Skip Navigation U.S. Department of Health and Human Services
Agency for Healthcare Research Quality
Archive print banner

Health Care Costs and Financing

This information is for reference purposes only. It was current when produced and may now be outdated. Archive material is no longer maintained, and some links may not work. Persons with disabilities having difficulty accessing this information should contact us at: Let us know the nature of the problem, the Web address of what you want, and your contact information.

Please go to for current information.

Researchers examine regionalization and use of expensive health technologies in neonatal intensive care

The rapid rise in use of neonatal intensive care (NIC) in the 1990s was accompanied by concerns about the cost-effectiveness of high technology neonatal intensive care units (NICUs) as well as reassuring indications that neonates fared better when treated in NICUs with high patient volume and sophisticated capabilities.

Although managed care plans have attempted to constrain the high costs typically associated with NICUs, a new study by researchers at the Agency for Healthcare Research and Quality suggests that they have not been any more effective than other payers in restraining the rise of NICUs and consequent use of expensive services. This finding is consistent with the hypothesis that younger married couples are attractive to an HMO and therefore the HMO must cater to their preference for hospitals with a NICU.

A second AHRQ-supported study found merit in the regionalization of NICUs. These researchers showed that the risk of neonatal death is reduced when hospitals with no NICUs or intermediate NICUs transfer high-risk mothers to hospitals that have a regional NICU where many such babies are treated. High-risk mothers are defined as those who are expected to deliver babies weighing less than 4.2 pounds. Both studies are summarized here.

Friedman, B., Dever, K., Steiner, C., and Fox, S. (2002, June). "The use of expensive health technologies in the era of managed care: The remarkable case of neonatal intensive care." Journal of Health Politics, Policy and Law 27(3), pp. 441-464.

This snapshot study of hospital market areas in New Jersey in 1994 reveals that neither the market penetration of managed care plans nor the concentration of managed care enrollment (proportion of the population enrolled in managed care plans) was associated with the offering of NIC by hospitals. Restraining access to high-cost NICUs with narrow panels of preferred physicians and hospitals might discourage enrollment by young families who usually are healthier. Managed care plans may consider that profits lost by reduced enrollment of these families might outweigh any gains achieved by reducing the cost of NICU care for a very small proportion of births, suggest the researchers.

They used NICU days and charges from discharge abstracts from short-term, non-Federal hospitals in New Jersey in 1994, American Hospital Association annual survey estimates of NICU beds at each hospital, and State data on HMO enrollment by county to examine how strongly a hospital's decision to offer NIC in 1994 was associated with teaching status and several market characteristics. Market factors ranged from the proportion of births covered by managed care plans, concentration of managed care enrollment, and proportion of higher risk and self-pay patients to market share of births going to the particular hospital and concentration index among major competing hospitals.

A higher concentration of births among the major competitors in a hospital's market area was associated with a lower probability that the hospital would offer NIC, although this result was limited by the relatively small number of hospitals. A high hospital market share of births was not associated with a higher likelihood of offering NIC, yet effect of market share was confounded with hospital teaching status. Finally, insurance status did not seem to influence the admission of individual patients to an NICU. Admission to an NICU was highly related to the presence of NIC at the hospital of birth, controlling for risk factors. However, Medicaid patients had somewhat higher adjusted charges and longer lengths of stay than other patients.

Reprints (AHRQ Publication No. 02-R078) are available from the AHRQ Publications Clearinghouse.

Cifuentes, J., Bronstein, J., Phibbs, C.S., and others (2002, May). "Mortality in low birth weight infants according to level of neonatal care at hospital of birth." (contract 290-92-0055) Pediatrics 109(5), pp. 745-751.

Neonates weighing less than about 4.2 pounds, who are born at hospitals with no NICUs or intermediate NICUs, have about twice the risk of dying of babies born at hospitals with regional NICUs that treat many such babies, concludes this study. The researchers linked the birth certificates of 16,732 infants who weighed less than 4.2 pounds when born in California hospitals in 1992 and 1993 with hospital discharge abstracts and death certificates. They classified the hospitals by level of NICU: no NICU (cared for only healthy neonates); intermediate NICU (cared for moderately sick infants, but did not regularly provide assisted ventilation for more than 4 hours); community NICU (provided long-term ventilatory support but no other specialized services typical of regional NICUs); and regional NICU (provided full range of specialized neonatal intensive care). They estimated death within the first 28 days of life, after controlling for demographic risks, diagnoses, transfer to an NICU, average NICU census, and NICU level.

Low-birthweight (LBW) infants had over twice the risk of death if born in a hospital with no NICU compared with those born in a hospital with a regional NICU; they had nearly twice the risk of death if born in a hospital with an intermediate NICU or a small (average census less than 15) community NICU. The risk of dying for LBW infants born in hospitals with a large community NICU (average census 15 or more) was not much different from those born in a regional NICU, but these data were not conclusive.

The diffusion of new technologies and trained neonatologists into lower level NICUs has certainly enhanced the ability of more hospitals to care for high-risk neonates. However, this study suggests that birth in a regional NICU offers them the best chance to survive. What's more, this study found that the level of care available at the hospital of birth is much more important for survival than is the level of care that the LBW newborn ultimately receives (for example, with transfer to a regional NICU). This strongly supports the recommendations that whenever possible, a woman with early preterm labor should be moved to the regional NICU rather than be transferred there later with her infant.

Return to Contents
Proceed to Next Article

The information on this page is archived and provided for reference purposes only.


AHRQ Advancing Excellence in Health Care