Iron Mountain Daily News photo Wisconsin-based Aspirus Health has announced it will end OB/GYN services at its Ironwood facility in Gogebic County.

WASHINGTON —

The Sept. 5, Aspirus Health announcement stating it will end labor and delivery services at its Ironwood hospital on Dec. 31 has been met with backlash from elected officials, as well as the union representing the nurses at the facility.

Michigan U.S. Senator Elissa Slotkin, D-Holly, however, says what is happening with Aspirus Health is happening to rural hospitals across the nation and she looks to the One Big Beautiful Bill Act, signed into law on July 4 as a contributor to a growing healthcare problem.

“It’s really scary for families.,” Slotkin said. “I’ll be honest. Ever since the president signed the bill in July, we knew that rural hospitals would be the first one who were going to cut some services.”

On Sept. 11, the American Medical Association reported the law includes significant funding cuts and policy changes to Medicaid and the Health Insurance Marketplaces, Medicare physician payment and medical student loans, among other health care related items, all of which will worsen patient access to care.

Slotkin, a strong opponent of the federal budget cuts, particularly to Medicaid, has warned the proposed cuts could have a far-reaching impact on Michigan, especially for rural hospitals that heavily rely on Medicaid funding.

“Our rural hospitals are more dependent on Medicaid dollars than suburban or urban hospitals,” she said, “and once you started talking about big cuts to Medicaid, our rural hospitals almost immediately came forward and said ‘Look; we’re having to do a really hard look at the services that don’t make a lot of money, or are overly dependent on Medicaid, and we may have to cut them.'”

The Sept. 5 Aspirus announcement regarding the end of labor and delivery services at Ironwood stated the change is part of a shift to a new model based on best-practice approaches for rural communities nationwide. The reason for this new model may be increasing financial pressure on rural hospitals, according to Aspirus. Small operating margins, which measure a company’s profitability from core operations by showing the percentage of revenue left after deducting operating expenses such as utilities and salaries, are no longer viable.

Aspirus Health on December 16, 2024 said on its newsroom website that a 3% operating margin isn’t enough to ensure long-term sustainability.

Aspirus CEO Matthew Heywood told Becker’s Hospital Review in a Dec. 12 interview many health systems that are talking about long-term improvement in their income statement are going to slowly get to 2% or 3%.

“Our belief is that’s not going to keep you alive,” Heywood told Becker’s. Heywood said a potential cybersecurity events or major inflationary spikes could quickly eliminate a hospital’s bottom line.

“Our view is you have to get to 5% or better, and you need to get back to where you were before COVID,” Heywood told Becker’s. “Then, if you’ve got your income statement able to absorb these shocks, that means you have access to your balance sheet. And if you have access to your balance sheet, you can borrow money to make the strategic choices.”

Heywoood said Aspirus attempts to get our margin 4%-6% range.

“Right now, we’re running about a 4.85% [margin], and that allows us to feed our balance sheet,” he said.

Slotkin said the hospitals in Ontonagon, Ironwood, and the Keweenaw, are not alone in losing services.

“I went and visited the hospital in St. Ignace in June,,” she said, “and they were struggling with some of the same questions.”

The University of Michigan’s School of Public Health reported in June that major cuts to Medicaid funding could face rural communities across the country with widespread hospital closures and reduced access to healthcare.

“Unfortunately, the U.P. is seeing some of the first cuts around the state of Michigan,” Slotkin said, “but it’s terrifying for these families who are trying to have a healthy and safe delivery, especially if it’s your first child and you’ve never gone through it before.”

Aspirus Health has not replied to telephone calls or emails for comment.