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Health Care Costs and Financing

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Medi-Cal changes in the 1990s shifted newborn deliveries from large public hospitals to smaller community hospitals

When California Medicaid (Medi-Cal) preferentially enrolled beneficiaries in managed care programs in the 1990s, clinics and public hospitals voiced concerns about the effects of managed care on safety net providers. During the 1990s, for example, newborn delivery market share in two large California counties shifted from large county hospitals (or county-contracted university hospitals) to smaller, nonprofit community hospitals. However, the majority of decentralization took place in the period from 1990 to 1994, before Medicaid managed care (MMC) was widely implemented in Los Angeles and Orange Counties. Thus, the decentralization of newborn services appears to be related more to Medi-Cal expansion in eligibility and provider reimbursement—two other changes in Medi-Cal financing mechanisms during the 1990s—than to MMC, explains Ruey-Kang Chang, M.D., M.P.H., of the University of California, Los Angeles.

The shift in newborn deliveries to smaller community hospitals was not associated with significantly more in-hospital neonatal deaths or morbidities or with interhospital transfer rates. However, the shift was associated with a significant increase in cesarean section rates for the Medi-Cal population (perhaps related to reimbursement mechanisms), while rates among non-Medi-Cal patients were stable.

The fall in obstetrical market share for public hospitals continued beyond 1994, suggesting that MMC may have played a role in the continued movement of low-income pregnant women away from the public hospitals, note the researchers. They conclude that health care policy changes may affect practice patterns for care delivery in an unexpected fashion. Their findings were based on analysis of 2,351,209 newborn deliveries at 124 hospitals in Los Angeles and Orange Counties during a period of extensive Medi-Cal financing changes. The study was supported in part by the Agency for Healthcare Research and Quality (HS13217).

See "Changes in newborn delivery practice and neonatal outcomes as financing changed in Los Angeles County and Orange County, California," by Dr. Chang, Alex Y. Chen, M.D., M.S.H.S., Sandra Rodriquez, M.S., and others, in the October 2005 Managed Care Interface, pp. 53-57, 62.

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