How California Decides Whether Your County Can Get Another Hospice — and the Math Error CDPH Had to Fix

Buried inside California’s new hospice rulebook is a provision that decides something no California operator could ever control before: whether a county is even allowed to have another hospice in it. Title 22 CCR § 74820 makes every county in your service area pass a “unmet need” test — a formula that weighs likely hospice demand against the capacity of the hospices already licensed there. And in a detail most coverage has missed, CDPH had to publish a June 22 addendum correcting a math error in that very formula. Here is exactly how it works now.

This is part of the same emergency framework we’ve been covering. For the broader picture, start here:

• California Just Wrote Its First Real Hospice Rulebook — Here Is What CDPH Now Requires
• Your Administrator or DPCS Doesn’t Meet California’s New Hospice Rules. Now What?

What § 74820 Actually Gates

Section 74820 (“Geographic Service Area”) puts two separate tests on every county a hospice wants to serve, and a county has to clear both — with written CDPH approval for each county individually:

1. The 2-hour response test. A licensed nurse must be able to reach any patient in person within two hours, 24/7. You prove your service-area radius by collecting at least four drive-time samples from your parent address during peak traffic (7:00–9:00 a.m. or 4:00–6:00 p.m. on a non-holiday weekday) and averaging them.
2. The unmet-need test. Even if you can drive there in two hours, the county is only in your approved area if the data shows the area actually needs another hospice — i.e., that existing licensed hospices don’t already cover the modeled demand.

The second test is the anti-saturation gate. It exists to stop the exact pattern the 2022 State Auditor report flagged in Los Angeles: dozens of hospices stacking into one county, all chasing the same patients. If a county is already “covered” on paper, § 74820 says no new service area there.

The Two Sides of the Formula

The unmet-need test compares estimated demand against assumed existing capacity, county by county.

Side 1: Estimated demand (“individuals likely to be eligible for hospice care”)

CDPH anchors demand on cancer deaths — a number that’s reliably counted — and scales it up to the full hospice-eligible population. You pull the figure from a specific public dataset:

• California Health & Human Services Open Data Portal → “Death Profiles by County” → the “Final Deaths by Year by County” dataset.
• Filter to Cause = CAN (cancer), Geography type = Residence, Strata = Total population, and all available years.
• Average across the years to get the county’s average annual cancer deaths. Call that number C.

From there, the regulation scales C up to total demand. This is the part CDPH corrected.

The Math Error — and the June 22 Correction

The regulation text filed earlier in the process contained, in CDPH’s own words, “an error in the original calculation for Geographic Service Area.” On June 22, 2026 — the same day the rules took effect — the Department issued an addendum that supersedes the § 74820 calculation. Here is what changed:

Step	Original (superseded)	Corrected (in effect)
Scale-up multiplier	cancer deaths × 0.7	cancer deaths × (10/3)
“Add cancer deaths back” step	included	deleted
Utilization multiplier	× 0.5	× 0.5 (unchanged)

The fix makes the math sensible. Cancer is only about 30% of hospice-appropriate deaths, so to get from cancer deaths to the total terminal population you multiply by roughly 10/3 (≈ 3.33), not 0.7. The original version only scaled cancer deaths up to about 1.7× — far too low.

The Corrected Demand Formula

With the addendum applied, estimated demand is simply:

• C × (10/3) = all potential hospice patients in the county
• × 0.5 = individuals likely to be eligible for hospice care (the utilization rate)

Which reduces to:

Demand = average annual cancer deaths × 5/3 (≈ 1.667)

Side 2: Assumed existing capacity

The capacity side did not change:

• Look up the number of hospices currently licensed in the county using CDPH’s Cal Health Find database (Facility type = Hospice).
• Multiply that count × 56 — the assumed average number of patients each licensed hospice can accommodate.

One clarification worth making, because it’s easy to get wrong: the 56 is a flat constant applied in every county, Los Angeles included. You’ll see write-ups describe 56 as “the statewide average outside LA County” — that only describes how the State Auditor originally derived the number (excluding LA’s fraud-distorted counts). The regulation itself contains no LA exception; you multiply licensed hospices by 56 anywhere.

The Test

There is “unmet need” only if Demand > Capacity.

If the modeled demand exceeds what existing licensed hospices can absorb, the county qualifies. If existing hospices already cover it, the county is saturated and must be excluded from your approved service area.

A Worked Example

Take a county that averages 200 cancer deaths per year. Demand = 200 × 5/3 ≈ 333 likely-eligible patients. Now test it against the number of hospices already licensed there:

Licensed hospices in county	Assumed capacity (× 56)	Result
2	112	333 > 112 → Unmet need — qualifies
4	224	333 > 224 → Unmet need — qualifies
6	336	333 < 336 → Saturated — excluded

In this county, saturation kicks in at around six existing hospices. As a rule of thumb, a county is “full” once it has roughly C ÷ 33.6 licensed hospices.

Note how much the correction matters: under the original (buggy) formula, demand for the same county would have been only about 170 — saturating at just three hospices. The fix nearly doubled the demand estimate, which means more counties now show unmet need, and the bar to claim a county is lower than the original text implied.

Why This Matters Even With the Moratorium On

California still isn’t issuing brand-new hospice licenses — that moratorium runs into 2027. So in the immediate term, the unmet-need test bites hardest in two places:

• Service-area expansion. Any change to your approved geographic service area goes back to CDPH for written approval — and each added county has to pass the § 74820 test on its own.
• Change of ownership. A buyer acquiring an existing hospice is exempt from re-proving unmet need — but only if the prior licensee already established it and the service area doesn’t change in the deal. Change the footprint, and you’re back to running the formula.

When the new-license moratorium does lift, this becomes the front-door gate for every applicant — which is exactly why it’s worth understanding now.

The Bottom Line

California now decides whether a county can support another hospice using a fixed, public formula — cancer deaths scaled to demand, weighed against existing licensed capacity at 56 patients per hospice. The June 22 addendum corrected a real error that had understated demand by nearly half, so make sure any analysis you rely on uses cancer deaths × 5/3, not the original text’s numbers. For operators thinking about where they can grow — or whether a target county is already full — § 74820 is the math that now governs the answer.

This article summarizes Title 22 CCR § 74820 and CDPH’s June 22, 2026 Finding-of-Emergency addendum for general information. It is not legal advice. Confirm any service-area or change-of-ownership analysis against the current regulation text and qualified counsel before relying on it.