Provider Payment Reform to Reduce Rates of Cesarean Delivery



“Cesarean delivery” is a method of childbirth in which a surgeon cuts through the pregnant woman’s abdomen and uterus to deliver the baby. The more natural method of childbirth is called “vaginal delivery”, in which the baby leaves the mother’s uterus through her vaginal canal.

Ideally, cesarean delivery would only be used when vaginal delivery would endanger the life or health of the child or mother, because cesarean delivery involves major abdominal surgery that is accompanied by much greater risks for both mother and child than vaginal delivery. Cesarean delivery also costs about 50 percent more.

Over the last 40 years, the U.S. rate of cesarean delivery has increased dramatically. In 1965 the rate was 4.5 percent and in 2012 it was 32.8 percent, an increase of over 600 percent. More than one million babies a year-one in every three American babies- are now born with a cesarean delivery. And cesarean delivery is now the most commonly performed surgical procedure in the U.S. In 2009, childbirth-related hospitalizations accounted for 7.6 percent of all inpatient costs, totaling $27.6 billion. Many of these cesarean deliveries—some researcher say 50 percent of them- are unnecessary.

The agent-based Cesarean Delivery Model simulates how reformed payment methods and organizational structures for Washington State hospitals and obstetrician-gynecologists might affect:

  • the rate of unnecessary cesarean deliveries
  • expenditures for vaginal and cesarean deliveries by State commercial insurance companies and Medicaid
  • financial results for State childbirth providers

The model addresses the following questions:


  1. What combination of organizational structure reform together with reform of the payment method for State childbirth providers will produce the greatest long-term reduction in the number of unnecessary Washington State cesarean deliveries?
  2. What is the long-term impact of the reformed organizational structure and payment method on (income of hospitals and obgyns, insurance company and Medicaid expenditures, total State health expenditures)?

AnyLogic’s simulation, sensitivity analysis, and optimization capabilities provided the foundation to answer these questions. Alan Mills, FSA MAAA ND, an independent family practice physician and research actuary presented his research findings at the AnyLogic Conference 2014. Refer to the case study, video presentation or PowerPoint for further information.

Why Alan Mills Chose AnyLogic?
“Compared to other agent-based simulation modeling platforms, AnyLogic has sophisticated capabilities that make it an excellent choice for serious business applications:
- It easily handles large numbers of agents interacting on complex GIS environments.
- It has sophisticated message-passing capabilities for agent communications.
- Its clever presentation canvas and tool palette help you easily build sophisticated yet friendly user-interfaces.
- Its statecharts, flow diagrams, and visualization capabilities make it easy for you to show agent behaviors.
- It works smoothly with Excel, the data and analytic tool of choice for most businesses.
- It enables sophisticated sensitivity testing and scenario analyses.
I’ve tried most of the major agent-based simulation modeling platforms. For my work in health policy simulation, AnyLogic is the best choice.”
- Alan Mills, FSA MAAA ND, an independent family practice physician and research actuary