Last week, Keck Medicine of USC announced closure of USC Verdugo Hills Hospital obstetrics services on November 20 they cited a 40% decline in delivery over the past decade in “our community” and the resulting financial effect on the hospital as the reason for the decision. While this justification seems reasonable at first glance, it hides an unpleasant trend with significant implications for maternal health.
The closure of hospital labor and delivery units is a national trend, resulting in “desert maternity care.” The shutdown primarily affects patients with Medicaid insurance, who pay for it more than 40% of the delivery in the United States, and through Medi-Cal, more than 50% of the delivery in California. Unequal access to obstetric care contributes to America the maternal mortality rate is a shame which, at 22 maternal deaths per 100,000 live births in 2022, double or triple the level of the same country.
Obstetric care differs from other types of health care in that it is unpredictable. Babies don’t come on anyone’s schedule, and the hustle and bustle of labor and the delivery unit can take a long time. In order for doctors to safely care for sick mothers and babies, hospitals must be assigned to the possibility of large numbers of patients requiring emergency care.
The modern fee-for-service health care model, which pushes hospitals to maximize efficiency and reduce staff, views the endurance required to deliver babies as a drag on the bottom line. In this model, hospitals must fund their hourly capacity but are only reimbursed when their facilities and staff are operating. So if not enough deliveries happen, the cost is greater than the repayment. This caused the hospital to go out of the baby delivery business altogether.
California has experienced a higher rate of obstetric unit closures than any other state, and continues to accelerate. More than 46 labor and delivery departments were closed in the country between 2012 and 2023, with 60% occurring in the last three years. These closures are not limited to sparsely populated rural areas: 17 are in Los Angeles Countyresults in a the local rate of closure far exceeds the birth rate. This year, five other California hospitals have stopped providing obstetric care, and USC Verdugo Hills Hospital will become the fifth in LA County to close labor and delivery within two years.
Health and medical benefits administrators are talking about scaling and consolidation, concentrating obstetric care in fewer hospitals so that there are enough deliveries to cover the costs of keeping them open. This will only work if we assume that market forces will sort out the balance between supply and demand so that the labor and delivery departments remain open to meet demand. But these forces can only work if prices are dynamic and responsive to changes in supply. Insurance providers, particularly Medicaid and Medi-Cal, do not exhibit this type of flexibility.
Medi-Cal, the Medicaid program in California, has reimbursement rates for obstetric care fifth lowest in the country. In our country, even a busy labor and delivery department that cares primarily for Medicaid patients will not go away. Martin Luther King Jr. Community Hospital South LA struggling to stay open despite increasing obstetric patient volume as other Los Angeles labor and delivery units close. This indicates that the amount paid by Medi-Cal is lower than the market cost of providing obstetric care. This deficit is at the heart of California’s shutdown.
There are at least two ways forward.
The first is to increase Medi-Cal reimbursement for each patient referred. The second requires directly regulating and subsidizing the maintenance of labor and delivery units as the state does for emergency rooms. Either approach will be cost-effective, as providing safe, modern, and evidence-based obstetric care is expensive.
Reproductive freedom is much in the news this campaign season. This should include adequate, safe and reliable access to labor and delivery services.
Anna Reinert is an assistant professor of clinical obstetrics and gynecology at the USC Keck School of Medicine.
