DETROIT FREE PRESS, November 7, 1997

A business of death and dollars
page 1A

by Raja Mishra, Free Press Staff Writer

        Yesterday, Bill was all right.
        He does not look so good on this early fall morning. He is in North Oakland medical Center with a terminal case of gastrointestinal bleeding. At 71, Bill has only one close living relative, his sister.
        He is curled in a ball, lying on his side. Purple blotches and tiny cuts cover his arms. A tube carries oxygen into his nose. He moans and winces. Then he raises his hand, beckoning hospice nurse Stacey Bozynski. She puts her ear to his mouth.
        "End it," he gasps.
        "You know we can't do that Bill," she says, smiling. "But we'll see what we can do about the pain."
        This is routine in hospice, the care terminally ill patients receive to help them die with dignity and comfort. It is emotional. Intimate.
        And it is becoming big business.
        Bozynski works for Southfield-based Hospice of Michigan, the nation's largest nonprofit hospice corporation.
        Hospices nationwide are watching to see whether the company can transform the fragile art of hospice into a profitable business. In a country whose population is aging and changing its attitudes toward death, Hospice of Michigan may be the future of dying.
        A decade ago, the corporation had a single hospice in Southfield. Today, Hospice of Michigan is a $50-million a year business managing 85 hospice buildings and another 53 hospice wings in hospitals.
        In metro Detroit, the company has sites in Detroit, Taylor, St. Clair Shores, Pontiac, Southfield and Mil- [continued on page 9A]

A hand on the dying, an eye on the dollar
Hospice, from Page 1A

ford. Outstate operations are in Grand Rapids, Fremont, Big Rapids, Ludington, Cadillac, Roscommon, Gaylord, and Alpena. About one-third of the 14,000 people who sought hospice care in 1996 went to Hospice of Michigan facilities.
        Nonprofit companies like Hospice of Michigan can make money, but they don't divvy it up among shareholders. They can spend profits on salaries, acquire property, or expand the company -- as long as the money stays in-house. Nonprofits are tax-exempt.
        Emblematic of Hospice of Michigan's ambition were discussions in 1996 in which it attempted to form a partnership with hospital giant Columbia/HCA, according to internal memos obtained by the Free Press.
        The partnership would have benefited both companies, said Carolyn Cassin, CEO of Hospice of Michigan.
        Cassin, who started working at the company in 1988, has brought modern management practices to hospice: flexible staffing, layoffs, centralized decision-making, and expansion, all with an eye on the bottom line. The company's size gives it many advantages, including low administrative costs and the ability to draw in new patients.
        "We are at the cutting edge, absolutely," said Cassin.
        "All has not been smooth. Last year, the federal government demanded that Hospice of Michigan repay almost $1.5 million in Medicaid overpayments. Some employees have resigned. Many resent their community-based, often rural, hospices being controlled from Southfield.
        "Everything just went to hell when they came in. ... What works in Detroit doesn't work in a rural community," said Debra Kieliszewski, who left the Alpena hospice after Hospice of Michigan took it over.
        For-profit hospices based in other states are preparing to enter Michigan. This may just be the beginning of competition for dying patients.

Explosive growth

        Bozynski smells death.
        Bill will die soon, she says. Her mission now is to make his last days -- or hours -- bearable. She quickly runs to phone his doctor. She can't locate him.
        "I'm getting irritated," says Bozynski. "I'd like to start him on drugs right away."
        Thirty minutes later the doctor calls and Bozynski rushes to Bill with a dropperful of a blue liquid and a shot. These are crucial tools of the hospice trade: morphine and an anti-anxiety agent. In an hour, Bill is sleeping.
        Three days later, he is dead.
        "It was peaceful, comfortable, what we call a nice hospice death," she said.
        Bozynski has done this for hundreds of patients during her 13 years working in hospice care. She has worked for Hospice of Michigan, before and after its explosive growth spurt in 1994.
        "What effect has that had? None," said Bozynski. "I know we're bigger but that's neither here nor there."
        In 1988 Hospice Of Southeastern Michigan was in bad shape. It had $2.2 million in debt and faced bankruptcy. Cassin was brought in.
        "When I came here this was a program that was really foundering," she said.
        Cassin began a vigorous reorganization. This culminated in 1994, when Hospice of Southeastern Michigan merged with 10 community hospices and changed its name.
        Last year, Hospice of Michigan made more than $1 million. Crain's Detroit Business newspaper named it the Best-managed nonprofit in 1994 and named Cassin one of Detroit's most influential women earlier this year.
        But Hospice of Michigan's ascent raised some eyebrows.
        "I think that Carolyn Cassin's heart is in the right place but I would prefer to see less competition in hospice care," said Maureen Butrico, executive director of Community Hospice and Homecare Services, which serves about 50 patients.
        Hospice of Michigan explicitly states in its literature that they "operate like a business, with a goal of maintaining a postitive bottom line," but there is no evidence that quality of care has suffered, said one hospice watchdog, Sue Homant, executive director of the Michigan Hospice Organization.
        Though hospice care is not the most lucrative business, Hospice of Michigan staff members said they do not feel pressure to deliver profits.
        "To break even yes, but not to be profitable," said Sandi Frost Parrish, executive director of Hospice of Michigan in Grand Rapids.
        Two years after the mergers, Hospice of Michigan stumbled. For every day the company provides hospice care to an individual in the Detroit area, the federal government reimburses it $104.96 under the Medicare program. This rate is $10 more than the rate in Grand Rapids and $15 more than in rural Michigan. In 1994-95, Hospice of Michigan billed Medicare the Detroit rate for all its patients. The government ordered the company to repay close to $1.5 million.
        This was followed by the layoffs of 80 employees, half in Grand Rapids. Cassin said the layoffs created "a more flexible staff" and helped cut administrative costs in half. Former employees claim that some services were interrupted. A current employee said her workload increased substantially.
        "I don't have time to hug people anymore," she said, asking that her name not be used.
        While this was going on, Cassin was harboring more ambitious plans.

A scuttled merger

In May 1996, Cassin sent some of her staff an E-mail that explained why, in a time of layoffs, Hospice of Michigan was hiring vice presidents. One new VP was Sherri Solomon, a hospice administrator in Lansing. Cassin wrote:
        "We're hoping Sherri can bring her former program in Lansing into the HOM family and that this will lead to a lasting relationship with Columbia/HCA, the country's largest health-care system. This could be the 'big break' we've been waiting for since our merger, and hiring Sherri will turn out to be a very smart move for HOM."
        Columbia/HCA is the world's largest health-care company, with $20 billion in revenues and 350 hospitals in 38 states. It grew that large in just a decade by aggressively buying community hospitals.
        About the time Cassin sent the E-mail, Columbia/HCA was trying to enter Michigan. It had picked Michigan Capital Medical Center in Lansing. Solomon was the director of Michigan Capital's hospice program.
        Attorney General Frank Kelley opposed Columbia/HCA's hospital purchase and a judge ultimately blocked it. The merger didn't happen.
        Five administrators in independent hospices told the Free Press that hooking up with Columbia/HCA was the "antithesis" of the hospice philosophy of community-based care. One observer was more sanguine.
        "As long as we have manged care driving health care it makes sense to develop relationships," said Sue Homant.

Showdown in Alpena

        In May of 1996, the employees of Hospice of Michigan's Alpena branch decided enough was enough.
        They had once been Hospice of Northeastern Michigan, a small community -based group. The hospice merged into Hospice of Michigan in 1994.
        "Everyone was afraid to be alone with managed care coming. We joined Hospice of Michigan thinking it was the best offer," said Jeraldine Habermehl, former director of the Alpena hospice.
        Two years later, they wanted out. They didn't like all the management directives coming from the headquarters in Southfield. And they were concerned that donations were being funneled to Southfield.
        "People began to think of it not as Hospice of Northeast Michigan but Hospice of Detroit, ' said Kieliszewski, the nurse who quit.
        The Alpena hospices's board of directors voted to leave the corporation in May. It wasn't as simple as that. Hospice of Michigan's lawyers had arranged for most of the Alpena site's assets, including its lease, its name, employees, patients and provider number to be retained. The provider number is necessary to practice.
        Undaunted, Habermehl, the director, quit and slowly organized a new hospice, dubbed Hospice of the Sunrise Shore. For close to four months the entire staff worked without pay until the patient load increased enough to cover costs.
        "We felt strongly enough about it," she said.
        Twenty-two former Hospice of Michigan workers defected. Today the two hospices compete for Alpena's dying.
        "There's too much competition here now," said Habermehl.

For-profit future

        Hospice of Michigan soon may have some equally aggressive competition.
        In September, a Dallas company called Odyssey Health Care, Inc. applied for a hospice permit in Michigan. Odyssey is a spin-off of Miami's Vitas, the nation's largest for-profit hospice company, with $214 million in revenues in 1996. Their goal is to be in 32 cities by the end of 1998.
        Cassin's complaints about for-profit hospices are similar to the things small hospices say about her corporation.
        "Our program was built on serving the community. We serve patients not investors. We have a different vision," she said.
        "Hospice mergers and affiliations are going on all the time, all over the country," said Homant. "As long as high quality end-of-life care occurs, size is not an issue."