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Kenmore Mercy Hospital, faced with a sharp decrease in maternity patients and increasing costs for obstetrical services, will stop delivering babies later this summer.

"It takes a great deal to justify keeping obstetrics when demand is down, costs are up, losses are estimated at more than a $1 million and others offer the service," Bonnie A. Cotter, vice president of marketing and planning, said Tuesday. The 225-bed hospital on Elmwood Avenue in the Town of Tonawanda has provided obstetrics since it opened in 1951.

Sister Mary Joel, the hospital's chief executive officer, was unavailable to comment. In a written statement, she said the decision to close the obstetrical service was one of the most difficult ever made at Kenmore Mercy.

The 21-bed unit will close on Aug. 31. The hospital will seek permission from the state Health Department to use the beds temporarily for acute-care patients.

No employee layoffs are planned, but 23 full-time and 19 part-time staff members, most of them nurses, will be reassigned to other areas of the hospital, Mrs. Cotter said.

Kenmore Mercy was hurt by the cost of providing maternity services, which increased as demand decreased. Officials said the hospital lost $586,000 on obstetrics in 1989 and projected to lose more than $1.2 million this year.

In addition, Kenmore Mercy officials said the number of births there decreased 25 percent since 1985, when the unit delivered 832 babies. Deliveries declined to 668 in 1989 and were projected to dip to 620 this year.

Mrs. Cotter attributed the decrease in deliveries to a decrease in the number of women of childbearing age in the area the hospital serves -- primarily Kenmore, the Town of Tonawanda, North Buffalo and Black Rock/Riverside.

The same pattern has occurred throughout Erie County, where census statistics show decreases in all age groups except people 65 and older.

"We would keep getting a smaller piece of a smaller pie," Mrs. Cotter said.

"The demographics are changing in Erie County," said Mary McNamara Ward, director of planning for acute-care services at Western New York Health Systems Agency. "We are seeing decreases in the number of women you'd depend on for babies now and in the future."

"Kenmore Mercy's decision took us by surprise. I think we've seen the end of consolidation in this area," said Dr. Ward.

Kenmore Mercy's decision follows a trend in which such specialized services were concentrated in fewer hospitals.

Most recently, in April 1989, DeGraff Memorial Hospital in North Tonawanda closed its maternity unit. St. Joseph Hospital in Cheektowaga dropped its unit at the start of the decade. Six hospitals in Erie County now offer the service: Children's, Buffalo General, Mercy, Millard Fillmore Suburban, Sisters and Bertrand Chaffee.

The hospital maternity unit faced other problems. For instance, the average number of days a woman spends in a hospital to deliver a baby has decreased from about 3.2 days in the mid-1980s to three days and sometimes less. The faster turnover in beds forced hospitals to fill their beds more quickly to remain profitable, Dr. Ward said.

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