For many doctors, a referral to hospice care, no matter how sick the patient, itself represents a terrible choice, though a growing number of medical professionals are endorsing it. “The values of hospice fly in the face of physicians’ training, which calls for doing everything they can to prolong life,” says John Kimberly, a management professor at the Wharton School at the University of Pennsylvania who served for many years on the board of a Philadelphia hospice. Doctors also fear they could be subject to charges of Medicare fraud if they refer a patient who doesn’t expire within six months. So they may be reluctant to make an early referral even if a patient is ready to end life-prolonging care. (That in itself is a tough call for patients, who may worry that their medical needs won’t be aggressively addressed in hospice, and that choosing hospice could mean giving up their relationship with their doctor.)

But many concerns of both doctors and patients are unfounded. Choosing hospice normally doesn’t require severing ties with a doctor. Also, Medicare will now extend hospice payouts through an unlimited number of 60-day service periods for patients who live longer than expected. “There’s nothing sacrosanct about six months,” says Kimberly. “Eligibility for the Medicare hospice benefit needed to be defined, and six months seemed reasonable at the time. But there has been talk of changing it ever since.”

Diane Meier, the physician head of the palliative care program at New York City’s Mount Sinai Medical Center, agrees. “The criteria for admission to hospice should have much more to do with what a patient needs than about how long that person has to live,” she says. “A patient with Alzheimer’s who needs help with virtually everything can live 10 years.”

Ann O’Keefe wrestled with the complexities of hospice eligibility last year when searching for end-of-life care for her widowed father. He was 83, had been suffering from debilitating dementia for nearly three years, and had been in and out of the hospital with stroke symptoms, panic attacks and injuries from falls. Yet no physician would certify that he qualified for hospice care until it was almost too late.

O’Keefe’s father died last fall after only a nine-day stay in one of the six homey bedrooms of the Miriam Boyd Parlin Residence, part of Parmenter Community Health’s Wayside Hospice outside Boston. On his third day there, he suffered a stroke. O’Keefe, however, describes her experience with hospice as positive, even transformational. “When I visited, I’d see the nurses or aides stroking his hand or hair in comfort, the way my mom would have,” she says. She and her family have also benefited from the hospice’s bereavement program, which has provided support in the months since her father’s death.

Wayside Hospice, however, is struggling. Hospices are paid a per-patient lump sum by Medicare, and that reimbursement may not fully cover the costs of care, leaving many nonprofit hospices operating on shoestring budgets. Wayside, which also provides home hospice care for about 110 patients in the Boston area, runs deep in the red, contributing to an annual operating shortfall of about $450,000 at its nonprofit parent, says Cindy Mayher, Parmenter’s executive director. The organization depends on private donations, grants and fund-raising to close the budget gap.

Moreover, Wayside now competes against more than 15 other hospice providers, many of them for-profit. That’s typical of a national trend reshaping the hospice industry, as hospices vie for admissions from hospitals and other health care facilities. But for patients and their families, it’s often an unwelcome trend. In Atlanta last fall, when Maureen Wareham’s mother was hospitalized and wasn’t given long to live, Wareham was hounded at work and at home by telemarketers urging her to enroll her mother. “Hospice seemed like any other business,” says Wareham. “Compassion went out of the picture.”

Within the $10 billion hospice industry, the number of for-profit groups increased almost fourfold from 1994 to 2004, a growth rate more than six times that of nonprofit hospices. For-profits care for about three in 10 hospice patients, compared with just 2% in 1990, and three publicly traded operators account for more than half of the for-profit market.

VITAS, with headquarters in Miami, is the country’s largest for-profit hospice, enrolling more than 11,000 patients in 16 states. During the past six years, VITAS has expanded in both rural and urban areas, including underserved areas in Chicago, St. Louis and Washington, D.C. But though the proliferation of for-profits has expanded patient access, it has also pressured nonprofit groups to evolve or expire. Those that don’t have the backing of a deep-pocketed corporate parent may find it difficult to deal with issues that beset hospices of all descriptions.

As the mix of patients in hospice grows more diverse, in terms of both diagnosis and length of stay, it becomes increasingly difficult to manage the costs of severely ill patients, particularly those who require intensive care or expensive treatments. Hospices may decline to accept such patients, and industry statistics suggest that for-profits offer proportionately fewer of the most expensive services. Nonprofits, meanwhile, may be bearing more of the burden and falling deeper into a financial hole.

Recent research has shown wide variation in the services and profit margins of the two business models. One 2005 study in the Journal of Palliative Medicine found that large hospices owned by publicly traded companies generated profit margins nine times higher than those of large nonprofits and three times higher than privately owned for-profit groups of similar size. In another study of hospice ownership, Mount Sinai’s Carlson found that for-profits provided a narrower range of services to patients and their families, particularly in more discretionary areas that are not as closely regulated by Medicare.