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Perspective: Academic Obstetrics–Gynecology Departments in the City of Philadelphia: Are the Wheels Coming Off?

Croft, Damien J. MD, MPH

doi: 10.1097/ACM.0b013e3182092347
Institutional Issues

Maternity care in Philadelphia is in an unprecedented and precarious situation, as all the community hospitals that once provided maternity care services have either closed completely or stopped providing maternity services. Six academic medical centers (AMCs) in the city of Philadelphia now provide care to a population of 1.5 million requiring increasingly complex and expensive maternity care, at the same time as insurance premiums and the malpractice crisis in Pennsylvania peaked. The AMCs are able to continue providing maternity care to this population that includes a large proportion of poor, minority, and un- or underinsured patients thanks to government subsidization of resident education, the services provided by resident physicians, and the influx of government and industry research funds, but the financial outlook of academic obstetrics–gynecology departments in this city is dire. Obstetric academic medicine in Philadelphia has come to more closely resemble a “big wheel” tricycle than Flexner's “three-legged stool.” Clinical medicine is the driver (the large front wheel and pedal) pulling along education and research, the two smaller wheels in the back. A maternity care alliance is needed in Philadelphia allowing area AMCs to pool and trade resources, reduce costs, improve quality and innovation, and share risks. Philadelphia may serve as an early warning for other cities and AMCs around the country and has the opportunity to serve as a model for how to overcome these serious challenges.

Dr. Croft is assistant professor, Department of Obstetrics and Gynecology, Drexel University College of Medicine, Philadelphia, Pennsylvania.

Correspondence should be addressed to Dr. Croft, Department of Obstetrics and Gynecology, Drexel University College of Medicine, Mail Stop 495, New College Building, 16th Floor, 245 N. 15th Street, Philadelphia, PA 19102; telephone: (215) 917-7879; fax: (215) 762-1689; e-mail:

First published online January 18, 2011.

Currently, in the city of Philadelphia, the only remaining providers of maternity care are six academic medical centers (AMCs) for a population of 1.5 million people and 23,000 births annually.1,2 Since the late 1990s, all the city's community hospitals that once provided not only maternity care services but also additional sources of medical student and resident training in obstetrics–gynecology have either closed completely or stopped providing maternity services. Although the mission and the strengths of AMCs have so far been equal to the challenge, pressures are mounting.

This concentration of obstetric services has left the city of Philadelphia and all of its AMCs in an unprecedented and precarious position. From an educational standpoint, the negative effects are already becoming visible. Many talented physicians have already stopped practicing obstetrics and/or gynecologic surgery because of exorbitant liability premiums that academic departments cannot afford. Thus, our most skilled and experienced providers are unavailable to teach their skills to the next generation of physicians. Second, although training in academic hospitals provides the educational foundation and skills for residents in obstetrics–gynecology programs, residents have traditionally also rotated through many of the community hospitals in the area. These rotations outside of the academic arena provide residents and medical students the opportunity to see how medicine is practiced in community settings. The majority of physicians we train will not practice in an academic environment but in the community. Community-based educational experience provides exposure to different practice styles and techniques; an opportunity for increased resident autonomy, because typically only one or two residents cover the entire hospital; and a source of patient volume, bringing opportunities to hone surgical skills and perform surgical deliveries.

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How Did We Get Here?

As recently as 1997, the city of Philadelphia had over 20 active maternity units. Beginning in the late 1990s, however, many community hospital maternity wards started to close. This process continued until the last of the Philadelphia community hospital maternity wards closed in June 2009 (Table 1). The reasons for this shift were related to three factors that made provision of maternity care not only unprofitable but actually financially detrimental—demography and payer reimbursements, increasingly expensive staffing and infrastructure requirements, and a worsening medical liability climate.

Table 1

Table 1

Philadelphia is a majority minority city. Blacks make up 44.8% and Hispanics 11.3% of the population. Educational attainment is low, with only 17.9% of residents possessing a bachelor's degree or higher, and the population is poor, with 23.8% living below the poverty level.1 As a result, the number of people who are un- or underinsured is relatively high. In the city of Philadelphia, 14% of the population is uninsured compared with 9.9% for the state as a whole.3,4 Medicaid serves as the primary insurance for many maternity patients in the city. Compared with private insurance, Medicaid reimbursements are low. In Philadelphia this problem is acute, because Medicaid in Pennsylvania typically pays only 80 cents for every dollar spent by hospitals in the provision of inpatient maternity care.5

This poor, minority, and un- or underinsured population typically requires increasingly complex and expensive maternity care. One of the largest drivers of cost is the personnel required to deliver modern obstetric care. By nature, most AMCs are already equipped to provide this care. Typically, they have 24-hour in-house obstetric and anesthesia physicians and residents available, as well as large staffs of nurses and support personnel. In addition, many AMCs have level III perinatal care centers, which require a neonatal intensive care unit (NICU), as well as neonatology staff typically supported by resident physicians. Community hospitals, on the other hand, are typically not equipped to provide this type of highly specialized care. With respect to the economics of maternal–child care, provision of NICU services is important because payments made to hospitals for neonatal intensive care typically allow these units to operate at a profit. Although Philadelphia-specific data are difficult to obtain, national data demonstrate that the two hospital diagnoses with the highest charges are for “infant respiratory distress syndrome” and “premature birth and low birth weight” at $91,400 and $79,300 per episode, respectively,6 both of which are treated in the NICU. The maternity care provided at AMCs and community hospitals is expensive to provide and poorly reimbursed, whereas the neonatal intensive care that only AMCs can offer is well reimbursed.

Perhaps even more significant, though, is that liability insurance premiums continue to increase for hospitals and physicians who practice obstetrics in the city of Philadelphia. The American Medical Association has identified Pennsylvania as a medical malpractice crisis state.7 Worse, the chance of being sued for malpractice is nearly twice as high in Philadelphia as it is elsewhere in Pennsylvania, and Philadelphia juries are more generous. Of all malpractice awards in Philadelphia, 39% equal or exceed $1 million.8 This issue has clear economic consequences for hospitals providing maternity care, as exemplified by the fact that some hospitals have seen their medical malpractice premiums for providing maternity care increase 100% year after year.9

Ultimately, this combination of low reimbursement, high overhead, and escalating medical liability costs led to an environment in Philadelphia where it became cost-prohibitive for community hospitals to continue to provide maternity services. This was especially true for facilities performing fewer than 1,000 deliveries per year. In contrast, none of the AMCs have closed yet. The AMCs are not immune to the factors mentioned. Because their goals, mission, and resources differ from those of local community hospitals, however, they have so far been able to survive.

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The Strengths of Academic Medicine

The primary reason academic hospitals have so far been able to continue to provide maternity care is tied to the parts of their mission that focus on training medical students and resident physicians and performing research. These missions provide additional revenue and human resources, and, ultimately, a mandate to provide maternity services.

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Medical school effect

The modern medical school is a complex organization that brings in revenue from multiple sources. In a financial survey administered by the Association of American Medical Colleges, total revenue for the 2008 fiscal year for 126 allopathic medical schools equaled $78.9 billion, an increase of 5% from the prior fiscal year.10 Although clinical activities account for a large portion of this income, more than 60% comes from other sources, including federal, state, and local government appropriations, tuition, endowments/gifts, and grants/contracts.10 For example, the endowment for the University of Pennsylvania, which manages a medical school and two residency programs in Philadelphia, saw its total assets grow to $6.6 billion in 2007, which provided nearly half a billion dollars of funding for university programs.11 In addition, medical school tuition is a relatively small but elastic source of funding. In the early part of this decade, medical schools in large systems such as the University of California and the State University of New York increased tuition from 5% to 30% depending on student residency (i.e., in-state versus out-of-state).12 Many of these students fund their medical school educations with the assistance of federally supported loans and grants. This represents an additional source of federal dollars brought into these institutions.

More important, AMCs are required to provide an experience in obstetrics–gynecology for their medical students. Medical school curricula are required to “include clinical experiences in family medicine, internal medicine, obstetrics and gynecology, pediatrics, psychiatry, and surgery.”13 Thus, a medical school must either find an outside location for its medical students to receive clinical instruction in obstetrics–gynecology, or its hospital partner must provide those services directly.

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Graduate medical education

The presence of resident physicians allows attending faculty physicians to provide more obstetric services to many more women than would be possible without such help. In academic settings, residents fill a role occupied by more highly paid “physician extenders,” such as nurse practitioners and physician assistants, in community hospitals. Physicians-in-training perform tasks more slowly and use more resources compared with experienced providers. Therefore, in this respect, many consider the “resident factor” cost-neutral at best. But it is the government subsidization of resident education that enhances hospital revenue for AMCs.

The federal government, via the Centers for Medicare and Medicaid Services, provides a subsidy for graduate medical education, nearly $80,000 per resident, by providing direct and indirect payments to hospitals through Medicare, and it spends approximately $8 billion per year doing so.14 That revenue, combined with the work residents provide, makes residents a valuable resource in providing care to many poor and sick pregnant women. Many high-volume facilities in underserved communities would find it impossible to provide all the maternity care necessary without the presence of resident staff.

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Biomedical research

In addition to the education of future health care providers, AMCs provide the setting for much biomedical research. The federal government via the National Institutes of Health (NIH) is a leader in providing funding for medical research centers throughout the United States. The fiscal year 2009 budget request for the NIH was $29.5 billion.15 Although not all of these funds go to AMCs, a significant portion of research dollars is allocated to these institutions. In 2008, nearly half a billion dollars in NIH grants were awarded to medical schools and AMCs in the Philadelphia area (Table 2).16

Table 2

Table 2

In addition to government-sponsored research, industry-funded projects provide funding to AMCs. Some estimates of the amount of industry-funded research taking place in AMCs are as high as $50 billion.17 Although this money does not go directly to obstetrics–gynecology academic departments, the funds can help to offset costs and subsidize faculty salaries and malpractice premiums.

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Academic Symbiosis and Philadelphia Maternity Care

Although the interactions among medical students, residents, academic physician faculty, research funding, medical schools, and hospitals are complex, they are a source of strength. The presence of medical students generally requires resident physicians, who provide a small but consistent source of revenue to academic hospitals and also allow for provision of services to a larger number of women. The requirement for constant attending supervision, not unique to obstetrics but mandated across 24 hours, brings those trainees into contact with physicians of greater experience, who may, if fortunate, also have research endeavors.

The benefit to medical students and residents is that they have a large patient population to assist in their learning, but they give back as they provide care for many patients who have limited resources. These symbiotic educational connections have allowed AMCs to survive as providers of maternity care in Philadelphia where community hospitals have succumbed. Therefore, the burden falls on AMCs in the Philadelphia area to continue to provide obstetric care. Not only do their educational missions mandate this care but the synergy of those missions provides the necessary resources, human and financial.

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From Flexner's Three-Legged Stool to Big Wheel?

Although academic obstetric departments have been able to survive, they are not thriving from a financial standpoint. The same pressures that have led to the closure of community hospitals have impacted academic obstetrics departments' profitability as well. Recognition is growing that their survival is threatened as many obstetrics–gynecology departments function increasingly at a deficit. Even with the alternative revenue streams available to academic medical departments and hospitals, continuously increasing deficits are not sustainable. Thus, academic obstetric departments have become ever more reliant on clinical practice revenue for operations.

The foundation of academic medicine, as described by Flexner, rests on the three principles of research, education, and clinical practice: the so-called three-legged stool.18 Increasingly, as finances become strained, the focus shifts to clinical activities. Many academic medicine departments have moved toward measures such as relative value units to monitor the clinical productivity of faculty. Quantifying and promoting valuable nonclinical activities for faculty compensation plans—already a difficult endeavor—becomes more problematic. This problem is not specific to Philadelphia or to maternity care, but the other environmental factors present in the area make this particular situation dire.

Under these pressures, academic obstetrics in Philadelphia more closely resembles a “big wheel” tricycle than a three-legged stool. Clinical medicine is the driver (the large front wheel and pedals) pulling along education and research, the two smaller wheels in the back. The tension between these competing missions continues to escalate as academic obstetricians are expected to be more clinically productive while continuing to educate medical students and residents. At some point the wheels will come off.

The paradox is that, while the education and research missions ultimately end up subsidizing maternity care, the need to focus increasingly on clinical productivity in an effort to improve revenues negatively impacts the performance of these academic missions. Consequently, many obstetrics–gynecology academic faculty in an area as vulnerable as Philadelphia may feel that engaging in clinical activities is more highly valued and thus more rewarding financially than scholarly pursuits. The pressures to bring in clinical revenue leave academic obstetrician–gynecologists very little time to engage in unfunded research and educational projects. Ultimately, the lack of objective value placed on teaching, the limited time for research, the income disparity between academic and private practice, and the ever-present litigation risk in this community are likely to push physicians out of academic medicine in the city of Philadelphia.

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The Need for Collaborative Effort

AMCs have remained the “safety net” for obstetric care in Philadelphia out of obligation to their academic mission and because they have additional human and financial resources on which to draw, but without assistance they will not be able to continue research and training of new physicians.

Many of the solutions to this problem are, unfortunately, outside the control of any one AMC. Although federal health care reform has been recently enacted, the medical malpractice component of the package is minimal, and medical liability insurance rates are unlikely to improve. In fact, rates are likely to worsen with the end of Pennsylvania's MCARE abatement program,19 which helped physicians to subsidize supplemental insurance. It is unclear what effect reform legislation will have with respect to the many women who are currently un- or underinsured, although there is some cause for optimism on this front. But for some time in the future it is likely that reimbursement will remain inadequate to cover the cost of maternity care. Therefore, the six remaining facilities providing this care must continue to function in the current environment.

The worst-case scenario would be the loss of one of the remaining academic obstetric departments. Although it is possible that deliveries would simply be further concentrated among the remaining centers, a dismal possibility is a public health crisis for the city of Philadelphia and the loss of a medical education institution.

The city government and the remaining maternity care providers must work together to design systems that provide care for the citizens of Philadelphia and simultaneously relieve some of the financial burden on academic obstetrics–gynecology departments. Although the AMCs compete for resources and prestige, the current crisis should push them into collaboration instead. These health systems should work together to find synergies and cost savings through a maternity care alliance.

In a “rapidly changing environment where organizations are highly interconnected with one another, and where organizations are highly interdependent with the society in which the organizations find themselves, the formation of a strategic alliance”20 is beneficial to all. The formation of a Philadelphia maternity care alliance at least initially should begin with Albert Einstein Medical Center; Tenet Health System, Hahnemann University Hospital (affiliated with Drexel University College of Medicine); Thomas Jefferson University Hospital; the University of Pennsylvania Health System (which includes Pennsylvania Hospital and the Hospital of the University of Pennsylvania); and Temple University Hospital.

Such an alliance would be difficult and involve risk, but this could be outweighed by the resultant benefits to all parties involved. Alliances can help with pooling and trading of resources, cost reduction, improved quality and innovation, and risk sharing.20 For example, all of these six AMCs and their parent universities have slightly different and complementary strengths. The University of Pennsylvania has enormous size and financial resources. Drexel University is smaller but has a strong focus on technology and computer sciences. The combination of these two could result in the development of a citywide electronic medical record for maternity patients. Other benefits could include cost sharing for particularly expensive faculty and pooling of resources for liability insurance premiums.

This model is not without precedent. In Nashville, Tennessee, two AMCs, Vanderbilt University Medical Center and Meharry Medical College, have been in a strategic alliance since 1999.21 Initially created because of changes in the health care environment in the region and financial pressures, the alliance has been sustained and has remained beneficial to both institutions, despite significant differences in the sizes and histories of the two centers. This alliance could serve as a model for what can be achieved in the Philadelphia area. Many synergies could be developed that would allow development of a sustainable model for maternity care.

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Heeding Academic Obstetrics–Gynecology's “Canary in the Coal Mine”

A confluence of events, including a health care environment hostile to the practice of obstetrics and a lack of coordinated planning among independently operated health care facilities, has led to an unusual situation in Philadelphia whereby the only facilities with the necessary resources to provide maternity care are AMCs. Unfortunately, this situation threatens to erode the foundations of academic medicine put forth by Flexner one century ago.

Academic obstetrics–gynecology departments in Philadelphia are torn between the need to improve clinical productivity among faculty and the need to simultaneously engage in educational and research activities. The latter activities are fundamental to the mission of AMCs, but time spent in performing these nonreimbursable duties makes it difficult to offset the economic realities of practicing obstetrics in the current environment.

Although some stakeholders have recognized the problem, including local government officials, directors of community health centers, and chairs of some of the academic departments, thus far coordinated actions have been less than adequate. What I have proposed here is not a new idea in the health care system, but its application to the creation of a Philadelphia maternity care alliance would be novel.

Without intervention, the financial viability of local academic obstetrics–gynecology departments will continue to deteriorate. The focus on education and research will diminish, academic physicians will leave the city, and attracting high-quality medical students and residents will become increasingly difficult. Philadelphia may be the proverbial “canary in the coal mine,” indicating that future academic centers in other regions may encounter similar problems.

As academic faculty at one of these institutions, I myself must take a proactive role in moving this process forward within my own department, but other obstetrics–gynecology faculty in the area must do the same. Other stakeholders in the area must promote the development of coordinated efforts among institutions so that providing obstetric care does not act as a detriment to the continued pursuit of research and educational missions by AMCs in the Philadelphia area.

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Other disclosures:


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Ethical approval:

Not applicable.

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