Scripps to shutter its hospice service
Less than five years after it started offering hospice care, Scripps Health is poised to shutter the service, notifying patients that they will need to find new providers by mid-September.

Scripps Health in San Diego has stopped accepting new hospice patients and is working to transfer existing patients to other area hospice operators.

Less than five years after it started offering hospice care, Scripps Health is poised to shutter the service, notifying patients that they will need to find new providers by mid-September.

It’s a significant change of course for an organization that has been committed to providing end-of-life care since it stepped in when San Diego Hospice went bankrupt in 2013.

Today, 114 county residents — most who receive care in their homes — must choose a new hospice company by Sept. 4. Scripps is working with Escondido-based Elizabeth Hospice, which has expanded its service area to San Diego in recent years and has agreed to hire its employees. However, patients and their families are free to select whichever service they want.

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Scripps Chief Executive Chris Van Gorder said Wednesday that his organization is following the law, which requires patients to be presented with a range of local hospice companies that can take over their care.

“We will work with whoever the patient selects to make sure there is as smooth a transition as possible,” Van Gorder said.

There is no transfer of cash from one organization to the other, Van Gorder added. Elizabeth, he said, pays nothing for Scripps’ recommendation. The company has agreed to hire all of Scripps Hospice’s 111 workers, including the doctors who oversee day-to-day care, he added. Jan Jones, Elizabeth’s president, confirmed that arrangement. Patients who choose Elizabeth, Van Gorder said, should be able to keep their current caregivers.

While 111 workers might seem like a lot for 114 patients, Scripps daily census ran between 150 and 180 before it stopped admitting new patients on Aug. 23. Staff-to-patient ratios are also high because hospice services run 24 hours a day, seven days per week.

“We’ve made offers to each of their employees and most of our offers have been accepted,” Jones said, adding that her operation currently has about 500 hospice patients receiving services throughout San Diego County and in southeast Riverside County.

Scripps, which operates five hospitals and a slew of outpatient offices across San Diego County, is exiting the hospice business for financial reasons. Van Gorder said that the service has never reached a break-even point, let alone even minor profitability, since the company purchased a small Poway-based hospice in 2013 and began accepting transfers from San Diego Hospice while the organization was under bankruptcy protection.

“We’ve lost between $2 million and $3 million per year,” Van Gorder said.

That amount, he added, has totaled nearly $14 million including a projected $3 million loss this year. While that amount might seem like a rounding error for an organization that lists $2.1 billion in investments on its balance sheet and $2.7 billion in expenses last year, Van Gorder said changes to the way health providers are reimbursed have recently put a crimp on operating revenue. The organization is still profitable, but margins are not as wide as they once were.

He said he must consider the big picture for his entire organization, and a set of interlocking needs in the future, in deciding which services to continue and which to drop. In some cases, he noted, he has no choice. Every hospital is required, for example, to treat every patient that walks into its emergency room regardless of whether or not they have the ability to pay. In terms of hospice, he said, he was not sure that Scripps could provide the service any better than Elizabeth Hospice does at a lower cost.

“We don’t enter any business like this with an intent to make a profit, but we also can’t afford to be running services at a loss when somebody else in the community can run it well,” Van Gorder said.

Elizabeth Hospice, though it is much larger than the Scripps operation, also faced losses from 2012 through 2015 but Jones said the operation broke even in 2016 and generated a slight profit in 2017. Jones said that nearly 40 years running a hospice service has taught the organization to watch its expenses very carefully.

“We operate lean but we also operate very much with mission,” Jones said. “This is our total focus.”

In general, hospices tend to operate with single-digit margins, said Jonathan Keyserling, senior vice president for communication and policy at the National Hospice and Palliative Care Organization.

He added that there is a nationwide consolidation trend underway.

“We are seeing smaller hospices form alliances, join up together or merge to achieve some economies of scale in order to purchase equipment and other supplies such as prescription drugs,” Keyserling said.

Today, he said, Medicare pays between $140 and $180 per day for hospice care when a doctor certifies that they have six or fewer months of life left.

“People don’t realize it, but when a hospice accepts a patient under Medicare or Medicaid, they’re responsible for all of the goods and services, any equipment supplies and all of the drugs related to their care,” Keyserling said. “Just like the rest of health care, hospice programs are feeling the effects of cost increases whether it’s labor, supplies or gasoline.”

Scripps’ exit does not appreciably diminish the supply of hospices operating in the region. Hospice Compare, and online database maintained by the U.S. Centers for Medicare and Medicaid Services, lists 143 organizations serving the San Diego region, though most are based outside the area.

The database also rates hospice performance nationwide and both Scripps and Elizabeth Hospice bested national averages in all categories in the most recent survey period. Those categories range from whether patients were checked for pain at the beginning of their care to whether they got timely treatment for shortness of breath.

Today, the local hospice landscape is much different than it was prior to 2013 when San Diego Hospice was still operating and had about 1,000 people on service at any given time. The nonprofit had an international reputation for training physicians in hospice practice, drawing fellows to its Hillcrest facility perched near the edge of the bluffs that overlook Mission Valley.

The 24-bed facility opened in 1992 with the help of a $18.5 million grant from the late Joan Kroc, the philanthropist and wife of McDonald’s chief, Ray Kroc, and former owner of the San Diego Padres.

Scripps purchased the facility during the San Diego Hospice bankruptcy auction for $16.55 million and recently sold it to a Texas real estate development company for $20 million. The company plans to build apartments on the 8-acre property which has sweeping views across Mission Valley and Mission Bay all the way to the Pacific.

The property is home to tributes to hundreds of San Diegans who died at the hospice. Anyone who wants to remove their loved-one’s memorial from the property before construction begins can contact Scripps coordinator Jamie Nelson at nelson-jamie@scrippshealth.org or (858) 678-6340.

Some are not taking the sale too kindly.

Peter Jensen, whose wife, Janeen, died seven years ago at the hospice, said he does not think Scripps should profit from selling a property that has a philanthropic focus over the years from Kroc’s large bequest to smaller gifts memorialized in tributes placed throughout the grounds.

“If they’re going to sell it at a profit, I hope they donate it to the next hospice facility that gets built,” he said.

Van Gorder said proceeds from the property sale are being put toward rebuilding Scripps Mercy Hospital in Hillcrest, which does not meet state seismic safety requirements and must be replaced or repaired by 2030.

“We have been providing community benefit through the hospice that we have been running at a loss for the last four years. I respect that opinion, but the money is going to go back into health services for the community,” Van Gorder said.

To use the building for inpatient care, millions in additional upgrades would have been required. San Diego Hospice, he said, did not have to make similar upgrades because it had obtained a special grandfathered status that did not transfer with the sale in 2013.

Of course, the parcel never would have been sold at auction if not for San Diego Hospice’s run-in with the federal government, which was investigating allegations of Medicare overbilling. Eventually, the federal government filed a claim for $112 million that made it impossible for the nonprofit to survive.

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paul.sisson@sduniontribune.com

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