Rural Georgia hospital plans to close its labor and delivery unit, in part due to Medicaid cuts

This story was updated at 6:19 p.m. on Sept. 17, 2025.  St. Mary’s Sacred Heart Hospital in rural northeast Georgia will discontinue its maternal health services next month as its parent company moves to consolidate OB/GYN services to one location, the hospital announced last week. The decision will affect the hospital’s labor and delivery unit […]

The closure of St. Mary’s labor and delivery unit in Lavonia comes as one of the first Georgia-based casualties of the federal budget reconciliation package, colloquially known as the “big beautiful bill.” Getty Images/Virojt Changyencham

This story was updated at 6:19 p.m. on Sept. 17, 2025. 

St. Mary’s Sacred Heart Hospital in rural northeast Georgia will discontinue its maternal health services next month as its parent company moves to consolidate OB/GYN services to one location, the hospital announced last week. The decision will affect the hospital’s labor and delivery unit as well as Clear Creek OBGYN, a separate center which provides reproductive care for patients at all stages of life.

The closure of St. Mary’s labor and delivery unit in Lavonia is one of the first Georgia-based casualties of the federal budget reconciliation package, colloquially known as the “big beautiful bill.” Hospital administrators say the bill, which included a $1 trillion cut to Medicaid funding, contributed to their decision to consolidate OB/GYN services, though it was not the only factor.

“This decision follows an extensive 18-month discernment process that included intensive efforts to recruit additional physicians, create new partnerships, and pursue incremental funding sources,” St. Mary’s, which is owned by Trinity Health Georgia, said in a statement. “Changing demographics in our region, physician recruitment challenges, increasing outmigration for labor and delivery services, and recent Congressional cuts to Medicaid solidified this decision.”

Pregnant patients in at least four Northeast Georgia counties will now be transferred to other facilities within the St. Mary’s Healthcare System, such as St. Mary’s Hospital in Athens, which is over an hour from Lavonia by car. Stephens County Hospital in Toccoa, which is owned by a different company, also operates a labor and delivery unit that may provide a closer option for some patients. Sacred Heart Hospital’s Emergency Department will still be able to deliver babies in emergency situations, according to a press release, but will not be equipped to help patients who need a “higher level of care.” 

The decision also comes as part of a growing trend of rural hospitals closing their labor and delivery units amid budget shortfalls. As of last month, only 36% of Georgia’s rural hospitals still provided labor and delivery services, according to data from the Center for Healthcare Quality and Payment Reform.

‘The most draconian cuts imaginable’: Health care providers, advocates brace for Medicaid cuts

Health care experts have warned that recent federal Medicaid cuts could accelerate those closures, particularly those in rural areas, where health care providers rely on funding from Medicaid to sustain their facilities. In Georgia, 45% of all births are covered by Medicaid, according to nonprofit health policy research organization KFF. That number jumps to nearly 60% in rural areas.

Closing obstetric services can also harm a community’s economic development, said HomeTown Health CEO Jimmy Lewis, since hospitals are often the main employer in an area. 

“Over a period of the last five to 10 years, we’ve closed somewhere in the vicinity of 14 baby delivery systems,” Lewis said. “And when they close, it puts the community in an extremely adverse situation, both from a health care standpoint and from an economic development standpoint.”

Other hospitals in Georgia are also discussing scaling back services, citing federal cuts to Medicaid. Evans Memorial Hospital, which closed its labor and delivery services in 2010, is now contemplating closing down its Intensive Care Unit due to a $3.3 million budget shortfall. Though the budget reconciliation bill set aside a $50 billion fund intended to offset the impact of the Medicaid cuts, it is up to state governments to apply for and distribute the money.

“This program is a win for every rural community across the country, and the administration urges every single governor to apply,” White House spokesperson Victoria LaCivita said in a statement.

U.S. Sen. Jon Ossoff, a Democrat who opposed the Republican-backed reconciliation bill, criticized the service cuts during an appearance at First Congregational Church in Atlanta Sunday.

“It’s not a mystery that in a flourishing society, the means of achieving health and long life are a right accessible to all, and not just to those who live in the right place or have the means,” Ossoff said. “Especially when the disappearance of those services for the people is a result of the pursuit of other priorities, namely to further enrich those who already have the most.”

This story has been updated to clarify that Stephens County Hospital in Toccoa also operates a labor and delivery unit, and to include a statement from White House spokesperson Victoria LaCivita.

Deputy Editor Ross Williams contributed to this report.

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