Newspaper articles cited financial issues as the main reason for the closure. I was talking with someone a few weeks back whose friend a hospital administrator. Here's the inside scoop:
55% of our hospital's maternity patients were on Medicaid. Medicaid reimbursements were so low that the hospitals' maternity department lost $500,000 last year. The administrators feared that the entire hospital would have to close if this trend continued. So they decided to close the maternity department, rather than risk shutting down the hospital.
Now, I'm not sad that this particular hospital closed. It had one of the higher c-section rates in the state (33.4% as of 2008). It also banned VBACs, another thumbs-down in my book. In contrast, a small community hospital 30 minutes away had a cesarean rate of 23.7% the same year. Both hospitals served nearly identical patient populations--only low-risk pregnancies and near/full-term babies--and did the same number of births per year.
But I am disappointed that I no longer have a hospital 5 minutes away. Granted, I'd only go there in an extreme situation where it would be impossible to travel to the other hospital (which does VBACs and is working on its Baby-Friendly certification).
Low Medicaid reimbursement doesn't just affect hospitals. Currently 60% of my midwife's clients are on Medicaid, 20% have private insurance, and 20% pay out-of-pocket. Although her global fee is $3,600, Medicaid only pays 15% of that amount per birth (a bit under $700). She cannot require her Medicaid patients to cover the rest of her global fee, which means that she actually has to pay to take Medicaid clients. Her birth supplies and birth assistant cost her more than she gets paid. She is currently deliberating whether to stop accepting Medicaid, since it is causing her practice to lose money.
A flip side of low Medicaid reimbursement is exorbitantly high billing for those with private insurance. A friend had her baby at our hospital a few months ago, before it closed. She had a spontaneous vaginal birth with no maternal or infant complications and no nursery stay. The total fees for her prenatal care and birth came to $25,000. The bill was negotiated down a few thousand dollars, coming to a total of around $22,000. Between her deductibles and co-pays, she had to pay close to $5,000 out-of-pocket to have her baby.
Other reading on the topic:
- Will Your Hospital’s Maternity Ward Close? By Dr. Linda Burke-Galloway
- Lower TennCare rates for C-sections upset obstetricians (thanks to The Unnecesarean)
- Bye-bye babies: South Seminole closing its birthing unit today
- 2 VA hospitals closing maternity wards
- Hospital Maternity Wards Are Closing Across U.S.