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Nearly half of rural hospitals lose money on births

By Liz Carey

Daily Yonder

About 40 percent of rural hospitals are losing money on their obstetrics programs, but many continue to provide the service because of its importance for community health, a new study shows.

Losing childbirth services can also be a harbinger of hard times for a rural hospital, oftentimes serving as a precursor to closure.

A study conducted by the University of Minnesota Rural Health Research Center found that some rural hospitals keep their obstetrics programs open even after they have stopped being financially viable.

In large part, researcher Julia Interrante said, rural hospitals that close their obstetrics units are more likely to close their doors for good.

“Usually the obstetrics unit will close, and then other services will start to close before the entire hospital closes,” she said. “It’s not always the case – sometimes we see things where hospitals will enter into mergers or move those services to another hospital location… But often when they end up closing OB services, then it usually kind of leads toward the hospital closing.”

A survey of obstetric unit managers or administrators at nearly 300 rural hospitals found that whether the program was in the black wasn’t as important to these leaders as how much the community needed it.

Hospitals reported they needed 200 births per year to maintain safety standards and to remain financially viable. More than 40 percent said they had fewer births than needed to sustain operations financially.

“I think that’s really striking,” Interrante said. “But so many of them also reported understanding the need and importance of having those services in rural communities, because people are still giving birth, and they have to have somewhere to go.”

The survey respondents said it was important to keep the obstetrics units open because of the complications patients could encounter if they had to drive long distances to give birth.

About two-thirds of survey respondents said meeting their community’s needs was the most important factor in keeping their obstetrics units open, even if there weren’t enough births in the area to warrant it financially. Only 16.5 percent said their top priority in making that decision was the financial aspect. Nearly 13 percent said their top priority was staffing. 

Nationally, birth rates have been falling since 2008, according to the U.S. Census Bureau.  Birth rates tend to be higher in rural areas, around 1,900 births per every 1,000 women, compared to 1,600 births for 1,000 women in urban areas. However, because there are fewer women of child-bearing age in rural areas, hospitals tend to see fewer births per year. 

“Many hospital administrators in rural communities care deeply about the health of pregnant rural residents,” Katy Backes Kozhimannil, director of the Rural Health Research Center and lead author of the study, said. “Rural hospital administrators prioritized local community needs over finances and staffing, keeping obstetric units open because local pregnant patients need care. Policy investments are needed to help rural hospitals and communities support safe, healthy pregnancies and births.”

Interrante said insurance reimbursement is one issue rural hospitals face in keeping the obstetrics units open. Rural areas tend to have more patients on Medicaid, she said, which only reimburses a percentage of what it costs hospitals to provide those services. According to the CDC, half of the women who give birth in rural areas are on Medicaid, compared to 41.9 percent in urban areas. 

Medicaid’s role in financing maternity care: Number and share of births, by payer source, rural vs. urban 2018. Table source: MACPAC; Data source: CDC

More than a quarter of those responding to the survey said they were not sure if they would continue providing obstetrics. Or they said they expected to stop offering the service, indicating a continued downward trend in health care access, researchers said.

“The responses from the rural hospital administrators strongly highlight the fact that they provide obstetric services because they are so necessary and important for the health of rural communities they serve,” Bridget Basile Ibrahim, a co-author of the study, said. “For many of the patients who give birth at these hospitals, it would be a huge burden for them to travel to the next nearest hospital to give birth.”

Researchers concluded that any policies to improve rural obstetrics care should take into account community needs, clinical safety, and rural hospital finances. How low-volume, rural hospitals are reimbursed should be investigated to ensure those hospitals’ financial viability, they said.

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