Hospitals & Facilities

Most rural hospitals no longer offer birthing services, study finds

Between low reimbursement rates and rising costs, rural hospitals are struggling to afford birthing centers.
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· 5 min read

Despite some hospitals considering childbirth a “cash cow,” many rural facilities are shutting down their birthing centers as they lose money on the procedure, according to a recent study from the Center for Healthcare Quality and Payment Reform (CHQPR).

More than half (55%) of rural hospitals in the US no longer provide birthing services, and 600+ more are at risk of closing their birthing centers because they cannot afford to maintain them, CHQPR researchers found.

“It is not an exaggeration to say that rural maternity care is in a state of crisis, and a crisis demands immediate action,” according to the CHQRP report.

The financial challenges rural hospitals are facing

Rural hospitals face a number of financial barriers when it comes to providing birthing services.

The number of births per year is decreasing across the US, according to a 2023 study from nonprofit organization Brookings Institution.

This presents an acute budgetary challenge, experts say: Insurance reimbursement rates are typically tied to the number of births that take place at a hospital, and some rural hospitals don’t administer births frequently enough to cover the costs of keeping clinicians staffed, Harold Miller, president and CEO of CHQRP, told Healthcare Brew.

Hospitals that provide birthing services are required to have specialized clinicians, including nurses and ob-gyns, on staff 24/7, since a birth could happen at any time. With nationwide staffing shortages, the cost to keep clinicians on staff is going up, and “it’s particularly hard to find people with the kinds of specialized skills that you need in maternity care,” Miller said.

As those costs go up—and a decreasing number of births leads to lower reimbursements—rural hospitals may feel they have no other option than to shut down birthing services, Miller said.

The fallout

Without nearby birthing services, most patients have to travel farther, which in turn increases the risk of complications and death for both the childbearing patient and the baby, according to Miller.

In urban areas, it takes less than 20 minutes on average to access a hospital with birthing services, according to CHQPR’s study. In rural areas, it takes at least 30 minutes on average; more often, it actually takes 40 minutes or longer, the researchers found.

And the consequences go beyond just childbirth, Miller noted. When hospitals eliminate birthing services, they often eliminate prenatal and postnatal care as well, he said.

That could have devastating consequences.

As the authors of the CHQPR study note, the US “has the highest rates of mortality for both infants and mothers among the world’s advanced economies […] Moreover, the problem is getting worse, not better; maternal mortality rates in the US nearly doubled between 2018 and 2021.”

A case study

Last June, St. Peter’s Health Partners (SPHP), a health system serving upstate New York, announced plans to shut Burdett Birth Center at Samaritan Hospital in Troy.

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Kim Baker, SVP of Samaritan Hospital’s health operations, said the decision was driven by low Medicaid reimbursement rates, a high proportion of Medicaid enrollees, and declining birth rates, per a letter to state Health Commissioner James McDonald.

Further, a health impact equity assessment that the hospital submitted to the state said that “the losses incurred through operation of the maternity services unit at Samaritan Hospital, inclusive of providers, anesthesia, and fixed costs, totaled $2.3 million” in 2022.

“Burdett has not been immune to the critical healthcare challenges hitting hospitals and birthing centers across the country,” Robert Webster, an SPHP spokesperson, told Healthcare Brew in an emailed statement.

Community organizers who are against the closure said it would force them to look at alternative birthing services in the future—particularly the midwifery and doula support offered at the facility, which would move to St. Peter’s Hospital in Albany if Burdett closes.

“If we lose it, we have nothing in Rensselaer County,” Ashley Saupp, an organizer with the Save Burdett Birth Center Coalition, told Healthcare Brew. “Here in our little corner, there’s no place to deliver a baby in Rensselaer County, in Greene County, or Columbia County.” The average distance to a birthing center for residents in Greene County, for example, is located nearly 33 miles away, according to the March of Dimes, which tracks maternity ward closures.

A possible fix

One possible solution to alleviate some of the financial burden on rural hospitals is to create a reimbursement system that’s not tied to the number of births, Miller said, arguing that insurers should reimburse hospitals with what CHQPR calls an “annual standby capacity payment.”

In this model, an insurer would essentially pay hospitals a flat rate per year to have maternity services available, rather than pay based on a strictly fee-for-service basis.

“That [flat rate] would be paid by health insurance plans based on the number of women living in the community that they’re insuring, age 15 to 44,” Miller said. “The payment then better matches the way the hospital incurs the cost.”

To make a difference, every type of insurer—including private, employer-based, and government-run—would need to agree to this new payment method, according to Miller.

Miller said he’s not aware of any insurers that have tried such a reimbursement model.

“Every day that steps are not taken to implement the changes in workforce recruitment and payments described above increases the likelihood that more women and babies will die unnecessarily,” the CHQPR study authors noted.

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Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.