ELI NEWMAN/Bridge Michigan - Bridge Michigan
•7/9/2026
Beth Kelley spent most of her life working at Sturgis Hospital. For 32 years, the nurse said it was “unusual to walk down the hall and not recognize somebody.” The independently owned hospital had served its community in rural St. Joseph County for more than a century.
“I like the small hospital atmosphere,” Kelley, 56, told Bridge Michigan. “I know this is maybe a little cliché, but it’s like family.”
When administrators held a town hall last month to tell staff the hospital would close about 70 hours later, Kelley said the room filled with “shock” and “devastation.” The decision left many long-serving employees like herself “scrambled trying to find a job” while they worked their remaining shift hours.
Sturgis Hospital shuttered its doors June 19, citing “years of ongoing financial challenges” facing rural health care providers. The facility had 84 licensed beds and about 300 associates working, according to the hospital.
There were warning signs. The facility had been winding down services in recent years, even as it obtained a city-issued pandemic relief loan, a state lifeline and new federal status — Sturgis Hospital became Michigan’s first designated rural emergency hospital in 2023, which allows for increased support from the US Centers for Medicare & Medicaid Services.
It’s not the only rural hospital in Michigan to be impacted by a shifting health care landscape. These health care facilities, sometimes the only medical care providers available for miles, have been navigating several problems, including declining payer reimbursements, rising operating costs, and a federal reworking of Medicaid and Medicare — programs used by the bulk of patients in rural hospital settings.
For Kelley and others, the Sturgis Hospital closure is part of a bigger trend and serves as a wake-up call for her and others in the field.
“As a nurse, we took care of patients, and that’s all we did. It’s all we cared about. We didn’t care about the financial end of it,” Kelley said. “Those days are gone.”
Rural hospital closures, reductions, restructuring and consolidation dominate the contemporary health care landscape in Michigan, according to researchers, physicians and policy advocates working in the field.
For one thing, Michigan’s population is aging, which puts strain on the state’s health care system. In addition, many point to problematic payment models that don’t offset costs for service, and federal program reductions outlined in HR 1 — the “One Big Beautiful Bill.”
Five rural hospitals have closed in Michigan since 2005, according to the Cecil G. Sheps Center for Health Services Research at the University of North Carolina at Chapel Hill.
As Congress debated the One Big Beautiful Bill last year, the Sheps Center estimated four of 63 rural hospitals in Michigan could be at risk for closure, highlighting facilities that had run a three-year deficit or existed as one of the top Medicaid revenue earners in the country. Sturgis Hospital was not included.
Even if a hospital does manage to remain open, many have to drop major parts of their operation to survive. Last year, the labor and delivery unit at Aspirus Ironwood Hospital and the obstetrics unit at MyMichigan Medical Center in Tawas City closed.
Rural birthing hospitals are costly and difficult to staff, according to Michael Shepherd, an assistant professor at the University of Michigan School of Public Health focused on rural health disparities and health policy in the US.
“Half of births in rural communities are being paid for by Medicaid at the moment,” Shepherd told Bridge following passage of President Donald Trump’s One Big Beautiful Bill, which calls for slashing Medicaid. “So what you’re talking about is a not very profitable service line — it’s very expensive and one that’s about to face massive financial shortfalls.”
Sturgis Hospital had closed its birthing center in 2018. Last month, it ended the remaining services nearby residents relied on — surgery, laboratory, medical imaging, physical therapy, endoscopy and cardiac rehabilitation services.
While other clinics exist to fill the gap, the absence of an emergency department in Sturgis has left facilities in Three Rivers, Coldwater and LaGrange, Indiana as the closest alternatives to patients.
That reality has a “substantial operational effect” on the city’s emergency medical services, according to Sturgis Director of Public Safety Ryan Banaszak. When ambulances leave their service areas, he said longer distances and travel times affect their ability to respond.
“What was once approximately a 2-mile transport for patients has now become closer to 25 miles, which takes ambulance personnel and equipment out of service for a much longer period of time,” Banaszak said in an email.
It’s more than distance for some patients — while Parkview LaGrange Hospital may be the closest drive from Sturgis at less than 20 minutes, low-income patients may still face obstacles finding medical coverage.
“If you are a Michigan Medicaid patient, you can’t simply go across the border to another hospital,” said Joe Gavan, CEO of Cass Family Clinic, a federally qualified health center operating in rural southwest Michigan. The loss of the Sturgis Hospital, he said, is “a huge burden on the folks that are impacted the most.”
Rebecca Burns, health officer of the Branch-Hillsdale-St. Joseph Community Health Agency, said she is “saddened by the loss” of the hospital. The public health agency continues to operate a site in Sturgis.
“We stand ready to continue to provide public health preventative services to residents as they need them,” Burns said.
Dr. Andrea Wendling sees a pattern play across rural systems which lands patients in emergency rooms and causes hospitals to operate on tight margins.
“People aren’t doing the primary care and they’re not doing the preventative care in between,” said Wendling, a family doctor who practices at a clinic in Boyne City and serves as senior associate dean for academic affairs for the Michigan State University College of Human Medicine.
“When they’re not able to pay that bill and there’s not insurance for them to pay, that’s a loss for those hospitals, and they need to have a certain percentage of paying customers in order to be able to fund the service that they provide.”
Wendling, who has spent much of her life living and working in rural hospital settings and ensuring its continued workforce, worries the Sturgis Hospital closure is “the first of more closings that we’re going to see over the next few years” in the state.
She said independent hospitals are pressured to join bigger systems for economic benefit: Acquisition allows for smoother negotiations with big insurance payers, stronger purchasing power and reduced administrative costs.
But acquisition is no guarantee of survival. Sturgis Hospital had been acquired by a health care company in 2023, but city officials reported last August the deal was slow to close “by all indications.” A representative from the company declined to comment.
“Despite extensive efforts by hospital leadership and the Board of Directors to secure the hospital’s future, including pursuing potential acquisition opportunities and partnerships, a sustainable path forward could not be achieved,” Sturgis Hospital noted in its announcement.
The closure underscores the need for rural hospitals to use every tool for financial sustainability, including dollars from the 340B drug cost program and “ swing beds,” according to Lauren LaPine-Ray, vice president of policy and rural health for the Michigan Health & Hospital Association. Under swing bed arrangements, hospitals can shift the use of their beds to provide either acute or post-acute care on an as-needed basis.
“Rural hospitals need sustainable policies that account for the unique challenges associated with providing care in communities with lower patient volumes, workforce shortages and populations that are older, sicker and more likely to rely on Medicare and Medicaid,” LaPine-Ray said in an email.
Michigan has received a $173 million grant from the Rural Health Transformation Program, but the federal initiative has been scrutinized by hospital leaders operating in the targeted areas.
The Michigan Department of Health and Human Services has been criticized because under its grant funding criteria, some populous counties, including Wayne, Washtenaw and Oakland, would qualify as “partially rural” while St. Clair, Monroe, Jackson and Ottawa counties would not.
For Kelley, the change the hospital’s closure forces is out of her hands.
“I was pretty comfortable, so to start over is a little rough,” the nurse said.
The hospital is behind on paying out certain paid time off and retirement benefits, Kelley said, and she’s “doubtful” she’ll get back her vacation and sick time.
Representatives for the Michigan Nurses Association say union members lost health insurance coverage on the day of closure, with some employees reporting issues getting temporary COBRA coverage.
A call to the hospital by Bridge was not answered in time for publication of this story.
Kelley, who lives in Centreville, about 17 miles away from Sturgis, has found new work at Three Rivers Health Hospital as an as-needed nurse working part-time.
It’s an adjustment from her guaranteed, full-time pay position at Sturgis Hospital. “I’m hoping for 40 hours a week, but that’s probably not realistic.”
While the commute will be slightly closer for Kelley, she said the closure of the Sturgis Hospital will mean longer drives for some patients to reach a health care facility.
“For some of those people, it could be a matter of life and death.”
This story was originally published by Bridge Michigan and distributed through a partnership with The Associated Press.
