The economics of a neonatal intensive care unit

During Gabriel’s five-month stay in the hospital, we got an awful lot of free pizza. Specifically, it was pizza that Lisa, the March of Dimes representative, would buy for the NICU families every other Thursday. She told us that private insurance companies will often donate to research efforts to prevent premature births because that’s their biggest expense for insuring young people — premature babies.

We certainly saw how expensive things are in the neonatal intensive care unit — Gabriel’s bill was $1,064,000, and that was after the insurance company negotiated down the rate.

This led me to wonder — how do the economics of running a neonatal intensive care unit work? More and more hospitals are opening these facilities around the country. This both helps babies get care where they need it, but it is also a moneymaker for the hospitals — in Washington state, every newborn who needs more than 30 days of hospitalization qualifies for Medicaid, regardless of the income level of the parents. In our case, we had a high-deductible insurance plan, so it was private insurance paying for it. Either way, it seemed that under this system, most patients would have the ability to pay, thus providing a more reliable revenue source than the usual way the American market works with its spotty coverage.

That’s one thing I’ll be examining with this blog — what’s the budget of a NICU? (My day job is to be the financial administrator of two non-profits, so this is interesting to me.) How does it compare as a revenue source to providing other types of care, for example, versus non-complicated births, in which large numbers of patients do not pay? Or, for that matter, how does it compare to cancer care for adults under 65?

This is particularly interesting to me because medical providers tailor the care they provide to both to the needs of the patients, but also to long-term revenue sources. For example, in the past couple of years, doctors and hospitals have been engaged in a mad dash to get as many procedures as possible classed “preventative care” because the Affordable Care Act now says that preventative care has to be covered at 100 percent by insurance. The original idea behind that was that focusing on preventative care as a separate class of care is supposed to save money in other classes later on. But, if everything your doctor does gets called “preventative care,” then it kind of loses its purpose.

Within neonatal care, too, I wonder if similar things are happening — the new wing of a hospital paid for with a big capital campaign might get devoted to opening a NICU when that city actually has enough beds already, and a different kind of care would be more helpful to the community.

I don’t know that this is going on — it’s early in this project. But, they say that blogging is a great way to work on your drafts and get ideas from readers. So I’ll leave it there for now.


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