Sturgis Hospital closure tests new rural emergency model amid looming Medicaid cuts

Sturgis Hospital, a historic facility near Michigan’s southern border, became one of the first to adopt the Rural Emergency Hospital model created by Congress to preserve rural care. After conversion, the hospital’s emergency department volume dropped 13%, and it closed in June, leaving the town of about 11,000 without critical services. Officials say the closure may foreshadow difficulties for the roughly 1,700 hospitals eligible for the model as the One Big Beautiful Bill Act reduces Medicaid spending by over $900 billion over a decade.

Senators, including Susan Collins, warned the CMS-run Rural Health Transformation Program could unintentionally disadvantage rural providers. While some converted hospitals report improved finances, others remain unprofitable, and proposals to expand services or allow drug-discount revenue are still pending. The situation underscores the uncertainty facing rural health systems nationwide.