Keeping babies out of the Neonatal Intensive Care Unit should be an unambiguously a good thing if the avoidance is because the babies are being born healthier and in less need of intensive care immediately after birth. There are steps that hospitals, doctors and the rest of the healthcare system can do to tilt the field so that fewer babies are born in severe need of care. Those steps reduce suffering, increase happiness and lower costs.
Well, it is not an unambiguous good thing as this article from the Providence Journal shows an incentive problem:
Care New England reported a $40-million loss during the first half of its fiscal year (Oct. 1-March 31), with the deepest declines at Women & Infants Hospital and Pawtucket-based Memorial Hospital.
Women & Infants delivers the vast majority of babies in Rhode Island, with close to 9,000 births a year — 10 to 20 times the volume of any of the six other hospitals in Rhode Island with obstetrics programs.
Hospital officials have attributed the losses to declining birth rates and reduced volume in the neonatal intensive care unit due to improvements in the health of premature infants.
The specialized maternity care hospital is losing money because an expensive service is not being used as much because the population is healthier. From a cost curve perspective, this is a good thing. From a infant health perspective, this is a wonderful thing. From keeping that capacity open and available, this is a problem. One solution is that Rhode Island loses high end Ob-gyn capacity and they send all the hard cases up to Boston. That is a viable solution.
Another potential solution is to come up with some type of maternity care bundle or an alternative payment reform that throws money back to the hospital for the savings it realized by having fewer babies than expected go to the NICU.
As we try to bend the cost curve, we’re going to see more stories like this. There will be winners, there will be losers as we try to figure out how to make the population as a whole both healthier and using less expensive services to maintain or improve health.