Dunkle
By Ryan Trares | Daily Journal
rtrares@dailyjournal.net
For The Republic
JOHNSON COUNTY — Since opening its doors in 1947, area residents have come to Johnson Memorial Hospital to have their babies.
Generations of people have been born inside the hospital walls, where families could receive care close to home and in their own communities.
That will end this year.
Johnson Memorial Health announced Friday that it is phasing out its obstetrics services and closing its Maternity Care Center due to budgetary constraints. More and more hospitals of JMH’s size are having to scale back on services due to an increasingly difficult financial landscape — the Franklin hospital becomes the 16th Indiana facility to close its maternity wards since 2020.
“We’ve made lots of cost-cutting initiatives and, as I’ve said, run a very sound fiscal operation the past few years. But we just decided no longer could we stand pat,” said Dr. David Dunkle, president and CEO of the hospital system. “We had to make some drastic cuts moving forward. Unfortunately, maternity is a financial negative for many institutions.”
The closure means the loss of about 48 positions at the hospital, Dunkle said. Expectant parents who are JMH patients will be informed of the long-term continuity of care plan at their next appointment, according to a release from the hospital.
The total closure of the unit will happen in the next several months, though an exact date is unknown at this time, Dunkle said.
“We’ve been delivering for many years. Our obstetrics team is outstanding. Our maternity center has been recognized time and time again for quality and patient satisfaction. That made the decision even more difficult,” he said. “We’ve got great doctors, we’ve got great nurses, great techs, but unfortunately, the reimbursement for maternity care is just not there.”
A myriad of financial pressures contributed to the decision to close the maternity unit, Dunkle said.
In a report released Jan. 27 by the Indiana Hospital Association, hospitals face the high probability of $1 billion in annual losses over the next three to five years. Indiana hospitals continue to operate on razor-thin margins, with the median operating margin in 2025 was 1.9%, well below the national median of 2.6%.
Operating income for Indiana hospitals fell 5.5% in 2025 compared to 2024, representing a loss of nearly $50 million in funds that would otherwise support patient care.
Shortfalls in Medicare and Medicaid reimbursements have left providers such as JMH strained to the breaking point. In Indiana, Medicaid reimburses hospitals for just 57% of the care of costs — a rate which is the 8th lowest in the nation. Medicare reimburses only 82% of costs in the state.
About 70% of patients at JMH are insured by Medicaid or Medicare, and about 40% of the deliveries made at the JMH maternity unit come from patients on Medicaid, Dunkle said.
“When you couple that with declining reimbursement received from commercial insurers, we’ve known we are in a long-term unsustainable model for quite some time,” Dunkle said. “There was hope we’d get either federal relief or relief at the state level. But that has not happened.”
The passage of the One Big Beautiful Bill Act in 2025 only exacerbates the issue, as Indiana will see more Medicaid cuts moving forward — a projected $12.7 billion throughout the state.
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 U.S. Congressional Budget Office estimates.
“The state of Indiana has attempted to leverage federal dollars to increase Medicaid reimbursement for several Indiana hospitals, but that plan was not approved by (the Centers for Medicare & Medicaid Services),” Dunkle said. “That was probably the last straw for us.”
While the cost of maternity care and the lack of reimbursements the hospital receives have been a large part of the issue, it’s not the only one. Commercial insurers have been increasingly aggressive in not paying out for care JMH has already provided, and in some cases, clawing money back, Dunkle said.
Costs from wages and supplies have grown continuously over the past five years. Those increases aren’t abating, Dunkle said.
“The cost of doing business continues to rise. It should worry people, if you look at statistics as a whole, I believe it was nearly 40% of hospitals have lost money in the past year,” he said. “However, commercial insurance companies continue to boast record profits. Pharmaceutical companies continue to be very profitable. Electronic record companies continue to post large profits.”
Though closing the maternity unit is a painful decision, JMH leadership believes it’s the only path forward to ensure future success. The focus will continue to be on maintaining the hospital as an independent, county-owned entity, while continuing to provide the outstanding care that has earned it a 5-star rating from the Centers for Medicare and Medicaid Services, and an A rating from The Leapfrog Group.
“We can no longer continue to lose money on certain services. We have to continue to concentrate on providing great care … while still navigating the low level of reimbursement we get,” Dunkle said.
