State records show 89 hospice companies are licensed to a single three-story office building in Van Nuys, Los Angeles, according to CBS News reporting.

The concentration of hospice businesses at one location represents what advocates describe as "clustering," a pattern that state auditors consider a significant indicator of potential fraud in the hospice industry.

CBS News visited the Van Nuys building to investigate how so many hospice companies came to be registered at the same address. The building houses what advocates characterize as one of the most extreme examples of hospice clustering they have encountered.

Clustering occurs when multiple healthcare companies, particularly hospices, register their business addresses to the same location despite potentially operating elsewhere or existing only on paper. State auditors and healthcare fraud investigators monitor this pattern as it can indicate shell companies or fraudulent operations designed to exploit Medicare and Medicaid reimbursements.

The hospice industry has faced increased scrutiny in recent years over fraudulent billing practices and substandard care. Medicare pays hospices a daily rate for each patient, creating financial incentives that investigators say can lead to abuse when proper oversight is lacking.