Delivering Better Efficiency: Why Hospitals Are Charged With Delivering Value Along With Babies

Delivering Better Efficiency: Why Hospitals Are Charged With Delivering Value Along With Babies

GREENBRAE, CA — Health care innovation isn’t always a matter of implementing a new software platform or augmenting an electronic medical records system.

Sometimes, it’s as simple — and as difficult — as reviewing your clinical performance on various measures compared to your hospital peers, and realizing you need to do things differently.

That dynamic is increasingly getting attention in the realm of unnecessary cesarean-section births, which can have a huge impact on costs and also can harm mothers and babies, sometimes including lasting health ramifications.

Business groups, including the San Francisco-based Pacific Business Group on Health, which represents many of the West Coast’s largest employers, and the Washington, D.C.-based Leapfrog Group, are pushing hospitals regionally and nationally to review and rethink their c-section rates, already with some success.

“We’ve crossed a tipping point on what (many consumers) can afford,” said David Lansky, PBGH’s chief executive. As a result, employers, employees and health care organizations are increasingly open to considering new ways of doing things.

And unnecessary c-sections, besides their potential health dangers, cost as much as 50 percent more than traditional vaginal births. In San Francisco, for example, costs for vaginal births can go as high as $37,000, while c-sections can approach $58,000, at the high end, according to California Department of Insurance estimates.

Dr. Adams Dudley, a professor of medicine and health policy at UC San Francisco, said hospitals with very high c-section rates would deny that the extra revenue plays a role, “but you see hospitals with low rates still having pretty darn good (clinical) outcomes.”

This is “a huge priority,” because for many employers maternity-related costs constitute roughly one-third to one-half of their health care spending, said Leah Binder, president and CEO of the Leapfrog Group, whose members include PBGH, Fed Ex, CBS, Korn/Ferry and Marriott, among others.

“It’s a very significant expense, especially for companies with younger employees,” she said, a category that includes many Silicon Valley and San Francisco tech giants.

C-sections, rare as recently as the 1960s, became increasingly common in the following decades. They have remained stubbornly common despite efforts by business groups and others to reduce their frequency. But that’s beginning to change, now that rates of cesarean births, and the rates recommended by experts in the field, are publicly available.

Leapfrog recommends 23.9 percent — or roughly one c-section birth out of every four low-risk births — as a “target” for hospitals to aim for. The target number is likely to shrink as progress is made.

The website, run by the nonprofit California Health Care Foundation, compares Golden State hospitals with the state average, which it says is currently 26.5 percent for low-risk Cesarean births for women who are pregnant for the first time, a common measure.

Some local hospitals did well on the Cal Compare data, notably John Muir Health (17.4 percent), UCSF Medical Center (18.5 percent), Marin General Hospital (19.5 percent), and Kaiser Permanente’s Redwood City hospital (16.6 percent), winning “superior” designations.

Hospitals that came in “under target” on the separate Leapfrog list included several Kaiser facilities,California Pacific Medical Center, UCSF and ValleyCare.

Among those that missed the target were Oakland’s Highland Hospital and San Jose’s Regional Medical Center.

But nothing in health care is simple. Some of the same hospitals, including John Muir and El Camino Hospital, declined to participate in Leapfrog’s survey, which was based on 2014 data but released about a year ago. Nancy Carragee, chief quality officer at John Muir, which did well on the other survey, said it lacks “the bandwidth” to deal with Leapfrog’s various data demands.

And other factors tie in too. Kaiser doctors and clinicians, for example, typically have prior prenatal experience with a patient before she goes into labor, noted UCSF’s Dudley. In contrast, at Highland, a safety net hospital, doctors may never have seen a maternity patient “until the day they walk through the door.”

And Dr. Tracy Flanagan, an ob-gyn specialist at Kaiser’s Richmond campus who also directs women’s health in Northern California and heads the region’s OB/GYN group, cautions that low percentages don’t always translate into the best specialty care.

In many cases cesarean sections are critically important to keeping the mother and child healthy. But there are plenty of complicating factors. At Kaiser’s 15 hospitals in Northern California that offer maternity care, for example, “some variation is due to internal triage,” Flanagan said.

Kaiser sends some higher-risk patients to hospitals that specialize in dealing with them, so a woman with multiple health issues who typically uses the Redwood City facility might be “asked to deliver at San Francisco or Santa Clara.”

Demographics can play a big role too.

Older moms are more likely to need c-sections, and African-Americans, pregnant women who are overweight, and women with hypertension are also more susceptible.

Overall, however, there’s clear evidence that c-section rates in recent years have risen higher than medical necessity would indicate, according to many experts, and businesses are losing patience. They’re saying “we won’t pay more for unnecessary c-sections,” PBGH’s Lansky said.

No one wants employers to be making the call in individual cases, of course. But in some situations, Binder argues, there are “perverse (financial) incentives to do c-sections” that aren’t connected to medical need. “When financial incentives make it hard to do the right thing,” she said, “we’ve got to change that.”

With that in mind, a group called the California Maternal Quality Care Cooperative will be sharing a “toolkit” of information with the roughly 6 in 10 Bay Area and California hospitals that haven’t yet met Leapfrog’s 23.9 percent goal for uncomplicated, first-time births.

Savings in California alone could be in the hundreds of millions of dollars annually if they meet the new standard, the group says.

Bottom line: “There’s transparency now with your (c-section) rates and practices,” Muir’s Carragee said. “We’re able to talk to our peers and compare, learning from others.”

Delivery charge

  • $37,000: High-end cost of a traditonal vaginal birth locally
  • $58,000: High-end cost for a c-section delivery locally

It’s complicated

Common concerns of c-section deliveries include:

  • Higher risks of breathing problems for the baby
  • Inflammation and infection of the mother’s uterus
  • Reactions to anesthesia
  • Surgical injury
  • Increased risks during future pregnancies


  • 23.9 percent: Leapfrog’s recommended ratio of c-sections for low-risk births. A target of roughly one-in-four.
  • California hospitals’ average: 26.5 percent
  • John Muir Health: 17.4 percent
  • UCSF Medical Center: 18.4 percent
  • Marin General Hospital: 19.5 percent
  • Kaiser Permanente Redwood City: 16.6 percent

This is a reprint of an article found in the April 8th edition of the San Francisco Business Times.