Abstract

The continued rise of health care costs, despite private and governmental control efforts, has sustained cost containment as a central issue for health care researchers and policy makers. In keeping with these concerns, the Florida Health Care Cost Containment Board conducted a study of neonatal intensive care units (NICUs) in Florida to ascertain the costs, charges, and net revenues associated with NICU services in individual hospitals, to document cost shifting and cross-subsidization as a means of financing NICU care for indigent populations, and to assess the fiscal impact of NICUs in state-sponsored vs non-state-sponsored Regional Perinatal Intensive Care Center hospitals providing NICU care. Hospitals in the state-sponsored program reported a loss of approximately $16.5 million in contrast to the non-state-sponsored hospitals, which reported a gain of $1 million. Payment being generated by private-pay patients amounted to almost 60% of total revenues but constituted less than one third of the costs in state-sponsored hospitals, indicating a high level of cost shifting. Government support of state-sponsored NICUs, while substantial, has been insufficient; increasing constraints on this funding source would likely worsen the deficit and increase the necessity of cost shifting.