By Joanne Faryon, KPBS-inewsource Investigations Desk

San Diego Hospice, which has been one of the country’s leading end-of-life care providers for more than 30 years, is closing its doors.

San Diego Hospice | Photo by Brad Racino

The organization’s announcement yesterday came after drastic downsizing, layoffs and finally a bankruptcy filing, all in response to an ongoing federal investigation into patient eligibility.

Kathleen Pacurar, president and chief executive officer of San Diego Hospice, said the pressure and uncertainty of an ongoing federal audit made the closing inevitable.

She said patients are the priority, and said Scripps Health, which recently entered the hospice arena, is working with San Diego Hospice to make sure patient care is not interrupted.

“Our hope is that patients and families see this as seamless,” Pucurar said yesterday.

Medicare, which pays for the majority of hospice patients’ care,  has been investigating San Diego Hospice for two years, focusing on patients who may not have been eligible for the specialized care or, if they were, may not have had their prognoses properly documented. To be eligible for hospice, a patient  must have a terminal illness – which means less than six months to live.

Pacurar has predicted that San Diego Hospice may have to pay back Medicare  tens of millions of dollars for ineligible patients. But yesterday she said Medicare won’t to talk to them, so they have no idea how much they might ultimately owe.

“In our circumstance, the lack of interactions and information has truly caused us to be in the situation we’re facing today,” Pacurar said.

Over the past several months, San Diego Hospice has cut its patient census in half, laid off nearly 300 employees, closed its 25-bed hospital and moved its operations out of its Mission Valley office. Last week, the organization filed for Chapter 11 bankruptcy protection, seeking to reorganize its finances and stay in business.

San Diego Hospice has been an $83 million business. Its bankruptcy filing listed its largest creditors as Wells Fargo $4 million, its former building owner $2.5 million, and the Price Family Charitable Fund $800,000.

San Diego Hospice began discharging patients late last year and became stricter about who it would admit into the program.

“We narrowed the window of patients we take on because we’re so specifically looking at it through a strong lens of compliance,” Pacurar told KPBS earlier.

Nearly all hospice patients are cared for at home where they can get services including, nursing care, counseling, a home health aide, homemaker services, physical and speech therapy, home medical equipment and medication. There were 20 hospice providers listed in the county in 2011.

The KPBS and inewsource Investigations Desk began a series on end-of-life care last week, focusing on the fact that more and more people — in San Diego and beyond — are rejecting conventional “curative” care for hospice care, which offers pain management and comfort.

The report documented that in 2010, of all the people who died and received Medicare benefits, 44 percent chose hospice, double the number in the past decade. But while the number of hospice patients doubled, the cost quadrupled. That divergence has led the federal government to increase scrutiny of hospice providers — most notably San Diego Hospice — by questioning the eligibility of those accepted into care.

The Investigations Desk also found that while, the majority of hospice patients die within the first month of care, there is evidence that — ironically — hospice can extend life.

A 2007 study published in Journal of Pain and Symptom Management concluded people in hospice lived on average, 29 days longer than patients who did not choose hospice at the end of life.

An analysis by the San Diego nonprofit journalism organization inewsource found the number of people in county hospices who lived longer than six months increased from one in 13 in 2004, to one in nine in 2010.

Medicare has not answered questions posed in phone messages and emails about hospice audits. But news of investigations outside of San Diego is making its way to the public.

The National Hospice and Palliative Care Organization recently pointed to a hospice in Delaware that also is under federal review and was forced to lay off staff.

Joanne Faryon is a freelance reporter and former inewsource and KPBS reporter.