Dive Brief:
- More rural hospitals shut down labor and delivery units this year as the providers faced mounting financial challenges, according to a new report by the Center for Healthcare Quality and Payment Reform.
- Twenty-seven hospitals closed their units or plan to shutter them by the end of 2025, compared with 21 last year, according to the CHQPR.
- Only 41% of rural hospitals in the U.S. still offer labor and delivery care, according to the report. In 12 states, less than one-third of rural facilities still offer these services.
Dive Insight:
Since the end of 2020, 116 rural hospitals have halted delivering babies or said they would shut down their labor units by the end of this year, according to the report. Closures this year are among the highest seen in the past five years, second only to the 34 reported in 2023.
Labor and delivery closures can have serious health consequences for pregnant patients and their babies, who face worse outcomes without access to local maternity care.
While pregnant women in urban communities typically have to travel fewer than 20 minutes to reach a hospital with labor and delivery services, rural patients likely have to spend half an hour reaching a similar hospital — and they could travel for 50 minutes or more, according to the CHQPR analysis.
Less than half of rural hospitals offer labor and delivery care
Rural hospitals already struggle financially and are at heightened risk of closure. Meanwhile, reimbursement from private payers and safety-net insurance program Medicaid often doesn’t cover the cost of maternity care in rural communities — and these providers can’t offset labor and delivery losses without profits on other services, according to the report.
More than 120 rural facilities that still deliver babies lost money in the past two years, potentially pushing these providers to shutter labor and delivery units to stay afloat, according to the report.
Additionally, keeping rural hospitals open and staffed at all hours is pricey in both rural and urban areas, but fewer births in rural communities means less revenue for providers. Meanwhile, staffing can be a challenge too: Providers can’t be on call at all times, so hospitals need to hire more staff to be prepared for births.
The cost of staffing labor and delivery units has also risen as salaries for physicians and nurses increase, Harold Miller, president and CEO of the the CHQPR, told Healthcare Dive via email.
“It has become harder every year for rural hospitals to recruit and retain OB-Gyns and OB nurses, and some hospitals simply haven’t been able to maintain what they believe is a safe staffing level,” he said.
One potential solution to the growing challenge of maternity care deserts is to rethink how labor and delivery services are reimbursed, according to the report.
For example, health plans could offer standby capacity payments based on the number of women of childbearing age covered in the facility’s service area, so hospitals can maintain the staffing and support needed to offer labor and delivery care. They could also receive a smaller fee for each birth.
“Under this two-part payment system, both spending for the health plans and revenue for the hospital and clinicians would be far more predictable than under the current system of paying per birth,” the report reads.
The analysis comes as rural hospitals will likely face increased financial pressures in the wake of the One Big Beautiful Bill Act, which includes significant cuts to Medicaid.
Millions will likely lose coverage as a result of the massive tax and policy law, increasing providers’ uncompensated care costs and cutting into revenue.
