Why smaller maternity units have higher costs

What is it about?

The average occupancy achieved in a maternity unit is driven by the size (number of births), and larger units have higher average occupancy and hence lower costs. This behavior is described by Poisson statistics and queuing theory. The HRG tariff used to pay hospitals in England does not take size into effect, hence, smaller units get penalized.

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Why is it important?

Smaller maternity units can lower their costs by flexing staff numbers to match arriving deliveries. This requires access to a pool of on-call midwives. The alternative is to merge two smaller units to form a larger one which gains lower costs due to economy of scale. This option is more difficult for remote and rural locations. However, reducing length of stay does not make much of an impact on costs since the majority of costs are associated with the delivery. Other papers in this series have demonstrated that declining LOS has contributed to a marked rise in neonatal (re)admissions for common conditions normally dealt with while the mother is still in the maternity unit.

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