The Quest for Neonatal Intensive Care Beds. A Statewide Phenomena.

As the controversy between Norton Healthcare and the University of Louisville over control of Norton Kosair Children’s Hospital continues to unfold, our colleagues at Insider Louisville have emphasized a central role that control of neonatal intensive care unit (NICU) beds is playing. Every hospital that delivers babies will have a nursery, but not all are qualified to run the NICUs that take care of the very sickest and most vulnerable infants. Aside from providing necessary care, it is no state secret that NICUs are one of the very most profitable services in a children’s hospital.

The number of NICU beds in individual acute care hospitals is regulated by Kentucky’s certificate of need (CON) process. There are four possible levels of NICU beds ranging from Level I for routine infant care, to level IV for institutions capable of caring for virtually any sophisticated need, including surgery. Kentucky’s continuingly updated State Health Plan addresses the criteria and requirements for each level. On May 31, 2013, the Plan was revised to bring it more into line with the most recent “Guidelines for Perinatal Care” of the American Academy of Pediatrics and the American College of Obstetricians and Gynecologists. The Plan now includes specific requirements for a new state designation of Level IV. You can download the NICU-related pages of the 2013 State Health Plan here.

The new regulations make it possible for a level II facility to care for sicker babies if it has a written affiliation agreement with a Level IV facility. Similarly, a Level III facility must now also have a formal collaborative relationship with a Level IV facility for consultation and transfers. This puts hospitals with Level IV NICUs at the top of networks of care and referrals. In medical terms, this is also referred to as guaranteed income streams. You can see where this might be going.

I wish I had their network!
Insider Louisville brought to our attention a letter of intent filed last February by University of Louisville Hospital to convert its existing 16 Level III beds into Level IV ones. [It has also signaled its intention to convert some regular hospital beds into NICU ones and to upgrade others.] University Hospital currently has only a Level III nursery. If it proceeds with a formal application and is successful, it would become the third Level IV NICU in the state along with UK and Norton Kosair! To be eligible for a level IV NICU, University Hospital would have to essentially duplicate the facilities of a second children’s hospital in Louisville. I have been warning about this outcome since the first attempt by CHI to acquire University Hospital. In my opinion this would be a colossal waste of resources, would compromise patient care, and demonstrates inexcusable selfishness by University. Surely we have a right to expect UofL to play better with its neighbors.

Who is looking for more and higher-level beds?
Stimulated by the Insider Louisville revelation, I dug deeper into Kentucky’s CON archives and reports. Because of the recent change in the State Health Plan, it is not surprising that UofL is not the only hospital that has filed new applications or letters of intent to change the number or distribution of their NICU beds. In 2013, Norton Kosair, Norton Suburban, University of Louisville, and University of Kentucky Hospitals all made requests. Within the last 2 years, similar requests were made by St. Joseph East, and by Central Baptist. Just last August 14, the CON Review process approved 7 such requests all at once. (UofL’s three letters of intent in 2013 are not yet to the application stage.) Clearly a lot of repositioning in is going on. I  summarize NICU-related applications and letters since 2007 here.  Norton Kosair, the University of Kentucky and University of Louisville Hospitals all requested  Level IV beds, the former two successfully. However, since the number of beds approved is equal to the total current number of Level IV beds in each of the two hospitals, it appears that in past years the Cabinet seems not to have considered Level IV a separate category in reports. That is an interesting wrinkle!

Where are the NICU beds?
The Cabinet for Health & Family Services provided me with an inventory of NICU beds in Kentucky that reflects the approvals of last month. In summary, 25 Kentucky Hospitals are approved to offer Level II, III, or IV neonatal care. Nine of these are rated for Level III, and only 2 (Norton-Kosair and UK) rated for Level IV. Of the 449 NICU beds in the state, 101 (22%) are at Norton Kosair. University of Kentucky Hospital has the next most with 66, followed by 40 at Norton Suburban, 32 at Baptist Health Lexington, 30 at St. Elisabeth Edgewood, and 24 at University of Louisville Hospital. All of these 5 hospitals have at least some level III cribs. A table with all the data is available here.

What does all of this mean?
The new state regulations give Level IV hospitals tremendous clout by requiring Level II and even Level III facilities to have written agreements with level IV hospitals. There are currently only two such units in the state, although the nationally ranked children’s hospital in Cincinnati currently serves this function in Northern Kentucky. This might be a bitter pill for UofL to swallow given its demonstrated efforts to be part of the statewide network of KentuckyOne Health. Other Kentucky hospitals with aspirations to expand their NICUs have been denied by the Commonwealth. It is hard form me to imagine that the CON review process, which has minimizing duplication of expensive services as an important goal, would approve what would be in effect a second Children’s hospital in Louisville. But then again, I am not King.

Where should NICUs be?
The attentive reader will notice that there are entire Area Development Districts in Kentucky without a single NICU bed and not very many elsewhere. Many of Kentucky’s hospitals are little more than cottage hospitals with very limited ability to provide services to the truly sick. Of Kentucky’s NICU beds, 39% are in Jefferson County, and another 25% are in Fayette County. Of Kentucky’s 155 Level III beds, 90% are in Jefferson and Fayette Counties, as are all of Kentucky’s 50 Level 4 beds. Furthermore, inspection of the 2012 Utilization tables shows that occupancy rates for many of the NICUs is not very high.  In my opinion we need to put less emphasis on putting high-powered children’s or adult hospitals in every county, and more effort in honing integrated systems of statewide care with coordinated  transportation that makes transfers to the most appropriate facility both safe and efficient. This will take a degree of cooperation we are not seeing.

This is not just about the money, or need for “research and teaching material.” Clinical services, adult or pediatric, need a critical volume of patients in order to provide services of high quality and to allow specialists and clinical teams to maintain their skills. We have already had a glimpse of the importance of this concept from the experience of the pediatric cardiology service at UK. Their volume of a cardiac surgery for congenital heart defects was only one quarter that of Norton. UK had to discontinue providing some pediatric cardiac surgery services because the outcomes were not as good as they needed to be. Surely it is examples and possibilities like this that drew UK and Norton closer together for their proposed partnership. We should expect such cooperation from all of Kentucky’s hospitals, including University of Louisville. I am not seeing it at present.

Enough for now. There are other reasons why UofL might want to capture Norton Kosair Children’s Hospital such as leveraging its large number of residents to capture higher Medicare reimbursements at its adult hospitals, but these are stories for another time. Suffice it to say, this dispute is not entirely about the money and market share, but also for control. It seems clear to me which party makes the better playmate.

Documents Referenced Above:

Neonatal utilization from Kentucky 2012 Hospital Report, published July 2013. (Level IV beds and days are lumped in with Level III.) (PDF 119 KB)

Criteria for Special Care Neonatal Beds extracted from Kentucky Heath Plan of 2013. (PDF 139 KB)

Inventory of NICU Beds in Kentucky as of August 14, 2013. (PDF 82 KB)

Summary of CON Applications and Letters of Intent 2007 to 2013. (37 KB)

 

Peter Hasselbacher, MD
President, KHPI
Emeritus Professor of Medicine, UofL
September 10, 2013