Key Takeaways
• Many freestanding birth centers are shutting down across the country, leaving gaps in local maternity care.
• Birth centers face strict state rules, low insurance payments, and hospital opposition.
• These centers offer a homelike setting, focus on low-risk births, and serve communities of color and rural areas.
• New laws, fair insurance rates, and grants could help birth centers stay open and improve access to care.
Birth centers are closing amid care gaps
Across the nation, birth centers once seen as a solution for healthy, low-risk pregnancies are shutting down. These freestanding centers are not part of hospitals. Instead, they offer a more relaxed, homelike setting with midwives and sometimes an OB-GYN. Yet in the past few years, dozens of them have closed. As hospital labor and delivery units also disappear, pregnant people face longer drives and fewer local options.
State rules and insurance payments often leave these centers on shaky ground. In some states, health departments treat them like hospitals and demand strict licenses. Meanwhile, hospitals worry that birth centers will draw away patients—and money. Low reimbursement rates from Medicaid and private insurers make it hard for birth centers to cover costs. As a result, communities in rural areas and neighborhoods of color lose vital maternity care options.
Regulatory and financial challenges for birth centers
Strict licensing and opposition
In many states, opening a freestanding birth center means jumping through hoops. Some require a certificate of need, which lets existing hospitals block new competitors. When doctors and midwives try to get approval, hospitals can challenge or veto their applications. Even after laws change to ease rules, centers still need written transfer agreements with local hospitals. Yet hospitals often refuse, fearing a drop in their own birth numbers.
Low insurance payments
Birth centers provide safe, low-cost care for healthy pregnancies. However, insurance companies and Medicaid reimburse them at rates far below what hospitals receive for the same services. This payment gap forces midwives and staff to cover expenses out of pocket or volunteer time. In one rural area, a center said it makes less than a third of what the local hospital earns for each birth. Rising malpractice premiums only make the finances tighter.
Impact on communities
These closures hit hardest where maternity care was already scarce. In parts of the South, Black women and infants face some of the highest mortality rates in the nation. Freestanding facilities often locate in majority-Black or Native communities, offering personalized care that hospitals rarely provide. When centers close, local families must travel long distances for prenatal visits or face unassisted home births. In tribal lands, where the nearest hospital can be half an hour away, closures create real risks.
Solutions to help birth centers stay open
Standby capacity payments
Experts recommend a new insurance model to support both hospitals and birth centers. Under this plan, health plans would make regular “standby capacity payments” to facilities based on the number of women of childbearing age in the area. Then, each birth would earn a separate delivery fee. This approach mirrors how other emergency services are funded. If applied fairly, it could help birth centers cover costs even when birth volumes are low.
State grants and fair reimbursement laws
Some states have stepped in with grants or new laws to boost birth centers. For instance, one state passed legislation to simplify licensing and exempt freestanding centers from complex approval processes. Another opened grant programs for both rural hospitals and birth centers at risk of closing. Yet birth centers say one-time grants are not enough. They need ongoing funding and pay parity, so they receive the same rates as hospitals for the same services.
Community partnerships and local support
Local efforts can also make a difference. In Florida, a nonprofit bought a building in a majority-Black neighborhood to open a new birth center by 2027. Tribal groups in the Northwest are training doulas and midwives from their own communities, with plans to open centers that honor traditional practices. When communities rally around these projects—fundraising, volunteering, and building partnerships with medical professionals—birth centers gain a stronger foundation.
Legal challenges and advocacy
In some states, midwives and doctors have fought back with lawsuits, arguing that strict regulations block access to essential care. When courts rule in favor of birth centers, they force health departments to treat them more like outpatient clinics than hospitals. Advocacy groups continue pushing for fair rules and better funding. As more stories emerge of mothers struggling to find local care, public pressure grows for lawmakers to act.
FAQs
How are birth centers different from hospitals?
Birth centers focus on healthy, low-risk pregnancies and births. They feature a homelike environment and are often run by midwives, with OB-GYN backup if needed. Hospitals handle higher-risk cases and have surgical facilities.
Why do hospitals oppose freestanding birth centers?
Hospitals see birth centers as competition that can reduce their birth volumes and revenue. Especially in small communities, a few lost births can threaten a hospital’s ability to keep its labor and delivery unit open.
What is a certificate of need?
A certificate of need is a state approval process for building new health facilities or adding services. Existing hospitals can challenge new applications, effectively blocking birth centers from opening in many states.
How can insurance changes help birth centers?
Standby capacity payments would give birth centers regular funding based on the number of women they serve in their area. Combined with fair delivery fees, this model helps centers cover costs even when birth totals are low.