A century-old hospital near Michigan\u2019s southern border was one of the nation\u2019s first to convert into a new emergency-focused model Congress created to save rural care.<\/p>\n
Afterward, though, use of Sturgis Hospital\u2019s emergency department fell, according to data collected at the state level. In June, three years after taking the federal lifeline, the hospital closed, leaving residents of Sturgis, a town of about 11,000 people, without critical healthcare. Its leaders had tried \u201cevery reasonable option\u201d to remain open, including seeking a buyer, according to a hospital news release.<\/a><\/p>\n The closure \u201ccould be kind of a canary in the coal mine\u201d for rural healthcare, said Lauren LaPine-Ray, the vice president of policy and rural health at the Michigan Health & Hospital Association.<\/p>\n Federal leaders have spent decades trying to prop up rural hospitals, which face persistent staffing shortages, low federal payment rates, and declining patient numbers.<\/p>\n About 1,700 hospitals nationwide are eligible to convert to the stripped-down Rural Emergency Hospital model. So far, more than 50 rural hospitals in over 20 states have signed on, but LaPine-Ray and other hospital leaders nationwide fear Sturgis\u2019 failure is a sign the new model won\u2019t be enough to keep doors open when the anticipated federal funding losses arrive from President Donald Trump\u2019s signature One Big Beautiful Bill Act.<\/p>\n Last year, the survival of rural hospitals became a central negotiating point<\/a> as Congress debated the massive tax and spending law, which is expected to reduce Medicaid funding by more than $900 billion over 10 years. The reductions are expected to have a substantial impact in rural areas that often have high Medicaid enrollment. Republicans added the new $50 billion Rural Health Transformation Program to win votes from a few holdouts in their ranks.<\/p>\n Sturgis\u2019 facility is the only rural U.S. hospital to completely close<\/a> in 2026. The day before it shuttered, four senators \u2014 including Maine Republican Susan Collins, an architect of the rural health fund \u2014 sent a letter to Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services. The letter<\/a> said the way his agency structured the fund \u201cmay unintentionally disadvantage many of the rural hospitals and clinics the program was intended to support.\u201d<\/p>\n Congress created the emergency hospital model, which took effect in 2023, as \u201ca whole new way of providing care,\u201d said George Pink, a senior research fellow at the Cecil G. Sheps Center for Health Services Research at the University of North Carolina-Chapel Hill. The Sheps Center tracks rural hospital closures and conversions, and Pink recently released early research showing converted hospitals reporting improved finances, though some are not yet in the black.<\/p>\n Hospitals that convert to the emergency model get a 5% boost in Medicare payments plus an extra monthly facility payment, totaling about $3.6 million a year, according to the Rural Health Redesign Center. In return, the hospitals must offer emergency services and give up their inpatient beds. They can continue offering outpatient services.<\/p>\n Janice Walters, CEO of the Rural Health Redesign Center, which has received federal funding to help hospitals change to the new model, said dozens of hospitals had reached out about converting during the first five months of 2026. It\u2019s reasonable, she said, to presume that 10 or 11 might convert this year.<\/p>\n \u2018No Easy Answers\u2019<\/strong><\/p>\n More than 40% of all rural hospitals lose money, and hundreds have eliminated obstetrics, general surgery, and chemotherapy services, according to<\/a> the healthcare consulting group Chartis.<\/p>\n Sen. Chuck Grassley (R-Iowa) sponsored the legislation that created the emergency hospital model. He touted the program last fall, pointing to hospitals such as Landmann-Jungman Memorial Hospital Avera in South Dakota, which he said would be able to use the model to enhance local health services.<\/p>\n Melissa Gale, the chief executive of the Scotland, South Dakota, hospital, said the facility averaged less than one inpatient a day and was \u201ca little above or below break-even year-over-year for decades.\u201d<\/p>\n Today, with additional federal funding from the emergency model, Gale said, the hospital could try to draw in more patients for mammograms and may add a wound care program. In the past year, the hospital has improved employee benefits and reinvested in the building, upgrading plumbing and the heating and air conditioning, she said.<\/p>\n \u201cNo one wants to see rural health fail,\u201d Gale said, adding, \u201cThere\u2019s no easy answers.\u201d<\/p>\n <\/a>Federal lawmakers have tried, and thus far failed, to update the emergency hospital model. One proposal, which is expected to be reintroduced, would allow converted hospitals to offer new services, such as beds for patients who need short-term recovery and in-house obstetric labor and delivery units. Another, which is in committee, would allow hospitals to use a federal drug discount program that many facilities use to generate revenue.<\/p>\n The current law is a \u201ccritical start, but it must evolve,\u201d said Carrie Cochran-McClain, the chief policy officer for the National Rural Health Association, whose members include hospitals and clinics.<\/p>\n Residents of the southeastern Iowa town of Keokuk continue to hope their shuttered hospital will reopen under the program. The effort has been plagued by delays.<\/p>\n The Keokuk hospital went out of business in 2022 and was later purchased by a Michigan company that pledged to reopen it.<\/p>\n \u201cIt\u2019s been a slower process than we envisioned,\u201d said Insight Health Systems Vice President Dayne Walling. Many of the delays have been related to improvements needed to the aging building, he said. Without the emergency hospital model, Walling said, his company would not see a realistic path to reviving the hospital.<\/p>\n Walling said the emergency model would be even better if Congress approved the bill that would allow hospitals to make extra income from prescription medications.<\/p>\n Dierdra Sorrell, the CEO of Clifton-Fine Hospital in Star Lake, New York, said converting to an emergency hospital was not a \u201csilver-bullet, magic pill.\u201d But it \u201cput us in a much better place.\u201d<\/p>\n The 20-bed hospital lost more than $2.5 million annually before 2024, when it became New York\u2019s first emergency hospital, Sorrell said. While converting, the hospital shut down inpatient beds and cut 20 employees.<\/p>\n The first year, Clifton-Fine lost only $600,000, and its emergency patient visits were \u201crock solid,\u201d Sorrell said. The hospital also won state grant money to update its two-bed emergency room and pay for additions that could house visiting specialty doctors or new lines of services, such as a dental hygienist.<\/p>\n If Clifton-Fine had not converted, Sorrell said, anticipated Medicaid losses could have \u201cput us under.\u201d<\/p>\n \u2018One Important Tool\u2019<\/strong><\/p>\n Timothy Foster, a spokesperson for the Centers for Medicare & Medicaid Services, said the emergency model is \u201cone important tool\u201d for rural hospitals, \u201cbut each facility must determine whether this care model is appropriate.\u201d Foster also said that the new five-year, $50 billion rural health fund was created to support \u201cinnovative, system-wide reforms\u201d that strengthen the rural healthcare delivery system.<\/p>\n Of the 56 hospitals that have converted to the rural emergency model, two have closed, and three remain open but have changed what services they offer, according to Sheps.<\/p>\n In Holly Springs, Mississippi, Alliance HealthCare System was one of the first to convert to the emergency hospital designation, laying off staff and shutting down inpatient beds.<\/p>\n Then, federal officials said they made a mistake<\/a> and required the hospital to recertify as a new hospital, a delay that cost an estimated $1.5 million in federal reimbursement, CEO Kenneth Williams said.<\/p>\n The hospital is \u201ca shell of what it once was,\u201d Williams said. The ER remains closed.<\/p>\n \u201cWe have survived, but survival has come at a tremendous cost,\u201d he said.<\/p>\n Williams said he is closely watching the impact of upcoming Medicaid changes because cuts in insurance coverage or payments \u201cultimately affect patient access,\u201d he said.<\/p>\n Sen. Josh Hawley (R-Mo.), who voted for the One Big Beautiful Bill Act \u2014 which included both the rural health fund and the Medicaid spending reductions \u2014 has asked for more support for rural hospitals. Ten full-service rural hospitals in Missouri have closed in the past 12 years, according to the Sheps Center.<\/p>\n Last year, Hawley introduced legislation to repeal the future Medicaid spending cuts<\/a>. This June, he held a news conference<\/a> to announce that he wanted to pay rural hospitals $1 million annually, or more if needed, to keep emergency rooms operating. A spokesperson said the bill would apply to all rural hospitals, including those using the emergency model.<\/p>\n Michigan\u2019s Sturgis Hospital faced \u201csome significant challenges\u201d in 2023 when it converted to the emergency hospital model, said LaPine-Ray, of the state hospital association. In the news release, hospital officials said the closure was due to declining reimbursement rates, rising costs, and declining patient numbers. Bobby Morin, a former chief operating and financial officer at the hospital, declined to comment.<\/p>\n The hospital\u2019s ER patient volume dropped 13% in the two years after it converted, LaPine-Ray said. Five rural hospitals have closed in the past 20 years in Michigan, and LaPine-Ray said she doubts the rural health fund Congress approved last year will stop the closures. The association, which worked with the governor\u2019s office on the funding, expects less than 10% of Michigan\u2019s $173 million in first-year rural health funding to trickle down to rural hospitals.<\/p>\n That money will pay for \u201cvery specific programs where rural hospitals have to create basically a new program and implement it with no funding on the front end,\u201d LaPine-Ray said.<\/p>\n At the same time, she said, the association expects Michigan hospitals to lose $6 billion in Medicaid payments over the next decade because of the One Big Beautiful Bill Act.<\/p>\n \u201cWhat\u2019s it going to look like in the coming years?\u201d LaPine-Ray said.<\/p>\n KFF Health News<\/a> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF\u2014an independent source of health policy research, polling, and journalism. Learn more about KFF<\/a>.<\/em><\/p>\n This article<\/a> first appeared on KFF Health News<\/a> and is republished here under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License<\/a>.<\/p>","protected":false},"excerpt":{"rendered":" A century-old hospital near Michigan\u2019s southern border was one of the nation\u2019s first to convert into a new emergency-focused model Congress created to save rural care. Afterward, though, use of Sturgis Hospital\u2019s emergency department fell, according to data collected at the state level. In June, three years after taking the federal lifeline, the hospital closed,…<\/p>\n","protected":false},"author":0,"featured_media":14877,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-14876","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"_links":{"self":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts\/14876"}],"collection":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14876"}],"version-history":[{"count":0,"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts\/14876\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/media\/14877"}],"wp:attachment":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}