Updated July 22, 2026, by Hola America
Hospitals in Ottumwa, Council Bluffs and Oelwein rely heavily on Medicaid and other public programs and recorded negative average margins from 2022 through 2024. None has announced plans to close.
Three Iowa hospitals entered the federal Medicaid funding changes with two indicators of financial vulnerability: a high share of revenue from public insurance programs and negative average profit margins.
The hospitals are Ottumwa Regional Health Center, CHI Health Mercy Council Bluffs and MercyOne Oelwein Medical Center.
None of the three hospitals has announced plans to close. Their designation as financially vulnerable is based on a Public Citizen analysis of federal hospital financial data covering 2022 through 2024. The designation describes financial risk and does not predict that a closure will occur.
Update: None of the three hospitals has announced plans to close.
CHI Health Mercy Council Bluffs will end labor and delivery and Level II neonatal intensive care services on Aug. 31, but the hospital will remain open. CHI Health attributed the change to difficulty maintaining provider coverage and specialized clinical support, not Medicaid cuts or the hospital-risk analysis.
Ottumwa Regional Health Center says it remains stable and fully operational. MercyOne Oelwein Medical Center says it continues to operate from a strong position and disputes the use of older financial data to describe its current condition.
President Donald Trump signed the One Big Beautiful Bill Act on July 4, 2025.
The law’s Medicaid provisions are projected to reduce the federal deficit by approximately $886.8 billion from 2025 through 2034, according to the Congressional Budget Office. The agency estimates that the provisions will increase the number of people without health insurance by 7.5 million in 2034.
Iowa’s four members of the U.S. House and its two U.S. senators voted for the legislation.
Nationwide, 446 hospitals met the same financial benchmarks used to identify the three Iowa facilities. Of those hospitals, 176 serve rural areas.
The Iowa hospitals are:
- Ottumwa Regional Health Center in Wapello County
- CHI Health Mercy Council Bluffs in Pottawattamie County
- MercyOne Oelwein Medical Center in Fayette County
Why the three hospitals face greater financial risk
The financial risk assessment rests on two benchmarks:
- Medicaid, the Children’s Health Insurance Program and other low-income government programs accounted for at least 20% of the hospital’s average payer mix from 2022 through 2024.
- The hospital recorded negative average net profit margins from 2022 through 2024.
The underlying figures come from hospital financial data collected by the Centers for Medicare & Medicaid Services.
Those figures describe the hospitals’ finances during the three-year period. They do not establish that a closure is planned or imminent.
Patient volume, staffing shortages, reimbursement rates, management decisions, ownership structures and access to specialized medical providers can also affect whether a hospital reduces services or remains open.
Iowa hospitals remain open as services and funding change
Ottumwa Regional Health Center says it remains stable, fully operational and committed to continuing patient care.
The hospital says its affiliation with a larger health organization provides resources for continued investment in medical services, technology and patient care. Federal Medicaid reductions could still place additional pressure on rural hospitals across the country.
MercyOne Oelwein Medical Center disputes the description of its current financial condition. The hospital says the 2022–2024 data do not reflect its current operations and that it continues to adjust resources while operating from a strong position.
CHI Health Mercy Council Bluffs has not announced plans to close. The hospital will stop providing labor and delivery and Level II neonatal intensive care services after Aug. 31.
Prenatal appointments and women’s health services will remain available locally through CHI Health Clinic. Patients who remain with CHI Health will be directed to the system’s Omaha birth centers for delivery.
CHI Health attributed the change to growing difficulty maintaining the provider coverage and specialized clinical support required for obstetric and neonatal services. The health system said Medicaid cuts and the financial-risk designation were not factors in the decision.
Related: Council Bluffs hospital to stop delivering babies Aug. 31
Related Iowa health news
Iowa health systems have cut jobs and closed clinics
MercyOne laid off 67 workers in January 2026 while outsourcing some services. The health system also closed a family medicine clinic in Ottumwa that month.
MercyOne said it was facing approximately $1.5 billion in recent and anticipated federal funding reductions, along with changes affecting Medicaid and Medicare coverage, access and reimbursement.
MercyOne South Des Moines Family Medicine and MercyOne South Des Moines Urgent Care closed on June 26.
The health system cited infrastructure problems, declining government reimbursement, pressure from commercial insurers, inflation and expected Medicaid reductions among the reasons for closing the locations on Southwest Ninth Street.
Other MercyOne practices in the Des Moines metro continued accepting patient transfers.
West Des Moines-based UnityPoint Health is also eliminating more than 200 information technology and revenue-cycle positions as it outsources portions of those operations.
UnityPoint attributed the decision to sustained financial pressure but did not identify the federal Medicaid law as the sole cause of the job reductions.
Federal funding is reaching rural Iowa health programs
The same federal law created the Rural Health Transformation Program, a five-year initiative that will distribute $50 billion to states for rural health projects.
Iowa received $209 million for the first year of its Healthy Hometowns plan. The state could receive approximately $1 billion over five years if future annual funding is fully awarded.
Healthy Hometowns includes projects focused on rural medical staffing, telehealth, cancer screening and treatment, medical equipment, maternal health and coordination between regional hospitals and smaller communities.
In June, Iowa Health and Human Services selected Ottumwa Regional Health Center as one of five participants in the Combat Cancer Health Hub Program.
The regional networks will support cancer care, telehealth, workforce recruitment, medical equipment purchases and partnerships between hospitals and smaller providers.
Iowa also secured approximately $49.5 million in additional annual federal funding to expand physician residency training across the state’s 13 teaching hospitals.
Once fully implemented, the expansion is expected to support more than 128 additional physicians in training.
Residents can track grants, participating counties and program spending through the Iowa Healthy Hometowns dashboards.
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