My father-in-law died the day he came home from the hospital. The hospice intake nurse was scheduled to arrive that afternoon.
Hospice is the one part of American healthcare built to own a whole situation rather than a piece of it. The team that was supposed to carry his medications, his equipment, his family's questions and the hours nobody else was covering never got to carry any of it.
Most people believe coordination goes missing because nobody pays for it, and that paying for the whole situation instead of each item would produce it. I believed that and wrote it in a book.
Here is what the evidence supports. Every Medicare hospice is required to run an organized bereavement program and to make it available to the family for up to a year after the patient dies. The statute says in so many words that no payment may be made for bereavement counseling. So the one service here carrying a mandate and no price of its own is also a service that gets delivered.
A payment reform that does not produce what it was bought for is the cost anybody can price. The cost nobody prices is the coordination itself, which still has to happen and lands on whoever is willing to absorb it after hours, because changing the payment form does not assign the work to a person.
Nothing in the two or three years leading up to hospice manages what hospice manages. Payment is part of the answer and less of it than I thought. Coordination produces nothing you can put on an invoice, which makes it very hard to buy per item, and every Medicare hospice is also under a federal requirement to coordinate. Payment and requirement cannot be separated on the evidence, and the one place they come apart points to the requirement.
What hospice has
A hospice patient gets a team, by regulation. A physician, a nurse, a counselor, someone doing the social and practical work. A registered nurse from that group is required to be designated to coordinate the care and keep assessing what the patient and the family need. Somebody answers the phone at three in the morning. And after the patient dies, the hospice is required to keep bereavement services available to the family for up to a year.
None of that exists in the two or three years of decline that usually come first. Same person, same family, same handoffs coming apart in the same places, and no team, no after-hours number, and nobody whose job is the whole of it.
Two things are different about hospice and I cannot separate them. Hospice gets paid a flat amount per day to handle the situation rather than per item. Hospice is also under a federal mandate to have that team. Every Medicare hospice has both at once, and there is no hospice anywhere paid per diem without the mandate, or under the mandate without the per diem. So, a post that credits the payment is choosing between two candidates on no evidence, and I am going to come back to that.
Joint production
Alchian and Demsetz named this problem precisely in 1972, though they did not answer it the way I want. Working on why firms exist at all, they defined a kind of production where you cannot separate out who contributed what. The output is joint. No portion of it belongs to any one input.
Coordination is the extreme version. Think of a caterer whose invoice runs to eleven line items. None of those items covers the four days she spent in March finding out that the venue's kitchen ran on a single forty-amp circuit, and that two of the warmers on the equipment list would have taken that circuit down together. She swapped equipment before anyone knew there was a question. What she produced was a dinner that happened, which is the same thing the cooks produced and the servers produced. There is no slice of that dinner that is hers.
A fee schedule prices items. Every line on the caterer's invoice is an item you can count and point at. Coordination is not an item, so under a pay-per-item arrangement it gets buried in the price of something else or comes out of somebody's evening.
Here is where I have to concede something to the paper I just cited. Alchian and Demsetz did not conclude that joint production makes coordination unbuyable. They concluded the opposite: somebody specializes in watching the whole operation, and you pay him by handing him whatever is left over after everyone else is paid. Non-separable output is the problem their residual claim was invented to solve. So, the strong version of my claim is wrong. You cannot price coordination as an item, and you can pay for it, by the residual or by the hour, since hours are countable even when output is not. What a fee schedule cannot do is make it appear on its own.
Bereavement
Here is where I have to hold the story looser than I would like.
Every hospice is required to run an organized bereavement program and to make those services available to the family for up to a year after the death. That is a condition of participation and it is not optional. Note the verb the regulation uses, which is make available rather than provide; the hospice has to have the program and offer it, not deliver a year of counseling to everyone.
And the statute says, in so many words, that no payment may be made for bereavement counseling.
So, here is the clearest case in American healthcare of somebody required to own the whole arc, past the patient's death and into the family's year afterward. It is also a case of the payer mandating a service and refusing to price it separately.
I first wrote that as a mandate with zero payment, and that was too strong. No separate payment is not the same as no funding. Whatever bereavement costs comes out of the daily rate, which is the bundled arrangement doing exactly what bundled arrangements do. What bereavement actually demonstrates is narrower and still useful: a service does not need a line item of its own to get delivered.
The claim I am left with is thinner than the one I started with. Paying for the situation rather than the item removes an obstacle to coordination. It does not by itself produce coordination, and nothing in the hospice case tells me which of the two is doing the work.
The trade nobody escapes
Paying for the situation solves the measurement problem and creates its own. A daily rate rewards a provider for spending less on a patient exactly as cleanly as a fee schedule rewards one for doing more. Neither form is neutral. Moving between them is a choice about which failure you would rather have to watch for.
I said in a book last year that coordination shows up when somebody is paying for coordination, and stays missing when the only way to fund it is out of an employee's evening. Here is what I can defend now. Hospice shows that a bundled payment and an explicit coordination mandate can run together and produce the thing. Bereavement shows that a separately priced line item is not required for a service to get delivered. Which of the two is doing most of the causal work, the mandate or the payment architecture, is not something this case can tell me, because no Medicare hospice has one without the other.
If you are in the middle of this
Electing hospice does not mean giving up curative treatment, and it does not mean giving up Medicare. I have watched families believe both and decline hospice over it. The waiver reaches services related to the terminal condition or equivalent to hospice care. Unrelated care stays covered under Parts A and B. And the election can be revoked at any time, by the patient or their representative, during any election period.
Something to look at
Take any invoice your organization sends, and find the work that has no line on it.
Then find out who is doing that work, and when.