste of money in hospice as it relates to DME is straightforward. It’s ordering equipment that should be patient condition-specific, but has simply become ordering habits. Routine ordering habits are easy to get into. The nurse orders the same set of items in the set ways, without knowing the most appropriate items to order. There is only one source for DME CE courses, industry best practices, etc. But the purpose of this portion of the article isn’t to advertise our service. Utilization of DME items is the key to reducing waste, often allowing for funds to be reallocated to improved patient care (and better salaries for staff). Think about who has educated nurses on DME. It’s not nursing schools, it’s other nurses and DME vendors. The result is old ordering habits compounding on newer ordering habits results in equipment delivered that isn’t always in the best interest of the patient. Utilization management is the Key to reducing the biggest waste of money in hospice as it relates to DME.”
According to a PBM:
“Drugs are generally the second highest cost to the hospice behind payroll. Often managing your PPD (Per Patient Per Day) costs can be challenging. Many times you have to consider your contracted pharmacy rate, per-diems, formulary, emergency kits, after-hours, delivery, compounds and more. If I had to pick just one, it would be managing your formulary properly and only paying for non-formulary medications when the time is appropriate. This is most important part of managing your PPD cost. There are also other important considerations that can greatly affect costs for a hospice. It’s important to have strong relationship with a pharmacy or pharmacies that provide a fair effective AWP discount for both brands and generics. Sometimes re-negotiating with your pharmacy or PBM can help contain costs immediately. Also, commercial products are generally much cheaper than a compounded medication. Many pharmacies when compounding a medication get paid whatever they want to charge or submit to a PBM. It is much harder to control the costs than commercial drugs. Lastly, delivery, shipping, stat, and after-hours can all increase costs if not negotiated and managed properly. Often we have found emergency kits can help greatly in overall prescription spend especially if your hospice is having a high number of after-hour fills. Many of our clients utilize a refill-authorization report we provide to help to manage refill ordering to reduce after-hour fills.”
According to a Pharmacy:
“There are 2 big wastes in hospice.” (I know what you are thinking, but we allowed it.)
“Direct waste would be paying ancillary charges. (I.e. Delivery, after hours, packaging charges.) I believe that if the pharmacy's reimbursement is adequate and the Hospice is supporting the pharmacy, then ancillary charges can be minimized or avoided. These charges never show up until after contracts are signed. They make a seemingly good deal not so good.
Second is an indirect cost. Biggest waste is having a nursing professional complete any task that is not directed at patient care. Some examples of this include picking up meds, delivery of meds or DME. These things suppress case-load.”
According to a Medical Supply Company:
“The biggest waste of money when it comes to disposable medical supplies is a lack of inventory control and improper use of product. Once product enters a patient’s room it cannot be used for another patient and must be disposed of once the patient passes, therefore causing waste if the clinician provides too much product for the patient. This is why education and in-service training is important for all disposable supplies. Knowing what a patient is going to use prior to the next visit is critical in containing waste. This can be very costly when it comes to incontinence and wound care specifically. Providing the correct amount of product to the patient is very important. Also, knowing how long a particular wound care product should remain on a patient is vital for quality patient care and waste management. If a wound care dressing is a 3-5 day dressing there should be no more than 1 additional at the bedside at any one time. Providing more will result in additional dressing changes or waste when the patient passes. Also the more dressing changes the patient experiences the more pain and trauma you are causing that patient when our ultimate goal is providing comfort during the last stages of life.
According to a Hospice Provider:
"I have seen it different with several hospice owners. There was a hospice in Michigan years ago that did a marketing study. They tested the market on what hospice brands they were aware of in the area, and then they spent a MILLION dollars in marketing with billboards and commercials. They tested the market again and there was no change in their branding. Huge waste of money. That also happened 10 years ago.
As far as we are concerned, they biggest waste of money, but required spending, would be the money hospices spend on fighting ZPIC, ADR’s, etc. It is maddening.
The money that is a waste for hospices is employees that are not engaged. 75% of costs for hospice are labor costs, so mismanagement of labor can have significant impact. As little as mismanaging routes of clinical staff can be time and travel impact into the thousands.
The mismanagement of pharmacy, supplies and DME have negative effects but measured against labor it is a drop in the bucket. Adversely, great leaders and managers of people can take an unsuccessful hospice and make it world class."
The same question asked to 6 different people from different perspectives yielded 6 completely different answers. Surprising or expected? Although It would have been nice to receive the same answer from all 6 people, unfortunately, it isn’t that simple. If a hospice was able to avoid all the aforementioned “biggest wastes of money in hospice” that were identified, the amount of savings would be astounding. Is your hospice wasting money in any of these areas? If so, you have the insight to make a difference and improve patient care through efficient processes and reducing waste of healthcare dollars.