04/02/2013 07:27 EDT | Updated 06/02/2013 05:12 EDT

Baby delivery business boom fading in Hong Kong

The maternity ward at Precious Blood Hospital in Hong Kong isn't the bustling place it once was, thanks to new restrictions on mainland Chinese women who want to give birth across the border. Until January, every one of the 37 beds at Precious Blood was typically taken.

"We always had a full house here," Cleve Wong, administration and finance manager at the hospital, said in an interview. Not anymore. Rooms with five or six beds each are now empty. Others have been converted into storage rooms. Vacant beds and extra space are things Canadian hospitals might love to have, but in Hong Kong, they are a problem.

The public and private hospitals all charged a hefty fee for mainland women to give birth. The recent crackdown, aimed at slowing the flood of mainland mothers-to-be, has meant a major loss of revenue, especially for private hospitals that were catering to them.

"The income dropped," said Wong. "That's the effect of the policy."

He estimates Precious Blood has lost two-thirds of its previous birth business. His hospital charges mainland women upwards of $5,000, depending on the package they choose. Some of Hong Kong's 11 other private hospitals charge more, some less. With about 3,000 deliveries a year, babies were bringing in a lot of money for Precious Blood.

The doors to Hong Kong's hospitals used to be wide open to non-local women who were willing to pay. More than 33,199 walked through those doors in 2012 alone. The year before it was 43,982.

Babies get residency

They come for different reasons: better medical care, avoidance of China's one-child policy, and for what's known as right of abode. Hong Kong is semiautonomous from China and according to its constitution, anyone born on Hong Kong soil is entitled to residency.

That means mainland children can go to school and get medical care on this side of the border, and that is one of the main reasons local people started complaining about the booming baby business. They also complained that because of the mainland mothers, they couldn't get access to doctors and hospital beds.

The soaring demand for Hong Kong's maternity wards initially prompted the government to introduce a quota system a few years ago. A certain number of women were allowed in, and they had to have a booking certificate from a hospital to prove they had been accepted. But capping the numbers didn't satisfy critics, and a high number of women were still making their way in by illicit means.

Opposition from local families kept boiling. Then in January, the new policy that has cut so deeply into hospital coffers, both private and public ones, took effect: mainland women are completely banned from delivering at public hospitals, and only those who are from Hong Kong or whose husbands are can deliver at private ones.

The cross-border births were giving a boost to the economy in the short-term, but concern over an unpredictable number of mainland Chinese children exercising their right of abode and taking up space in schools and hospitals is why the government eventually clamped down on the business.

More than 309,000 babies have been born to non-local women since 2000. Some children commute across the border daily for school, and there are cases where mainland parents have hired "guardians" for their children to live with in Hong Kong. There's no way of knowing how many will eventually move to Hong Kong as adults.

Thousands turned away

Immigration officials stop pregnant women at the border and check whether they have the required documentation to show they have a bed booked. In 2012, more than 4,000 women were turned away. Still, some slip in either on their own or with the help of agents who get paid to facilitate a cross-border birth.

The hospitals weren't the only ones cashing in on the baby business.

There are illegal guesthouses where women rent a room while they wait to give birth, and then they show up in labour at an emergency department. They take up the beds and the doctors that are supposed to be dedicated to local women who have booked their spots in advance. The number of "gatecrashers" used to be around 150 per month but increased surveillance and the zero quota policy have helped cut it down. There were just 22 cases in January.

Women clearly are willing to risk going to jail to give birth here illegally, and so are the people they hire to help them do it. One mother was sentenced to 12 months behind bars after lying to immigration officials. A dozen agents have been jailed.

Even though the restrictions are eating into hospital profits, administrators say they understand why the government had to act. They aren't fighting the changes, they're adjusting to them — and that involves making new business plans.

Dr. Joseph Chan, head of obstetrics at Hong Kong Sanatorium and Hospital, said as the demand for beds grew, some hospitals increased their supply so they could cash in more.

They added beds and some allocated as much as 20 per cent of their overall operations to maternity services. The Sanatorium only dedicates about eight or nine per cent of its business to maternity and about one-third of births there were to mainland women. Chan said his hospital isn't taking as big a hit as Precious Blood but that doesn’t mean it isn't affected.

Precious Blood is now shifting its focus to other areas, such as endoscopy and minor surgeries, as a result of the baby-business decline. That, in turn, means tougher competition for hospitals like the Sanatorium in those alternative areas.

"We need to strengthen ourselves on all fronts and make sure our services are good," said Chan. "We're looking at what other people are doing to fill their vacuum. Like any business, we have to look at our positioning."

With Hong Kong no longer an easy destination for Chinese women wanting to give birth, they're looking for alternatives. Wong, from Precious Blood, said he's heard of women turning to Canada.

"I think Canada will face the same problem," he said. "They will have to give birth somewhere else."