AUSTIN, TX – State health officials searching for solutions to Texas’ multibillion-dollar budget shortfall have set their sights on neonatal intensive care units, which they say are being overbuilt and overused by hospitals eager to profit from the high-cost care.
The Texas Health and Human Services Commission, under the gun to find savings in the state’s huge Medicaid program, suggested last month it could save $36.5 million over the next biennium by better managing which babies end up in NICUs, curbing so-called convenience C-sections and refusing to finance elective inductions before the 39th week of pregnancy.
“When we look at the data, it indicates that, yes, there is overutilization of NICUs – more babies are being put in NICUs than need to be in NICUs,” said HHSC Commissioner Tom Suehs.
Lawmakers aren’t ready to say with certainty that Texas has a problem with overused NICUs, nor will most hospitals admit to such a problem. But the data suggests NICU beds may not be proliferating due to natural demand alone. Births in Texas are up nearly 18 percent since 1998, according to state health statistics. Meanwhile, the number of NICU beds in Texas hospitals has surged roughly 84 percent, to 2,510 in 2009 from 1,365 in 1998.
Some state health officials are suggesting there is a profit motive at play for hospitals. The average routine delivery costs Medicaid $2,500, according to state records; the average NICU stay costs $45,000.
Elective procedures like inducing labor prior to 39 weeks of gestation or delivering a baby via C-section at the mother’s request are only contributing to complications that send babies to the NICU, these health officials say. In 2009 alone, 137 Medicaid-covered newborns suffered complications resulting from elective inductions, costing the Texas Medicaid program $1.6 million.
Charles T. Hankins, MD, a neonatologist at Texas Children’s Hospital in Houston, suggested there is a far more nuanced motive than profit. Hospitals – hard hit by low reimbursement rates and high malpractice costs for routine obstetric care – are simply looking for ways to make up the difference.
“A lot of facilities realize if they had a Level 3 nursery, they could help offset their costs,” he said.
He says the NICU boom is often driven less by hospitals than by obstetricians, who do their residency training in facilities with NICUs and can’t imagine not having one available for their patients.
Frank Mazza, MD, vice president and chief patient safety officer for the Seton Family of Hospitals, said state health officials are on the right path in considering birth inefficiencies. When Seton made the almost unheard-of move in 2005 of prohibiting elective inductions before 39 weeks, the number of babies admitted to the NICU fell off dramatically. The hospital’s revenue from them also dropped by 95 percent, to $186,000 per year from roughly $4.5 million per year.
This article was reprinted from Kaiser Health News, an editorially independent news service and a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente