JMH to discontinue Maternity Care Center

FRANKLIN, Ind. - Due to decreasing federal and state insurance reimbursement rates and coverage and the rising costs of services, Johnson Memorial Health (JMH) announced on Friday that it would be phasing out its obstetrics services and Maternity Care Center on the Franklin campus. The hospital will also take other 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.

He said county hospitals, including JMH, 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%. For most Indiana hospitals, Medicaid and Medicare provide the insurance coverage for the majority of patients.

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

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

The decision to reduce services is reflected in a recent study by the Indiana Hospital Association that included:    

• Medicaid base reimbursement rates haven’t seen a significant increase in 30 years
• The 2025 "One Big Beautiful Bill Act" will cut Medicaid reimbursement to Indiana hospitals by $12.7 billion
• Congress estimates the law will reduce federal Medicaid spending by $911 billion, and 10 million more people will become uninsured by 2034

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.

In recent years, Dr. Dunkle said JMH has also been harmed by commercial insurers that deny reimbursement for services already 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 closure of the Maternity Center and reductions in 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 has to make. They affect people we value deeply, and that is not lost on 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."