Hydronephrosis, or enlargement of the urine collecting system in the kidneys, can sometimes indicate that there is an obstruction somewhere along the urinary tract. Sometimes hydronephrosis occurs because the "valves" that prevent urine from backing up from the bladder do not work very well. In either case, the increased "back pressure" of the urine to the kidneys causes the urine spaces within the kidneys to enlarge.
The good news is that your baby's kidneys are still functioning and making urine, since you have polyhydramnios (more amniotic fluid around your baby than expected). The vast majority of amniotic fluid is produced by urine from your baby's kidneys.
Your baby's hydronephrosis is not dangerous to you. Your gestational diabetes can be a cause of polyhydramnios, and could lead to problems for you and your baby unless you work closely with your doctor to control your blood sugar levels.
If no other abnormalities have been seen on your ultrasounds, there is no need to do anything at this time about your baby's hydronephrosis. After your baby is born, he/she will be evaluated for kidney function. This includes watching the urine output, obtaining some blood tests for kidney function, and at some point another ultrasound. Other studies may be required depending upon the results of these initial evaluations. The timing for all these tests depend upon the severity of the hydronephrosis.
Depending upon the test results, surgery is sometimes required to relieve an obstruction or to repair faulty bladder valves in order to prevent ongoing damage to the kidneys. In many cases, however, no surgery is required. Your baby may need to be on once a day (low dose) antibiotics after birth to prevent urinary tract infections. Your pediatrician or neonatologist will coordinate the evaluation and care of your baby after delivery.