March 4, 2016

More rural hospitals closing their obstetrics wards, study finds

Daily Briefing

Read the Advisory Board's take on this story.

Facing low Medicare reimbursements and staffing shortages, more rural hospitals are closing their obstetrics wards, Michelle Andrews writes Kaiser Health News.

A recent analysis published in Health Services Research of 306 rural hospitals in states with large rural populations found that 7.2 percent shuttered their obstetrics units between 2010 and 2014.

Closures force pregnant patients to make "a long drive for prenatal care visits," says Maureen Murphy, a family physician at Alleghany Memorial Hospital, which closed its labor and delivery unit several years ago. And she notes that bigger problems could arise "if they have a fast labor."

Financial, staffing pressures

In rural areas, it can be difficult to recoup the costs required to run an obstetrics ward, including expensive monitoring equipment and high staffing needs.

"A labor and delivery unit is functionally no different than an intensive care unit," says Neel Shah, an assistant professor at Harvard Medical School.

The lower population in rural areas means that there are fewer deliveries, and rural areas also have higher proportions of patients paying through Medicaid, contributing to even slimmer margins.

"The financial aspect of keeping a labor and delivery unit open is harder in rural areas," says Katy Kozhimannil, an associate professor at the University of Minnesota School of Public Health.

Response

Congress has introduced a bill that would require the federal government to focus on providing maternity care professionals to underserved areas, much as current programs focus on supporting rural primary physicians and mental health professionals. Other organizations have created scholarships that would award providers for committing to work in an area with provider shortages (Andrews, Kaiser Health News, 2/23).

The Advisory Board's take

Haley David and Tali Warburg, Service Line Strategy Advisor

We are seeing some organizations question the sustainability of their OB programs and whether they should close their OB units. The trend is in direct response to financial pressures that are all too familiar to health care leaders, given the costs associated with maintaining and staffing these units, inadequate reimbursements, and difficulty recruiting and retaining OB/GYNs.

Some hospitals may choose to keep their OB units open in order to bring women to their hospital or system, even if the OB unit itself is not breaking even. Since women are often the primary medical decision makers for themselves, their children, and sometimes their parents, bringing these women into a system can result in downstream revenue from other services.

At the same time, those that choose to close their OB units are not always shutting down OB access altogether. Some organizations are using partnerships and other alternative ways to serve their communities. For example, one hospital, profiled in our The Sustainable Acute Care Enterprise study, closed its OB services but mitigated community backlash by forming a temporary partnership with a Federally Qualified Health Center to deliver OB services.

Regardless of whether or not an alternative partnership is put in place, organizations that do move forward with OB closures must carefully message this decision to the community. Successful organizations are transparent about their decision-making process and the trade-offs made.

To learn more about how community hospitals are responding to financial pressures, you can join our experts and community hospital leaders on Monday, March 7, for a webconference to explore how smaller, independent, and rural facilities can solidify their financial foundations.

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