As hospital closures accelerate, Medicaid cuts could worsen trend
As hospitals continue to face mounting financial pressures, facility closures are ramping up as a direct consequence of those strains.
As of September 2025, Becker’s has reported 21 hospital closures, up from our coverage of 19 facility closures at this point in 2024. Becker’s capped its 2024 reporting with 25 total closures, just four more than early September 2025, with three more months to go in the year.
So, what could be leading to these heightened closures?
While higher year over year, operating margins have started to slip as well. In July, the average operating margin dropped to 2.6%, down from June’s 3.4%.
Profitability is also slipping, as revenue growth slows. In the first seven months of 2025, revenue rose 8% year over year as expenses climbed 7%. Expense growth was led by a 9% spike in non-labor expenses year over year. Labor expenses were up 5%, drugs and supplies each up 12% and purchased services increased 7%.
New policy changes could also be intensifying these pressures. The One Big Beautiful Bill Act, passed July 4, will cut around $1 trillion over the next decade from Medicaid. A recent analysis from Kodiak Solutions also projected that hospitals could lose up to $25 billion in annual revenue.
Most recently, Fisherville, Va.-based Augusta Medical Group, part of Augusta Health, also of Fisherville, cited its ongoing response to the OBBBA as part of plan to consolidate three care locations.
“These decisions are never easy, but demonstrate Augusta Health’s commitment to deploying innovative access strategies for addressing demand at the neighborhood level,” Kris Doan, president of Augusta Medical Group, said in a news release addressing the consolidations.
Maternity care is also enduring mounting strain, with Becker’s covering 21 related service closures so far in 2025.
Sen. Ron Wyden, D-Ore., warned during a Sept. 4 Senate Finance Committee hearing with HHS Secretary Robert F. Kennedy Jr. that hospital service cuts tied to the OBBBA have already started taking effect. Mr. Wyden pointed to Providence Seaside (Ore.) Hospital’s plan to end its inpatient obstetric and newborn care services on Oct. 4.
In an Aug. 19 caregiver announcement obtained by Becker’s, Providence Seaside Chief Administrator Rebecca Coplin and Providence Women’s and Children’s Services Executive Director Kristine Bell, RN, pointed to a “historic reset” that Oregon’s healthcare system is experiencing.
“Hospitals across the state, including Providence, are grappling with the reality that the cost of care continues to outpace reimbursement — driven by inflation, workforce shortages and rising supply costs,” the announcement said. “We find ourselves at a point where we must take steps to ensure we can continue to provide high-quality care and pay our caregivers competitive wages.”
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