Johnson Memorial Health to close its maternity care center

The center will be the 16th obstetrics department in Indiana to close since 2020.

FRANKLIN, Ind. — Johnson Memorial Health will close its Maternity Care Center and will no longer offer obstetrics services on the Franklin campus, citing low insurance reimbursement rates and rising costs of service.

JMH has birthed hundreds of babies since it opened in 1947, but it’s losing $2 million a year providing maternity services, and it’s no longer sustainable for the hospital, President and CEO Dr. David Dunkle said.

“It’s sad when you stop delivering a service that the community has depended on again since 1947,” Dunkle said. “This is a decision that we’ve looked at for months. Is there anything, possibly, else that we could do? There is nothing else.”

The hospital has struggled financially, especially since the COVID-19 pandemic. Indiana Medicaid reimburses hospitals for 57% of the cost of care, and Medicare reimburses for 82% of the cost of care. It’s an unsustainable structure, the CEO said.

“That’s 70% of all our business,” Dunkle said. “Just think about that, from a business standpoint, 70% of the service we provide, we don’t even get full percentage cost to cover the cost.”

Commercial insurance payouts are part of the problem he believes too, and JMH receives lower reimbursements than larger organizations for the same services.

“Commercial insurance companies are paying us rates that don’t keep up with inflation,” Dunkle said. “They deny more, I mean, record numbers of denials. They don’t pay on time. They find every reason in the world not to pay us.”

JMH is now one of 16 OB departments to close its doors since 2020. Twelve of those happened in the last three years, according to the Indiana Hospital Association. Most recently, Greene County General Hospital closed its doors on its OB department at the end of January.

“We get paid $6,000 per vaginal delivery, and we get paid $13,000 per C-section,” CEO Brenda Reetz said. “We deliver 70 babies a year. The cost of the physicians only, only the physicians alone, because we have to use contract labor, is about $1.7 million to cover a 24/7 OB unit. It doesn’t take very much math skills to realize that those numbers don’t break even.”

In the last decade, nine hospitals have closed in Indiana, including Ascension St. Vincent Dunn in 2022. At the time, 13News reported on concerns of what it would mean for OB services, with no childbirth services within 30 minutes.

“Something has to be done or what you’re going to see is more small hospitals shut the doors or stop providing services,” Dunkle said. “The state has to wake up. We have to do something.”

Both Dunkle and the IHA are concerned about impacts from President Donald Trump’s One Big Beautiful Bill and what it could mean for hospitals already struggling financially. It’s projected to result in $12.7 billion in cuts over the next decade for Indiana hospitals, according to IHA.

“Less people are going to be covered for insurance. We already see with Medicaid work requirements, and we’ve seen with the Healthy Indiana Plan in the state of Indiana capping the enrollment,” Dunkle said. “So what’s going to happen? We’re gonna have more people who are uninsured, and then what are they gonna do? They’re gonna put off getting the care they need until something serious happens. Then, they’re gonna come in the ED and their cost of care is gonna be more than it ever should have been. What’s that gonna mean for the hospital? It’s gonna be charity care because these people won’t be covered. It’s really just a huge problem is brewing. It’s been ignored for years, and the time to deal with this is now.”

Dunkle is calling on the state to raise its Medicaid reimbursement rates, something IHA says has not seen a significant increase in over 30 years. He’s also asking government officials to hold commercial insurers accountable to paying hospitals.

“We have to raise our rates,” Dunkle said. “We can no longer be the eighth lowest in the nation.”

Scott Tittle, president of the Indiana Hospital Association, sent the following statement to 13News after learning JMH would close its maternity care center:

“These trends threaten the stability of our health care system and will lead to even more closures if left unaddressed.     

Indiana hospitals remain committed to protecting access to care and serving the health needs of all Hoosiers—but we cannot do it alone. Reimbursement reform is urgently needed to ensure hospitals can keep their doors open and maintain critical services for every community in our state.” 

JMH said 48 staffers with the Maternity Care Center will lose their job as part of its closure. It hasn’t finalized an exact closing date yet, but is telling expecting moms if their due date is in more than four months, they’ll likely deliver somewhere else. They’re working on a transition plan to help patients to find other care. Dunkle is grateful four other hospitals are able to deliver babies within 30 minutes of their Franklin campus.

Along with the maternity care center, JMH is closing a satellite pediatric office in Greenwood, but pediatric services will continue on its main Franklin campus. No other services are in danger of closing at this time, Dunkle said.