Oregon is putting $25 million on the table to keep hospital maternity services from slipping away, a statewide push to keep local birthing rooms open as rural units continue to shrink. The money is meant to prop up smaller community hospitals while nudging up payment rates at the larger centers that handle most deliveries. State officials say the core goal is simple: families should still be able to find labor-and-delivery care close to home, not hours down the highway.
Under the plan, $15 million will flow into stabilization payments for smaller rural hospitals and another $10 million will go into diagnosis-related-group rates for larger hospitals. Lawmakers told the Oregon Health Authority to distribute the money out of the general fund, and Gov. Tina Kotek folded the allocation into this cycle’s OHA budget. The package and its breakdown were detailed in state budget materials, according to the Oregon Legislature.
Why hospitals say they need help
Hospital leaders say a tough mix of declining birth volumes, rising operating costs and ongoing workforce shortages has left many small maternity units financially fragile. Low Medicaid reimbursement has repeatedly been called out as a major pressure point that makes it hard for rural hospitals to keep labor-and-delivery services adequately staffed and safe. That broader backdrop helped push lawmakers to tack targeted maternity funding onto the OHA budget, as reported by The Lund Report.
Local examples
In Southern Oregon, Asante has announced it will end inpatient and birthing services at Ashland Community Hospital and convert the facility into a satellite campus of Rogue Regional next spring, citing sharply lower birth counts and mounting financial losses. Samaritan Health Systems also drew public fire last year after warning it might close two rural birth centers, prompting nurses and lawmakers to sound alarms about access. Those kinds of local disruptions are exactly the closures this new funding is meant to blunt, according to reporting from Medford Alert News and coverage by KLCC.
What this could mean for families
Medicaid pays for nearly half of all births in Oregon, so cuts to local maternity units would land hardest on low-income families and people of color. When nearby labor-and-delivery wards close, patients are often stuck with much longer drives in labor, more reliance on ambulance transfers and added strain on already thin rural emergency services. Supporters say the $25 million is a modest but meaningful step that buys time while policymakers and providers work on deeper fixes to rates and workforce shortages, per state budget notes.
Next steps and timing
The funding sits inside House Bill 5025, the Oregon Health Authority budget approved this cycle, and OHA now has to write the rules that will govern how and when the stabilization payments go out. The agency is also pursuing federal rural-health transformation dollars and other grants in an effort to shore up capacity over the longer term. Officials note the Ashland transition is slated for spring 2026 as state and local health systems work through implementation details, with the underlying budget documents and enactment materials available on legislative and agency sites.
“This is a good first step,” Becky Hultberg, president and CEO of the Hospital Association of Oregon, told local media, and OHA Director Dr. Sejal Hathi said the investments should help stabilize hospitals that provide maternity services so families can rely on local care. Health leaders caution that truly sustained access will still require more substantial rate reform, workforce investment and continued legislative attention. For now, advocates say the move throws a short-term lifeline to at-risk communities while those deeper fixes are hammered out, according to local reporting.
Sources: KOIN; Oregon Legislature; The Lund Report; Medford Alert News; KLCC; HB 5025 (OLIS); Oregon Health Authority.
