News

JMH Phasing Out Maternity Care Services Over the Next Several Months

February 6, 2026

FRANKLIN, IN - Due to decreasing federal and state insurance reimbursement rates and coverage and the rising costs of services, Johnson Memorial Health has announced the phasing out of its obstetrics services and Maternity Care Center on the Franklin campus. The hospital will also take additional steps to reduce costs, including staff reductions.

Dr. David Dunkle, JMH President/CEO, said the process for phasing out the maternity care center is expected to take several months.

Expectant parents who are JMH patients will be informed of their long-term continuity of care plan at their next appointment. 

“This is such a difficult decision because delivering babies and caring for them and their moms has been such an important part of our mission for decades. Also, we have an outstanding obstetrics team that provides great care for mothers and their babies,” said Dr. Dunkle, noting that the Maternity Center has won awards for the quality of care and has high patient satisfaction scores.

Dr. Dunkle said county hospitals, including Johnson Memorial Health, have struggled financially for several years, especially following the Covid pandemic. Compounding the problem is that Indiana Medicaid continues to reimburse hospitals for just 57% of the cost of care, and Medicare reimburses hospitals for only 82% of the cost of care. For most hospitals in Indiana, those two governmental payors provide insurance coverage for the majority of patients.

The current reimbursement structure for many Indiana hospitals in unsustainable, according to Dr. Dunkle.

“At JMH, about 70 percent of the people we take care for are insured by Medicaid or Medicare,” Dr. Dunkle said. JMH also provided approximately $1 million dollars of charitable care in 2025 to those without the ability to pay for the medical services that they needed.

JMH’s decision to reduce services is reflected in a recent study by the Indiana Hospital Association, which partnered with Kaufman Hall, a healthcare management consulting firm. Their findings included:

•    Medicaid base reimbursement rates haven’t seen a significant increase in 30 years.
•    Provisions of the One Big Beautiful Bill Act, passed in 2025, will cut Medicaid reimbursement to Indiana hospitals by a projected $12.7 billion.
•    The law will reduce federal Medicaid spending alone by $911 billion over 10 years and lead to 10 million more people becoming uninsured by 2034, based on Congressional Budget Office estimates.

During the past 10 years, nine Indiana hospitals have closed, including four since 2022. But even the hospitals that remain open have had to scale back services. Since 2020, 15 hospitals have closed their obstetrics departments.

Also in recent years, Dr. Dunkle said JMH has also been harmed by commercial insurers who deny reimbursement for services that have already been provided to patients in need.

Denials or delays in paying for services, and reimbursing JMH less than larger organizations for the same services, have significantly impacted JMH, “even though we have a better rating for quality and safety than many of these larger organizations,” Dr. Dunkle added

Johnson Memorial Health recently earned an “A” grade from The Leapfrog Group and received a 5-Star Rating from the Centers for Medicare and Medicaid Services for safety, excellence and compassionate care. Those scores make Johnson Memorial Health one of the top nationally recognized healthcare systems in Indiana and the country.

Despite the closing of the Maternity Center and reducing other costs, Dr. Dunkle said the leadership team and board of trustees are committed to keeping JMH an independent, county-owned hospital system and a provider of outstanding healthcare.

“Decisions like staff reductions and cost cuts are among the hardest any organization ever has to make. They affect people we value deeply, and that is not lost on me or our leadership team,” said Dunkle. “At the same time, taking these difficult steps now is necessary to stabilize our organization, strengthen our foundation, and ensure Johnson Memorial Health remains independent and well-positioned for the future. By making thoughtful, strategic changes today, we are creating a path toward long-term sustainability, renewed growth, and the ability to continue serving our community with excellence for generations to come.”