Oregon Rural Hospitals Get $197 Million Lifeline After Years of Shrinking Services
Amid rising service cuts in Oregon’s rural healthcare sector, the U.S. Centers for Medicare & Medicaid Services announced that the state will receive $197.3 million in 2026 to improve rural healthcare, and more may follow over the next four years.
Source: Oregon Health Authority award announcement and HHS press release on CMS state awards
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Oregon Rural Healthcare Gets $197.3M Federal Funding Boost
To help improve healthcare access, boost disease management and prevention, support the workforce, expand data and technology use, Oregon Health Authority (OHA) plans to invest the latest round of federal funding in community-driven projects in Oregon’s rural and frontier communities.
Source: OHSU Oregon Office of Rural Health, ODHS Tribal Affairs, U.S. Census ACS 2023
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The Oregon Rural Health Transformation Program includes a dedicated Tribal initiative that funds the Nine Federally Recognized Tribes in Oregon to improve their own healthcare access and health outcomes.
Oregon Gov. Tina Kotek said, “Oregon is resolved to steward this funding effectively, ensuring it benefits rural communities across the entire state.
Oregon initially requested $200 million annually, or $1 billion over five years, from the federal program. OHA will scale down its original proposal to fit its budget and center the unique needs and perspectives of people in rural communities for this effort.
Awarded through the Rural Health Transformation Program established under House Resolution 1, the federal program will distribute $50 billion nationwide over 2026-2031. It will revisit funding awards each year after reviewing each state’s progress.
More information can be found on the OHA Rural Health Transformation Program website.
Healthcare Cuts Across Oregon
The new federal funding, while substantial, comes after years of financial strain that pushed hospitals to cut services in smaller Oregon communities, worsening access after emergency federal financial help ended. Many hospital systems in Oregon and nationwide are reeling from repeated quarterly operating losses.
A recent example is Ashland Community Hospital, which plans to keep its ER open but move overnight and maternity care to Medford by 2026.
While PeaceHealth declined to say how many beds it is closing in Eugene and Springfield, at its four Lane County hospitals, which constitute PeaceHealth’s Oregon network, 69 positions were eliminated after it closed specialty clinics.
Oregon healthcare cuts in recent months include:
| Facility / community | Service change | Reported impact | When announced |
|---|---|---|---|
| CHI Mercy Health / Roseburg | Home Health service line closure | About 50 jobs affected | Apr 2023 |
| McKenzie Willamette / Springfield | Planned closure of McKenzie Midwives practice | Patients to be transferred by July closure date | Apr 2023 |
| Legacy Mount Hood / Gresham | Birth center closure attempt blocked | OHA denied waiver request to stop required maternity services | Mar 2023 |
| Bay Area Hospital / Coos Bay | Behavioral health unit closure plan | 56 temporary contracts canceled / later kept open after outcry | May 2022 |
| PeaceHealth / Lane County network | Clinic closures and service reductions | 69 positions eliminated reported in Oregon network | May 2023 |
The savings from staff cuts and reductions in the number of beds could be further complicated by workplace disruptions that may drive other employees to leave. Significantly, for patients, quality and access to needed care may be diminished, and the new funding can help address these gaps.