The number of pediatric inpatient units in the US is falling, with rural communities hardest hit. The phenomenon is fueled by the rise in hospital consolidations over the past three decades, say experts. The inherent financial risks of investing in pediatric hospital care outside of academic centers at a time when federal spending is tightening, also compound the issue.

Together, these factors are giving rise to regionalism in pediatric specialty care. What does this trend mean for pediatric patients nationally?

“Hospital system consolidation is generally not good for families being able to access pediatric hospital capabilities,” Kenneth Michelson, MD, MPH, told Medscape Medical News. Hospitals that consolidate are more likely to close their inpatient unit than hospitals that don’t, he said.

Michelson is an attending emergency medicine physician at Lurie Children’s Hospital and an associate professor of pediatrics, emergency medicine, at Northwestern University Feinberg School of Medicine, both in Chicago.

For a recent study published in Pediatrics, Michelson led a team that examined inpatient pediatric capacities at a mean 3927 hospitals nationally per year, from 2003 to 2022. Each hospital was graded according to how much pediatric care capacity it had, based on 24 different offerings, with level 1 being the highest capability and level 4 being the lowest.

Michelson and his colleagues found that high-capability hospitals steadily decreased between 2003 and 2022, and that fewer hospitals were capable of 17 out of 24 (71%) services at the end of the study period than they had been at the start.

Specifically, level 1 hospitals decreased 38% (95% CI, 27%-48%), level 2 hospitals decreased 54% (95% CI, 47%-60%), level 3 hospitals decreased 48% (95% CI, 43%-53%), while level 4 hospitals increased 137% (95% CI, 119%-156%).

“When capacity is matched to typical demand, the system is less able to absorb volume surges,” Michelson and his coauthors wrote. “As an example, recent concurrent respiratory virus epidemics led to overcrowding at pediatric centers.”

As for the specific capabilities lost in community hospitals, Michelson and colleagues found that while 72.0% of hospitals offered pediatric appendectomy in 2003, by 2022 only about a fifth of hospitals studied offered the service (21.5%; change, -50.5%; 95% CI, -52.5% to -48.5%). Over three quarters of the hospitals in 2003 offered hospitalization for pediatric pneumonia, but in 2022, that percentage had dropped to just over a third of hospitals (77.0% in 2003, 34.7% in 2022; change, -42.3%; 95% CI, -44.2% to -40.3%). Asthma hospitalization dropped similarly over that time period (77.9% in 2003, 36.8% in 2022; change, -41.1%; 95% CI, -43.0% to -39.0%).

There were some services that did not change much, including extracorporeal membrane oxygenation, which went up 1% across the study period (2.2% in 2003; 3.0% in 2022; change, 0.8%; 95% CI, 0.1%-1.5%). Fontan surgery slipped slightly (2.5% in 2003; 2.4% in 2022; change, -0.1%; 95% CI, -0.8% to 0.5%), while organ transplant remained the same at 2.1% (change, 0.0%; 95% CI, -0.7% to 0.7%).

Why Pediatric Inpatient Units are Closing

In 2023, a University of Pennsylvania professor of medicine and healthcare management and economics, Rachel M. Werner, MD, PhD, testified to her state House of Representatives Subcommittee on Health Facilities, that an average of 21 US hospitals close annually as a result of mergers. Between 2010 and 2022, 143 rural hospitals closed, 19 of them in 2020 alone, according to Werner.

Between 1998 and 2021, 1887 hospital mergers cut down the number of hospital systems from about 8000 to 6000, according to Werner, who also told the Committee that in 2017, two thirds of US hospitals were part of a larger system compared with just over half in 2005.

Once consolidated, investors weed out health system redundancies or drop unprofitable units altogether, which typically include pediatric units. “Hospital consolidation is associated with pediatric inpatient closures — hospitals that consolidate are more likely to close their inpatient unit than hospitals that don’t,” Michelson said.

Meanwhile, fewer medical school students are choosing pediatrics. According to the Association of American Medical Colleges, the percentage of pediatric residency positions that were filled through the Match^® fell from 97% in 2023 to 92% in 2024. This as a National Academies report declared pediatrics was having difficulty attracting new physicians because of “lower compensation than offered by most adult subspecialties, increasing complexity of pediatric patient cases, and less exposure to pediatrics during medical school and before.”

Pediatric inpatient admissions are also dropping. Nationally, they decreased by 19% between 2008 and 2018, while beds decreased by 12%, according to a 2021 JAMA study led by JoAnna Leyenaar, MD, PhD, MPH. Leyenaar and her colleagues also found that during the same time period, the number of rural pediatric units dropped by 24% with a 26% decline in the number of beds. Meanwhile, pediatric beds were up by 12% at children’s hospitals but decreased by 18% at general hospitals.

“Our study shows that overall birth and nonbirth related hospitalizations in children have decreased substantially over time,” she told Medscape Medical News. This is one factor that has likely contributed to the closure of pediatric services at some hospitals.

Michelson and his study coauthors considered that pressure on hospitals during the pandemic could have restrained pediatric admissions, thus decreasing the associated need for pediatric services. They concluded, “There are few incentives to bring back such capacity after it is lost.”

Looming Spending Cuts Cause Concern

Meanwhile, however much pediatric admissions are decreasing, nearly half or more of inpatient pediatric care is paid for with federal dollars, which are typically insufficient, especially when compared with federal spending on adult care.

“Increasing Medicaid reimbursement to the level of Medicare reimbursement is one potential solution that could support the financial viability of pediatric services,” Leyenaar said.

“On average, over 50% of the care provided at children’s hospitals is supported by Medicaid and for some hospitals that goes up to 70% or 80%,” Aimee Ossman, vice president for policy at the Children’s Hospital Association, told Medscape Medical News. Over 40% of children in small towns and rural areas are enrolled in Medicaid, she said.

Yet Medicaid is scheduled to begin shrinking in 2027, thanks to the Big Beautiful Bill (H.R. 1) which became law last summer. The legislation will cut federal Medicaid spending by $911 billion over 10 years and will increase the number of people who are uninsured by 10 million in 2034, according to KFF, a nonprofit health policy research organization.

“We see several of the changes made in H.R. 1 impacting children,” Ossman said, noting that the new law also puts pressure on state-administered Medicaid programs. With children making up 50% or more of beneficiaries in state Medicaid programs, this will affect them and the providers who care for them. “Our hospitals are very concerned with the State Directed Payment and provider tax that plays a very important role in supporting the care they provide in their hospitals and their communities.”

Regional Centers Could Suffer

Inpatient pediatric units already spending more than they take in are likely to shutter if they receive even less reimbursement, according to Michelson. “Unfortunately, policy is going in the wrong direction. Decreasing Medicaid investment is not likely to help slow or halt regionalization.” he said. “In an absence of policy solutions, I suspect regionalization will continue, further decreasing access to highly capable pediatric care for kids.”

Whatever happens, Ossman said all pediatric care will take a hit, including children’s hospitals. Telehealth and hospital at home models could be helpful here, but the reductions in capacity may go beyond what these models can support, she said. “Hospital at Home, is a viable option for some hospitals, but freestanding children’s hospitals are experiencing barriers to participating under Medicaid since they are not allowed to participate in the Medicare model.”

Leyenaar, Michelson, Ossman, and Werner reported no conflicts of interest.