Facing Trump's Medicaid cuts, KY hospitals to scale back services. Here's what could go

LEXINGTON, Ky. — Medicaid cuts included in President Donald Trump’s signature ‘Big, Beautiful Bill,’ are already prompting Kentucky hospitals to consider pausing expansions, scaling back services, layoffs and even closing altogether.

That’s the takeaway from Kentucky Hospital Association President and CEO Nancy Galvagni, who notes while the cuts officially start in 2028, the earliest effects will be felt much sooner.

“A few hospitals are already putting some reductions in place, but we think most of that will happen next year,” Galvagni told the Herald-Leader recently.

Hospitals already operate on razor-thin margins and rely on state-directed Medicaid payments to cover the cost of care. This is particularly true for Kentucky’s rural hospitals, which treat more patients on Medicaid and Medicare than those with commercial insurance, Galvagni said.

“When these extra funds go away, they’re going to be severely harmed,” she said.

In a recent interview, Galvagni ticked off the types of cuts rural and urban hospitals across the state are weighing. With the passage of the One Big, Beautiful Bill Act over the summer, Kentucky is set to lose billions in federal dollars used to prop up health care access and employment. When those services are gone, more than just Medicaid patients will lose out.

“We’ve even heard that some hospitals might not be able to continue their cancer treatment because that’s a subsidized service,” she said, adding those sick patients would have to travel hours out of their way to seek treatment.

Galvagni said the Kentucky Hospital Association has reached out to the commonwealth’s congressional delegation about the effects of the Medicaid cuts, but so far a solution hasn’t been reached.

“I think our members of Congress don’t want to see hospitals closed, and I think they don’t want to see services go away, but we’re early in those discussions to know what the solution might be,” she said.

How are KY hospitals planning for looming Medicaid funding cuts?

One early estimate laid out by Senate Democrats in a letter to Trump and Republican leaders in Congress found 35 rural hospitals in Kentucky — more than any other state — are at risk of service cutbacks, restructuring or outright closures. It cites information provided by the Sheps Center for Health Services Research at the University of North Carolina and includes the following Kentucky hospitals:

•Whitesburg ARH

•Highlands Regional Medical Center

•University of Louisville Health - Shelbyville

•T.J. Samson Community Hospital

•St. Claire Medical Center

•Middlesboro ARH

•Spring View Hospital

•AdventHealth Manchester

•Bourbon Community Hospital

•Harlan ARH

•Deaconess Henderson Hospital

•Saint Joseph Mount Sterling

•Tug Valley ARH

•Owensboro Health Twin Lakes Medical

•Baptist Health Corbin

•Clark Regional Medical Center

•Baptist Health Madisonville

•The Medical Center of Albany

•Three Rivers Medical Center

•Kentucky River Medical Center

•TJ Health Columbia

•Pineville Community Health Center

•Marcum & Wallace Memorial Hospital

•Our Lady of the Way

•Casey County Hospital

•Carroll County Memorial Hospital

•The Medical Center at Caverna

•Fort Logan Hospital

•Mary Breckinridge Hospital

•Jane Todd Crawford Hospital

•Barbourville ARH Hospital

•Saint Joseph Berea

•Russell County Hospital

•McDowell ARH

•Fleming County Hospital

Speaking to the Herald-Leader Oct. 31, Galvagni stressed closure will always be a hospital’s last resort. Still, patients are likely to feel the cost-cutting measures hospitals implement to avoid taking that drastic step, and not just those who rely on Medicaid for their care.

First, hospitals will try to cut costs by putting off capital projects, and Galvagni said many hospitals around Kentucky are already looking at that. That includes hospitals delaying renovations and shelving plans for new outpatient centers and other bids to expand their services. It also means delaying new equipment purchases and upgrades.

Kentuckians already face long travel times to seek care given the state’s severe shortage of health care workers.

“We’re probably not going to see expanded services, which benefits patients, because when hospitals expand, they’re probably going to make services more available closer to home,” Galvagni said. She added hospitals in urban centers will be under greater pressure to pick up the slack.

Hospitals will then be forced to ask what services they can afford to keep? Behavioral health is often the first to go in these situations.

“Behavioral health probably is a service that’s going to be looked at strongly as to whether that can continue because the reimbursement for behavioral health is very, very low,” Galvagni said. “Hospitals lose money on that service, and so that may be something that they can no longer offer.”

Similar services on the chopping block include maternity services and community outreach, where hospital employees show up at local health fairs to conduct free screenings. It puts hospitals in the position of making hard choices, Galvagni said.

“To say that we’re not going to provide behavioral health anymore, well that doesn’t just affect the Medicaid patients that use that service. That affects the entire community,” she said.

When those services disappear, the ramifications can be widespread.

“When services go away, then jobs are going to go away,” Galvagni said, adding about 60% of a hospital’s costs are on personnel. Across Kentucky, hospitals employ 90,000 people.

If nothing changes, job losses are likely, Galvagni said. In Kentucky’s rural communities, where hospitals are some of the biggest employers and pay high wages, that will likely be felt across the local economy.

“We do expect to start seeing that next year,” Galvagni said.