Oregon giving out $37 million to preserve rural maternity care.
Hospitals still worry about closures
[June 23, 2026]
By DANIELLE DAWSON/InvestigateWest
Nearly two dozen Oregon rural hospitals will receive $37.5 million in
state and federal funds to shore up labor and delivery care ahead of
Medicaid cuts going into effect next year, though state and hospital
officials say the one-time funds are likely a limited solution.
The program, which was greenlit by the Centers for Medicare and Medicaid
Services last month, combines $15 million in state dollars with more
than $22 million in federal matching funds. The money will be
distributed to the state’s 21 rural hospitals that provide maternity
care, most of which are more than 50 miles from the next closest birth
center.
The funding was announced after a number of rural hospitals across
Oregon have closed — or threatened to close — their labor and delivery
units, which typically cost more to operate than they bring in. As
InvestigateWest highlighted, these services are often eliminated when a
struggling hospital is trying to prevent closure altogether.
Oregon officials described this new assistance as a short-term buffer
against the financial pressures facing rural hospitals that put their
maternity services at risk, including rising costs, staffing shortages,
and looming changes in Medicaid eligibility and spending.
The tax cuts and spending package passed by Congress that made these
changes, known as H.R. 1 or the “One Big Beautiful Bill,” is expected to
wipe out roughly $11 billion in federal support for Oregon’s Medicaid
program over the next five years, according to an estimate from Gov.
Tina Kotek’s office.
“I fought for these funds in my budget to stabilize services in Oregon
because rural communities deserve reliable, high quality maternity care
close to home,” Kotek said in a May 28 news release announcing the
funding.
While the additional funds will provide a limited cushion for hospitals
before sweeping changes to the federal program start to take effect in
January, hospital leaders told InvestigateWest they remain concerned it
won’t be enough to prevent further erosion to rural maternal healthcare
in the coming years.
“A one-time payment in and of itself isn’t going to solve a long-term
problem, but it will help us for now,” said Dan Grigg, CEO of Wallowa
Memorial Hospital, a rural healthcare center in the northeasternmost
corner of Oregon that delivers about 50 babies a year.
Ashley Thirstrup, Oregon Health Authority chief of staff and external
relations division director, said the agency recognizes the constraints
of the one-off investment.
“The scale of the Medicaid cuts proposed in H.R. 1 is going to put
significant pressure on the system overall,” she said. “I don’t think
we’re thinking this hole is going to be plugged by these dollars alone.”
Rural hospitals, most of which are already operating with precarious
margins, are rarely able to recoup the cost of running a labor and
delivery unit, in part because they see fewer patients than their urban
counterparts.
With more than half of all births in Oregon covered by Medicaid, these
facilities worry the federal cuts will crater their finances and force
more maternity wards to close. The result would leave more pregnant
women in the state to travel long distances to receive prenatal care or
give birth, resulting in more dangerous pregnancies and higher risk of
infant mortality.
The Oregon Health Authority will distribute the $37.5 million fund to
hospitals based on the total number of Medicaid patients they care for
throughout 2026, according to the application submitted to the Centers
for Medicare and Medicaid Services, meaning hospitals that get more
patients covered by the program will likely get more money. The amount
each hospital will receive is still being finalized, but officials plan
to send out the first dollars before the end of the year.
State officials say the funds are intended to narrow the gap between
what Medicaid pays back to healthcare providers and the actual cost of
care. Hospitals may use the payment to cover maternity care-related
expenses, like hiring or retaining staff, training, or updating
equipment.
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 These costs have been cited by
hospital leaders as a driving force behind recent decisions to wind
down maternity services. Both Providence Seaside Hospital on the
North Coast and McKenzie-Willamette Medical Center outside Eugene,
Oregon described challenges recruiting doctors and recouping costs
through reimbursement when they closed their programs last fall.
In Oregon’s southeast corner, the payments could be a boon for
Malheur County, which has the highest Medicaid enrollment of any
county in the state. The county has one hospital and birthing
center, Saint Alphonsus Medical Center in Ontario. The next closest
hospital for pregnant women to receive care is across state lines in
Boise, more than 50 miles away.
Grigg, the CEO at Wallowa Memorial, said the small district hospital
will likely use their share of the $37.5 million to fund existing
needs, such as backpay for on-call physicians. Since the funding
isn’t ongoing, Wallowa likely won’t use it to hire more staff or
grow services, he said.
St. Charles Madras in Central Oregon, another hospital serving a
large number of Medicaid patients, loses about $1 million each year
on its labor and delivery service, said Kimberli Munn, chief nursing
officer.
Munn said the hospital is considering using the payments to buy new
monitors or introduce a neonatal telehealth system that would allow
their clinicians to consult with outside physicians in the event of
an emergency. Both options would still require alternative funding
sources when the assistance runs out.
“You would need continual funding to keep it sustained,” Munn said,
referring to the telehealth program.
Oregon Health Authority officials say they also plan to draw on
another federal grant, the Rural Health Transformation Fund, to
prevent further loss in the state’s maternity services.
The $50 billion, five-year initiative created by the “One Big
Beautiful Bill” was described by Senate Republicans as a form of
“immediate relief” to preserve rural health access. The Trump
administration has said they intend to prioritize efforts to
modernize care.
Oregon received $197 million through the fund for 2026 — a fraction
of the cuts to the Medicaid program state officials are
anticipating. It’s difficult to determine how much the grants will
help to offset losses rural hospitals are expecting with the
Medicaid changes, as implementation will happen gradually and the
effects are expected to grow once the funds are spent, according to
the nonprofit policy research group KFF. Federal health officials
say they will assess future awards based on states’ progress towards
implementing the program’s goals.
Thirstrup said the agency plans to use the dollars they put towards
maternity services to experiment or expand models that incorporate
other providers into obstetrics care — like midwives and family
medicine doctors — as well as provide workforce development and
training.
One of the first Rural Health Transformation Fund grants approved by
Oregon Health Authority is a $1.2 million, two-year mobile training
initiative by the Oregon Perinatal Collaborative that will give
rural providers an opportunity to practice responding to maternal or
neonatal emergencies they may not encounter often.
“We’re going to continue to look for any available resource we can
find — federal, state or otherwise — in order to shore up these
critical services,” Thirstup said.
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