Are hospitals the wrong place to give birth?

Most babies in the United States are delivered in a hospital by an obstetrician, but that is changing.

Between 2004 and 2012, the percentage of women delivering outside a hospital – mostly in birth centers – increased from 0.8 percent to 1.3 percent. This is driven largely by a desire to avoid the medicalization of childbirth – particularly the high risk that in an American hospital, a pregnancy will end in a cesarean. The trend comes at a convenient time, as healthcare prices continue to rise, and as patients shoulder an increasing share of their medical costs.

Hospital births are expensive. Obstetricians are paid a one-time fee of approximately $2,900 that covers delivery, all 14 prenatal visits, and the postpartum visit six weeks after delivery. This rate is a national average, according to a 2013 report from Truven Healthcare Analytics, the most comprehensive report on pregnancy costs in recent years. The hospital receives $6,700, and the anesthesiologist receives about $1,000 to place an epidural. Ultrasounds, labs, and medications will add almost $2,000 – and newborn care will cost $5,800. Total payments: $18,329, assuming commercial insurance.

Keep in mind that these are 2010 dollars, and since health care inflation has outpaced the consumer price index for most years since, these figures are now approximately 25 percent higher. Medicaid programs, that pay for roughly half of American pregnancies, pay approximately half what private payers do. Of course, reimbursement varies by insurer, the amount billed by doctors and hospitals is vastly higher than what is paid, and patients are responsible for approximately 15 percent of the total expenses.

This also assumes a vaginal delivery, which used to be a reasonable assumption. In 1970, the cesarean rate in the United States was 5.5 percent; in 2015 it was 32 percent, according to the Centers for Disease Control and Prevention. Total payments for a pregnancy ending in a cesarean and the newborn care that follows totaled $27,866 on average in 2010 for commercially insured moms.

The cost comparison between hospitals and birth centers is striking: Midwives cost less than doctors, and they tend to order fewer ultrasounds and other tests. Only patients who are low-risk and motivated to have a non-medicalized experience and a rapid discharge end up in a birth center. But for that subset of the pregnant population, birth center obstetric care costs a fraction of traditional hospital-based care.

The Minnesota Birth Center operates two facilities near hospitals in Minneapolis and St. Paul. Although licensed by the state, each feels like a cross between a medical office building and a well-appointed home. Intravenous antibiotics and fluid can be administered, and these centers have inhaled nitrous oxide (laughing gas) to dull labor pain, but not epidural anesthesia. The birth center uses the cloud-based athenahealth electronic medical record that allows them to access prenatal records from anywhere, and helps to identify who is – and who is not – eligible for birth center care. Dr. Steve Calvin, Medical Director at the center, estimates 50 percent of all pregnant women are eligible for a birth center delivery, and 91 percent who begin prenatal care at the birth center deliver vaginally.

Birth centers may be unequivocally less expensive than hospitals, but there has been debate about whether they are safe. The medical literature provides justification for heading to the hospital. It’s rare, but babies are twice as likely to die if they are born outside a hospital than they are in a hospital birth, according to a 2015 study in the New England Journal of Medicine.

However, this study didn’t have enough enrolled subjects to compare home births to birth center deliveries. Nor were there enough to distinguish birth centers staffed by well-trained certified nurse midwives (CNMs) who adhere to strict clinical protocols from lesser facilities and less well-trained midwives who inappropriately provide care for high-risk patients in out-of-hospital settings. Whether or not these factors impact safety is up for debate, according to Aaron Caughey, an obstetrician and chair of the department of obstetrics and gynecology at Oregon Health & Science University who co-authored the study. A different study that tracked over 15,000 women who planned to deliver at one of 79 birth centers reported no serious maternal outcomes, but a stillbirth rate in labor of 0.05 percent, somewhat higher than comparable in-hospital rates.

With these concerns in mind, Calvin set up his birth center to optimize safety. He only employs certified nurse midwives, ensures they have hospital privileges with the ability to follow their patients in the event they are transferred, and the team maintains rigorous clinical protocols.

To address the cost issue, Calvin put together the “birth bundle.” For $12,500, the birth center will take responsibility for the cost of prenatal care, delivery, and newborn care – whether it happens in the birth center or in the hospital, negotiating a deal to pay the hospital if a patient needs to be transferred. With the establishment of the bundle, Calvin estimates commercial insurers could save approximately $5,000 per delivery compared to the $21,000 payment that is typical in the area.

The irony is that in many parts of the country, birth centers have struggled to convince insurance companies to pay them adequately – even if an adequate amount is far less than physicians and hospitals receive. Pregnancy is a logical condition to be bundled from a payment perspective, given the defined timeframe and relatively low rate of complications that are expensive to treat.

Though in the world of obstetric care, policy-making is challenging. Unlike joint replacement and cardiac care – conditions that have been bundled by CMS – government-funded obstetric care is covered largely by 50 different state-run Medicaid programs, and not the federally-run Medicare system. Although the payers would be the obvious winner in a shift to birth-center care, it is the hospitals that are ready to collaborate. Alina and Northwestern hospitals in the Twin Cities areas are working with Calvin – even if he might take patients away from them – because it allows them to focus on the complex patients who need hospital care, while providing a subset of patients with a cost-effective, highly satisfying out-of-hospital experience that maintains patient goodwill.

Adam Wolfberg, MD, MPH practices obstetrics in Boston. He is the chief medical officer of Ovia Health and is the author of Fragile Beginnings.

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