Perinatal regionalization versus hospital competition: The Hartford example

Abstract

Objectives. The increasingly competitive health care environment may undermine effective traditional regional organizations. It is urgent to document the benefits of perinatal regionalization for the emerging health care system. We present a case study that illustrates many of the challenges to and benefits of perinatal regionalization in the 1990s. Background. The controversy in Hartford was sparked by a proposed merger of two major pediatric services into a full-service children's hospital. Community hospitals reacted with plans to upgrade their obstetrics/neonatal facilities toward level II (intermediate) or II+ (intensive) neonatal intensive care units (NICUs). The fear that unrestricted competition would drive up overall health care costs prompted the hospital association and Chamber of Commerce to retain consultants to evaluate the number and location of regional NICU beds. Methods. The consultant team interviewed stakeholders in area hospitals, health maintenance organizations, insurance companies, businesses, state agencies, and community groups, and analyzed quantitative data on newborn discharges. Results. The existing system worked remarkably well for clinical care, training, referrals, and provider and patient satisfaction. There was a high level of inter-hospital collaboration and regional leadership in obstetrics and pediatrics, but strong and growing competition between their hospitals. Hospital administrators enumerated the competitive threats that obligated them to compete and the financial disincentives to support the regional structures. Business leaders and insurance executives emphasized the need to control costs. Analysis of discharge data showed marginal adequacy of NICU beds but maldistribution between NICUs, particularly between level III and level II units. The consultants recommended no new beds based on population projections, declining lengths of stay nationally, and substantial gains available from aggressive back- transport of convalescing infants. The consultants emphasized the need for all stakeholders to support the regional infrastructure (referral, transport, education, evaluation, quality assurance) and to modify competition when it impaired effective regionalization. Conclusions. Regionalization permits better care at lower cost, yet competition may disrupt this effective system. Active cooperation by stakeholders is vital. Substantial new research is required to define optimal regional organization.