Sturgis closure may be ‘first of more’ for Michigan rural hospitals
[July 10, 2026]
By ELI NEWMAN/Bridge Michigan
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.”
Service cuts
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.
From 2 miles to 25
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.”
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 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.
Another perspective
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.
Looking forward
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.”
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