Understanding hospice economics: the highest-margin post-acute sector

The median hospice runs a 10.2% EBITDA margin, the highest in post-acute, and it keeps most of it. Where a skilled-nursing facility hands nearly all of its margin back in rent, a hospice's operating line still sits at 7.4%. The catch is on the other side of the ledger. Hospice is a single-payer business running almost entirely on Medicare, at a rate the government sets, under a per-patient cap built to take the best years back.

• EBITDA margin — 10.2% · Highest of the three post-acute sectors
• Operating margin — 7.4% · Against 0.3% in skilled nursing
• Median ADC — 43 · Middle half 21 to 89 patients
• Medicare share — 94.7% · Of days; a single-payer business

That combination, rich margins and concentrated payer risk, is what makes hospice the most-wanted asset in post-acute and the one that rewards diligence most. Here is what the sector earns, why it earns more than its neighbors, and what a buyer has to underwrite that a margin alone will not show.

Why hospice economics differ from the rest of post-acute

Hospice is paid differently, and the payment model shapes everything else. Medicare pays a flat daily rate for each patient on service, regardless of how many visits or services that patient receives on a given day. Medicare defines four levels of care, from routine home care through continuous home care, inpatient respite, and general inpatient, but routine home care is close to 99% of all days. The intensive and facility-based levels exist for symptom crises and short caregiver respite, not as the core of the model. In fiscal 2026 the routine rate is $231 a day for the first 60 days and $182 a day from day 61 on. In the cost-report data, the median hospice books about $200 in revenue per day of care, the per-diem model showing through the blend of long and short stays.

Two things follow from a per-diem model. The first is that hospice carries almost no real estate. Care is delivered in the patient's home or facility, not in a building the hospice owns, so capital and rent take a median of just 2.0% of revenue, against 8.2% in skilled nursing. Hospice is asset-light in a way its post-acute neighbors are not. The second is that the volume metric is census, not occupancy or visits. What matters is how many patients are on service on an average day and how long they stay, measured against a fixed rate and a cap. Filling a building has nothing to do with it.

What a typical hospice earns, and why margins run higher

The file holds 4,075 Medicare-certified hospices. After screening consolidated filings and implausible outliers, 3,956 facility-level filings drive the numbers here. These are small businesses: median revenue is about $3.1 million, with the middle half between $1.5 million and $6.8 million and the top decile above $14 million. A hospice is a fraction of the size of the median skilled-nursing facility, which books near $10.7 million.

On margin, hospice leads the sector. The median EBITDA margin is 10.2%, with the middle half from 1.7% to 19.8%. That is the highest median of the three post-acute sectors, ahead of skilled nursing at 9.2% and home health at 7.2%. The spread is wide, though: the bottom decile runs a negative 9.6% margin, about a fifth of hospices are negative outright, and more than a third come in at or below 5%. A national median tells you the sector is healthy on average and says nothing about a specific provider.

The real difference shows up one line down. The median hospice operating margin is 7.4%, against 0.3% in skilled nursing. Skilled nursing earns a 9% margin and hands almost all of it to a landlord; hospice earns a 10% margin and keeps most of it, because it has almost no rent to pay. Hospice earnings are mostly operating profit rather than rent coverage, which is exactly why the sector trades at a premium. A flat daily rate meets a largely variable, labor-driven cost base and very little fixed overhead, and the result is a margin that reaches the bottom line instead of evaporating under a rent line.

What separates the top of that distribution from the negative tail is mostly scale and census management. A hospice needs enough patients on service to spread its clinical, on-call, and compliance overhead, and the providers running negative margins are disproportionately sub-scale or still ramping, carrying the cost of an infrastructure a 20-patient census cannot support. Above roughly the median census, margins firm quickly; below it, a single lost referral source or a run of short stays can tip a small hospice into the red. The premium multiple attaches to the scaled, stable-census provider, not to the sector average.

Census (ADC): the volume metric that drives the model

Average daily census, ADC, is the number of patients a hospice has on service on a typical day. It is the hospice equivalent of occupancy, the single operating figure that moves the P&L. The median hospice runs an ADC of about 43, with the middle half between 21 and 89. That range, a 4x span from the lower to upper quartile, is most of what separates a small regional hospice from a scaled one.

Revenue scales almost linearly with census, because every patient-day earns the per-diem. A hospice at 40 ADC billing roughly $200 a day books near $2.9 million a year; double the census and you roughly double the revenue. Unlike skilled nursing, there is no fixed bed count to cap growth, so scaling is a question of referral flow and clinical staffing rather than real estate. That is also why small hospices are fragile and large ones are not: fixed administrative and compliance cost spread over a 20-patient census bites in a way it does not at 200. Census growth is the whole margin story, and it is the logic behind every roll-up in the sector.

The consolidation picture: who's buying hospices

Hospice is the most fragmented sector in post-acute. The data identifies 387 distinct operators across roughly 4,000 facilities, and the largest, Amedisys, accounts for only about 1.5% of them. The ten largest operators together hold 8.1% of facilities and the twenty-five largest 12.4%, both lower than the equivalent figures in skilled nursing. Nearly two-thirds of named operators run a single location. This is a long tail of independents with no dominant incumbent, which is precisely the setup buyers want.

By in-file footprint, the largest operators are Amedisys (63 facilities), CH Services (60), Enhabit (45), and VITAS Healthcare (30). Read these as an in-dataset ranking, not a national tally, and note that Amedisys itself was acquired by UnitedHealth's Optum in a $3.3 billion deal, a sign of how far up the payer stack hospice consolidation now reaches. Private equity is the primary consolidator below that level, with active platforms backed by sponsors including Linden Capital, Advent International, Webster Equity, and H.I.G. Capital. The 2025 deal flow ran to small and regional bolt-ons rather than platform deals, with valuations normalized well off a 2020 peak near 29 times EBITDA, and with compliant, clean-survey assets in short supply.

Sizing private equity precisely is not possible from this data. The ownership flag marks a limited set of facilities, it captures identified sponsors only, and many appear under acquisition-entity names rather than a recognizable operator, which undercounts real PE presence. The honest read is by named sponsor and platform, not a penetration rate, and the detail belongs in the hospice M&A breakdown. What the pillar view establishes is the runway: a high-margin, asset-light sector with a fragmented supply of targets is a standing consolidation story.

Payer and length-of-stay dynamics

The concentration risk in hospice is the payer. Medicare covers a median 94.7% of the sector's days, so this is a single-payer business in all but name. One rate-setter, one fee schedule, and one set of survey and eligibility rules govern nearly all of the revenue, and a change to any of them moves the whole sector at once. A 10% margin earned entirely from one government payer is a different risk than the same margin spread across a commercial book.

Length of stay is the swing variable underneath the margin, and eligibility sets its shape. Medicare admits a patient when a physician certifies a prognosis of six months or less if the disease runs its normal course. Because referrals often come late, the median stay is short, on the order of a couple of weeks, while patients referred earlier in a long decline sit in a right tail that pulls the average far higher. The economics favor that tail. After the first 60 days the per-diem steps down, but long-stay patients often cost less to serve per day than even the reduced rate, so a census weighted toward longer stays can be more profitable, up to a point.

The cap is aimed squarely at the long-stay, low-acuity model that would otherwise be the most profitable, which makes cap exposure a first-order diligence item rather than a footnote.

That point is the aggregate cap. Medicare limits total payments per beneficiary to a fixed amount, $35,361 in fiscal 2026, and a hospice whose payments run above the cap repays the overage. Two more checks sit alongside it.

• The aggregate cap — Medicare limits total payments per beneficiary to $35,361 in fiscal 2026, and a hospice whose payments run above the cap repays the overage.
• The 36-month rule — A federal rule now blocks the quick resale of a newly certified hospice.
• Program integrity — Scrutiny concentrated in the handful of states that saw a wave of thinly run new entrants has made a clean survey and admission history a gating condition for any deal. Live-discharge rates and length-of-stay mix are read the same way.

Using a benchmark responsibly

Cost-report data is the right tool for market position and the wrong tool for a valuation opinion. The figures are self-reported, unaudited, and lag current operations by 12 to 24 months. Use medians rather than means, since a fifth of hospices run negative and an average would be meaningless, and screen outliers before trusting a slice.

Hospice adds its own checklist on top of the general one. A 10% margin sitting on a clean, uncapped, Medicare-compliant book is a different asset from the same margin carrying cap liability, an outlier live-discharge rate, or a length-of-stay profile that will not survive review. Read the margin together with cap exposure, payer concentration, and the census trend, not on its own. A benchmark tells you where a hospice sits relative to its market; it does not tell you what it is worth, and getting to a defensible number is the work of a qualified appraiser who can see the facts a cost report cannot.

To place a specific hospice or market against the full distribution, the Post-Acute tool returns median revenue, margin, and ADC for any market on the free tier, with the full percentile curves and per-facility financials on a plan. For who is buying hospices, see the hospice M&A breakdown; for the volume metric in depth, see what average daily census is; and for why the sector is measured before rent, see what EBITDA is.

Sources and method

• Source — CMS HCRIS provider cost reports, FY2024 and FY2025 filings
• Universe — 4,075 Medicare-certified hospices
• Analysis set — 3,956 facility-level filings after dropping consolidated filings and margin-plausibility outliers
• Margin definition — EBITDA here is measured before rent; operating margin is after capital and rent, which take a median 2.0% of hospice revenue. Skilled-nursing benchmarks are quoted as EBITDAR because leases dominate that sector
• Payer — Median Medicare share of days is 94.7%; the Medicaid column is empty for hospice in this extract
• External anchors — FY2026 per-diem rates and the $35,361 aggregate cap are CMS figures; length-of-stay characterization and M&A context are industry references, not computed here
• Known limits — Self-reported, unaudited, and lagging current operations by 12 to 24 months

Full methodology and limitations

Disclaimer

This article is a market-data benchmarking resource derived from publicly available Medicare cost reports. It does not provide, and must not be relied upon as, a fair market value determination, valuation opinion, appraisal, or legal, tax, or compliance advice. Cost-report figures are self-reported, unaudited, and subject to revision. The opinion of value for any specific arrangement remains the professional judgment of a qualified appraiser.