Two Florida hospitals are following the lead of several counterparts around the country by closing their maternity units as rising malpractice insurance premiums have squeezed profits.
Aventura Hospital and Medical Center, Miami, announced last week that it would stop delivering babies on Nov. 27, after six years of operating its obstetrical services program in the red. Columbia Hospital, West Palm Beach, already made the decision earlier this year to close its maternity unit because of high malpractice premiums and competition from three other hospitals within a five-mile radius.
The issue of rising malpractice premiums is "hot, heavy and considered a crisis," said Geri Evans, spokeswoman for the Florida Hospital Association, which represents 230 hospitals.
The closures are the latest in a national trend in which premium costs have more than tripled for providers in nine states, forcing some to end their maternity services, according to the American College of Obstetricians and Gynecologists. Hospitals in Florida, Mississippi, Nevada, New Jersey, New York, Pennsylvania, Texas, Washington and West Virginia have been hit especially hard by the rising premiums, the college said.
In Philadelphia this summer, Thomas Jefferson University Hospital stopped delivering babies at its Methodist Hospital division. Mercy Hospital of Philadelphia also blamed high insurance costs for its decision to abandon its maternity unit.
At 407-bed Aventura, Chief Executive Officer Davide Carbone said escalating malpractice costs and inadequate reimbursements from insurance companies are to blame for the closing. The hospital's malpractice costs have exceeded $1,000 per birth for the last three years and average $1.1 million annually, Carbone said, adding that the hospital did not have one malpractice case in the six years the maternity unit has operated.
Net revenue in the obstetrical services unit represents only 2% of the hospital's total net revenue from all services, while malpractice premiums account for 26% of the hospital's total malpractice costs, he said. Aventura's total revenue was $134 million in 2001. The hospital would not provide figures for its net income.
"We need dramatic malpractice and tort reform, especially in the state of Florida," Carbone said. "We are stuck between a rock and a hard place. Without affordable insurance, more and more obstetricians and hospitals will be forced to stop delivering babies."
Aventura's maternity unit has reported an average loss of $900 per birth. In 2001, when the hospital delivered 863 babies, the hospital reported a $750,000 loss in the unit. Aventura faces stiff competition, too. The hospital reported the lowest volume of deliveries among the 14 hospitals in the Miami-Dade County region, according to the hospital's own statistics.
At 250-bed Columbia Hospital, which delivered 800 babies last year, the story is much the same. The hospital, which has eight birthing suites but no longer operates its maternity unit, faced higher premiums and more competition.
Columbia is located just one mile from St. Mary's Hospital, which has a stranglehold on maternity units in the West Palm Beach area, Columbia spokeswoman Simone McPhee said.
"We have a lot of hospitals literally sitting on top of us that deliver babies," she said. "It wasn't a focus of our business. It was an add-on boutique service."