Written by Kim Krisberg

In the mid-1960s, Texas was home to about 300 rural hospitals, and nearly all of them provided labor and delivery services. Fast forward to 2018, and the state is home to 162 rural hospitals, only 66 of which provide labor and delivery care outside of emergency situations.

Don McBeath, director of government relations at the Texas Organization of Rural and Community Hospitals said the data doesn’t tell the whole story. For example, while the state might collect information on the number of obstetric beds inside a hospital, the data doesn’t always reveal whether the hospital actually uses those beds to provide regular labor and delivery services. More anecdotally, TORCH estimates that each year during the last handful of years, about four to five rural Texas hospitals have had to shutter labor and delivery services. In 2018, McBeath reported that hospitals in four more rural communities — Lamesa, Yoakum, Marshall and Eagle Lake — joined the list.

The common contributors to such closures — low Medicaid reimbursement rates, the high costs of malpractice coverage, workforce shortages and a relatively low number of births — can make it financially impossible for an already-strapped rural hospital to sustain an active obstetrics unit, according to McBeath. Consider that the average cost of a noncomplicated vaginal delivery in Texas is more than $7,300 and the average cost of a cesarean section is more than $10,500. In some rural communities, up to 70 percent of deliveries are covered by Medicaid, which doesn’t cover the full cost of delivering and caring for new moms and babies, McBeath said. That leaves many rural hospitals with revenue gaps they just can’t absorb without endangering their many other critical health care services.

“Put yourself in the shoes of a CEO at a small rural hospital,” McBeath said. “At some point you have to ask yourself: What’s my biggest loss? And in many rural hospitals, that’s labor and delivery.”

Complicating reimbursement challenges more is a 2013 state law that directed state health officials to create new maternal level of care designations, somewhat similar to the designations hospitals have for trauma care. Beginning in 2020, such maternal designations will be a requirement for hospitals to receive Medicaid reimbursement.

McBeath predicts that the same 66 rural hospitals that already obtained a neonatal level of care designation — also mandated in the 2013 state law —also will apply for maternal care designations, which were created to help improve patient outcomes and reduce maternal mortality and morbidity. But without a fix to the state’s Medicaid reimbursement rates, McBeath predicts that many rural hospitals will still struggle to keep the doors open on labor and delivery.

“This is a silent crisis,” he said.


Letha Stokes, CEO of Medical Arts Hospital in the West Texas town of Lamesa, described the shuttering of the hospital’s labor and delivery services as the “most difficult thing we’ve ever had to do.”

Labor and delivery at Medical Arts Hospital was officially discontinued Dec. 6, 2017. Before then, the hospital delivered between 80 and 120 babies each year; since then, the hospital’s two dormant obstetric suites have been relicensed for other purposes, often serving as rooms where visiting doctors and other guests can sleep.

Stokes estimates that at least 80 percent of the babies delivered at the hospital had been insured by Medicaid, which typically covered less than half the cost of delivery and aftercare. The result, she said, was that by the time the decision was made to shutter nonemergency labor and delivery, the hospital was losing more than $500,000 every year to keep delivering babies. In the three years prior to shutting down obstetrics, the hospital had lost more than $1.5 million in direct revenue.

“It was nonsustainable,” Stokes said. “We weren’t delivering the volume of babies needed in order to compensate for the loss in cash flow to our small, rural hospital. It was inevitable that this would happen.”

Of course, the hospital still delivers babies on an emergency basis and then arranges to transport new moms and infants to nearby hospitals with obstetrics units and nurseries — a trip of 40 to 60 miles away, Stokes noted.

Fortunately, closing the hospital’s labor and delivery services didn’t eliminate the community’s prenatal care access. Stokes said the hospital still has two full-time family practice physicians in its rural health clinic who provide prenatal care up to 32 weeks of pregnancy and then help patients coordinate and plan their deliveries with doctors and hospitals in nearby towns like Lubbock, Big Spring and Snyder.

Preparing the community should be top priority when a small, rural hospital has to close down labor and delivery, Stokes said, including explaining the decision to board members and other stakeholders, and educating residents on the continued availability of local prenatal care and the need to plan for a delivery outside of town.

“Education is my biggest concern,” Stokes said. “We’re still here for you but understand that we no longer have an obstetrics unit.”

At Medical Arts Hospital, labor and delivery is just one casualty of the rural hospital’s struggle to stay open. In the span of six months, the hospital closed labor and delivery, home health care, hospice, anesthesia, general surgery and its nursery — “and if we hadn’t done that, we’d be boarded up,” Stokes said.

Stokes said increased Medicaid reimbursement from the state would certainly help, but she also said the “everyday pressures” to do more with less “have to stop.”

“There needs to be an understanding from Washington, D.C., all the way down to Austin on how critically important rural hospitals are to their communities,” she said. “You have to stop asking us to give more with less or we won’t be here a year from now — and not because we’re not great at what we do, but because we got pressed so hard, we couldn’t sustain it anymore.”

For TORCH, holding Medicaid managed care organizations accountable for fully reimbursing rural hospitals for the cost of caring for Medicaid patients would go a long way to ensuring rural hospitals can sustain labor and delivery services. A bill to address Medicaid underpayments was proposed during the last Texas legislative session, and McBeath anticipates a similar effort when the next session begins in January.

In Eastland, a town of about 4,000 people between Dallas and Abilene, Eastland Memorial Hospital shut down its labor and delivery services in 2007. Ted Matthews, the hospital’s CEO, said the closure was due to a combination of workforce shortages, low reimbursement rates and high malpractice insurance costs. “It just became completely cost prohibitive,” said Susan Greenwood, chief nursing officer at Eastland Memorial Hospital.

“You need nurses who are specialized (in labor and delivery), physicians willing to do it, and 24/7 coverage before you can start accepting patients,” Greenwood said. “There’s special equipment, special training, the insurance to cover it — if you do it, you have to do it right for the safety of mom and baby … It became difficult to nearimpossible to sustain.”

Before 2007, Matthews said the hospital delivered about 83 babies each year, with many of those births covered by Medicaid. Since then, the hospital still delivers a few babies each year in an emergency capacity — three babies in the last year — “but it’s not an ideal situation for anyone,” Greenwood said. After an emergency labor and delivery, most patients are transported about 60 miles to Abilene.

Unfortunately — unlike the situation in Lamesa — the loss of labor and delivery also meant a loss of prenatal care in Eastland. To offset that gap, Matthews said, an obstetrician from Abilene visits the hospital twice a month to provide prenatal services.

“Still,” Greenwood said, “their obstetrician is an hour away and that’s a challenge.”

But without a better balance between malpractice coverage and reimbursement rates, she said regular labor and delivery “just isn’t feasible” for many small, rural hospitals like hers.

“It’s not ideal that we don’t deliver babies here, but it’s just the unfortunate reality in rural communities,” Greenwood said. “At the end of the day, we have to be able to pay our bills.”