Last week, Keck Medicine of USC announced the USC Verdugo Hills Hospital Obstetrics Services to Close On November 20, they cited a 40% drop in deliveries over the past decade in “our community” and the resulting financial impact on the hospital as reasons for the decision. While this rationale seems reasonable on its face, it masks a worrying trend that has significant implications for maternal health.
The closure of labor and delivery units in hospitals is a national trend, leading to “maternity care deserts“The closures primarily affect patients with Medicaid insurance, which pays for more than 40% of deliveries in the United States and through Medi-Cal, more than 50% of deliveries in California. Unequal access to obstetric care contributes to the shamefully high maternal mortality rate which, with 22 maternal deaths per 100,000 live births in 2022, was two to three times higher than the rate in peer countries.
Obstetric care is different from many other types of health care because it is unpredictable. Babies don’t arrive when they’re expected, and labor and delivery units can fluctuate around those schedules. For doctors to safely care for laboring mothers and their babies, hospitals must be staffed to handle a sudden surge of patients requiring emergency care.
The modern fee-for-service model, which pushes hospitals to maximize efficiency and reduce staffing levels, sees the resiliency needed for deliveries as a drag on their bottom line. In this model, hospitals must fund 24-hour capacity but are reimbursed only when their facilities and staff are operating. So if there aren’t enough deliveries, expenses outstrip reimbursement. This pushes hospitals out of the delivery business altogether.
California has seen a higher rate of obstetric unit closures than other states, and that rate continues to accelerate. More than 46 labor and delivery units closed in the state between 2012 and 2023, including 60% in the last three years. These closures are not limited to sparsely populated rural areas: 17 were in Los Angeles Countywhich results in a a local rate of closures that far exceeds the declining birth rateThis year, five more California hospitals have stopped providing obstetrics care, and USC Verdugo Hills will be the fifth in Los Angeles County to close labor and delivery services in a two-year period.
Health insurance and health care administrators talk about rightsizing and consolidation, about concentrating obstetric care in fewer hospitals so that there are enough deliveries to cover the costs of maintaining operations. This will work only if we assume that market forces will balance supply and demand so that enough maternity and delivery services remain open to meet demand. But these forces work only if prices are dynamic and responsive to changes in supply. Insurers, particularly Medicaid and Medi-Cal, have not demonstrated this kind of flexibility.
Medi-Cal, California’s Medicaid program, offers reimbursement rates for obstetric care that are fifth lowest in the countryIn our state, even busy maternity wards that primarily serve Medicaid patients are failing to break even. Martin Luther King Jr. Community Hospital in South LA has trouble staying open Despite the surge in obstetric patients, more labor and delivery units in Los Angeles have closed. That shows that the amount Medi-Cal pays is below the market cost of providing obstetric care. That shortfall is at the heart of the closures in California.
There are at least two paths to follow.
The first solution would be to increase Medi-Cal reimbursement for each delivery patient. The second would require regulating and directly subsidizing the maintenance of labor and delivery units, much as the state does emergency departments. Either approach will be expensive, because providing safe, modern, evidence-based obstetric care is expensive.
Reproductive freedom is at the heart of this election campaign. It must include reasonable, safe and reliable access to childbirth and maternity services.
Anna Reinert is an assistant professor of clinical obstetrics and gynecology at the Keck School of Medicine of USC.
