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The Real Cost of Early Elective Deliveries

What if I told you that across the country there’s a procedure being performed on pregnant women that makes their newborns more likely to end up sick and in a $3,000-a-day Neonatal Intensive Care Unit (NICU)?

Too outrageous to believe?

It’s true.

Early elective delivery ‚ when labor is induced 3 to 4 weeks early without medical necessity , is on the rise in the U.S. According to a report released in January 2011 by the Leapfrog Group, between 1992 and 2003 the number of these births increased from 19% to 29%. Seven hospitals across the country perform these deliveries on 100% of women without medical necessity, and over thirty others perform them 50% of the time or more.

The American College of Obstetricians and Gynecologists (ACOG) has long recognized the risks associated with inducing labor when it is not medically needed. One retrospective study found that infants born at 37 weeks are nearly 23 times more likely to suffer severe respiratory distress than those born between 39 and 41 weeks. ACOG thinks this is unacceptable.

So why do hospitals do it? Experts see a few possible explanations:

  1. Obstetricians deliver but don’t care for newborns. They move quickly from birth to birth, and lack a complete understanding of the complications associated with early deliveries.
  2. Natural deliveries are difficult to anticipate. Nature can be fickle and tends to ignore the schedules of busy physicians. Patients may simply agree because they see little harm in early deliveries.

There’s yet another incentive worth pondering. It’s prefaced by a big green $, and followed by plenty of zeros. NICUs – where many pre-term babies end up – are highly profitable for hospitals. John Lantos, a former Chief of General Pediatrics at the University of Chicago, recently wrote in Health Affairs:

The NICU – which represented nearly 4 percent of total admissions [for the hospital] ‚Äì had generated 11 percent of the net revenue. Since most of the academic medical center’s divisions either barely broke even or lost money, that meant that a staggering 69 percent of the net profits of the entire hospital system came from the 4 percent of hospital admissions to the NICU.

In other words, healthy, full-term babies are not nearly as profitable as preemies. The average cost of caring for a premature baby is $41,610 versus just $2,830 for a full term baby. A clear line can be drawn between more early term births and more days spent (and dollars generated) in the NICU. Increasing the numbers of preterm births creates a perceived need for additional NICU beds, thereby increasing the need to fill those beds. A self perpetuating cycle quickly emerges.

Such a cycle can be broken, as illustrated by Intermountain Healthcare. This Utah and Idaho-based health system reported a 30% rate of early induced labor in 2001 before introducing a protocol that explicitly urged doctors to avoid performing early inductions unless medically necessary. At first, some obstetricians didn’t see a problem. Convincing them required bridging the‚ “information gap,” between what doctors thought they knew and the evidence-based reality. When presented with data from their own patient base ‚ which showed a lot of babies in distress ‚ obstetricians fundamentally changed their practice patterns.

By 2004, Intermountain’s rate of early elective deliveries had plummeted to 5%. They have since brought this rate even lower to 2%. A New York Times article on Dr. Brent James, the chief quality officer at Intermountain, noted that Intermountain’s protocol had reduced the number of babies who ended up in the NICU.

Maybe it’s time to start thinking about babies first and changing the way we pay for births. Simply put, as hospitals reduce their early elective deliveries, they’ll see reduced NICU profits. Intermountain is a capitated health system, so there is little incentive to provide unnecessary care. The fee-for-service model of most American medicine still encourages doing more, even when more medicine doesn’t translate to better health. Bundling payments for birth might be one way to discourage hospitals from performing early elective deliveries when they’re not medically necessary. Although bundled payments require risk adjusting to account for the mother’s health, they would serve as a check against doing more than what’s really needed. Early elective deliveries involve more care at a very great cost – a baby’s health.

(This post originally appeared on The New Health Dialogue,a blog from New America’s Health Policy Program.)

Vanessa Hurley is an analyst for New America’s Health Policy Program. She earned her bachelor’s degree in English from Dartmouth College. Ms. Hurley also holds a Master of Public Health degree from The Dartmouth Institute for Health Policy and Clinical Practice.

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medical-x-ray machinejosey jasenCammyHealth and safety manuals TorontoMary Albert Recent comment authors
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Guest

It is helpful and this is a good article that I saw,thanks for sharing!

josey jasen
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Cammy
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Health issue are the most important issues in human’s life. We and our Govt. should more considered to them to resolve them.

Health and safety manuals Toronto
Guest

Great Article, And good information about the Early Elective Deliveries.
This is very dangerious the women and her child. Early elective delivery ‚ when labor is induced 3 to 4 weeks early without medical necessity . Your right,such a cycle can be broken, as illustrated by Intermountain Healthcare.
Thank to u, this is a really nice post…
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Mary Albert
Guest

I just found out that a recent survey found that the leading reason (accounting for about 25% of early births) was caregiver concern that the mother was overdue. About 19% were medical inductions, another 19% were due to the mother’s desire “to get the pregnancy over with,” and the final one (17 percent) came from concern about the size of the baby.

Katherine Henderson Doula
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Katherine Henderson Doula

As a woman living in an area with a high rate of induction without medical need, which, inevitably leads to cesaerean. I can say that, had I not been fully educated on the matter, I would have given in to the severe bullying I received from my OB’s office to induce 3 weeks early! I had the time, the energy and the passion to fully research this matter before I came to a decision. Unfortunately, many other women do not have those luxuries. The doctor says “I think we should induce” and the mother takes that as “Doctor’s orders” and… Read more »

Paige
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Paige

I got the impression that the author was not saying women are being induced early in order to fill NICU beds. I read her as saying the money generated by a full NICU gives hospitals little incentive to encourage their OBs to stop inducing early with no medical necessity. As in, it isn’t a nefarious plot, just a vicious (profitable) cycle.

Alissa
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Alissa

Well put Paige, I think you have hit the nail on the head. Although I doubt there is indeed a ‘nefarious’ plot at work, the ridiculous profit that NICUs bring into hospitals certainly acts as a disincentive for change!

Cheryl Kohout
Guest
Cheryl Kohout

You have a whopping logical fallacy in play as you attempt to paint a nefarious picture of NICU administrators:

You say “Obstetricians deliver but don’t care for newborns.” Fine, they are just trying to schedule their day.

But then you posit that as a profit center, hospitals need to fill NICU beds. Well, how does that happen if OBs deliver but don’t care for newborns?

blondie
Guest
blondie

I know that a lot of OBs like their patients to fit into their schedule, but I really hope they aren’t THIS stupid and selfish! I sincerely hope that not one person who cares for pregnant women is so dumb that they don’t know delivering a baby early for no good reason can do more harm than good. If they do, they should have their medical licences revoked!

Danielle Irizarry
Guest
Danielle Irizarry

As a midwife that has worked with an extremely high risk population of women in NYC, I can echo the sentiments of many of the other professionals on this thread in saying that early inductions (what I refer to with my patients as “social inductions”) have ABSOLUTELY nothing to do with peds/NICU. All those on this thread who work L&D can actually affirm that we do our damnedest to avoid dealing with peds at every cost. The number one thing I strive for with every patient that I manage antepartally & intrapartally is to have a healthy mother and baby.… Read more »

Jason Talenter
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Jason Talenter

While hospitals may make more money for NICU deliveries, there’s no way that the hospital is going to the OBs and telling them to deliver early so they can make more money. Nor do the NICU doctors talk to the OBs. The decision for elective/early deliveries is 100% the responsibility of the pregnant mother an the OB/GYN doctor or midwife. The hospital and the NICU have absolutely nothing to do with it. These are shoking allegations and you’d better have some ammo to back it up when you make these kinds of outrageous claims. The reason elective early deliveries are… Read more »

Daron
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Daron

One thing that needs clarification is that Intermountain Healthcare is not a capitated health system.

nate
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nate

its some crazy term I found on an old insurance policy from the 40s, old people sure use to talk funny

Tom Leith
Guest
Tom Leith

What’s that Nate? A “medical necessity” standard in MEDICAL INSURANCE? That’s just crazy talk.

nate
Guest
nate

to resolve James’ issue and quickly put an end to it how would everyone feel if Insurance companies denied any delivery charges that were induced early without medical necessity? This would keep all hospitals on an even playing field preventing doctors from shoping facility and wouldn’t require any changes to contracts, reimbursement methods, or anything else. This could be rolled out and effective next monday. The only thing it would require is the media and politicians not turning around and blasting insurance companies for doing it. Easy problem with a very easy fix as long as people agree it is… Read more »