QuickTake:

PeaceHealth’s Florence hospital will get a portion of up to $37.5 million the state has secured for 21 rural hospitals across Oregon. The money comes as rural communities face deep federal cuts to Medicaid. 

Federal officials have signed off on Oregon’s proposal to put a combination of up to $37.5 million of funding into the state’s rural hospitals.

The $37.5 million includes $25 million in state funding that lawmakers approved in 2025. The remaining money – potentially up to $12.5 million — is federal dollars. The money will be dispersed to 21 rural hospitals in Oregon, including PeaceHealth Peace Harbor Medical Center in Florence. 

State officials don’t have the breakdown for how much money each hospital will get, including the Florence hospital, as it depends on their patient volumes in 2026. The funding averages out to nearly $1.8 million for each of the 21 rural hospitals, though the actual amounts likely will vary.

The funding comes as healthcare, and rural hospitals in particular, face a financial cliff as federal changes to Medicaid after Congress passed the President Donald Trump-backed H.R. 1 in 2025. About half of all births in Oregon are covered through the Oregon Health Plan, the state’s Medicaid-funded program that provides medical coverage. 

“These funds will directly help some of our most vulnerable community members in Florence and throughout western Lane County,” said Jim Murez, a spokesperson for PeaceHealth. “Rural hospitals are likely to shoulder a disproportionate share of the cuts to Medicaid funding that are tied to H.R.1, and this federal and state money will help bridge that gap. At Peace Harbor Medical Center, supporting maternity services and investing in outreach strategies will better connect Oregon Health Plan members and other community members in Florence to exceptional care while also allowing for the needed growth in women’s programs.”

The Oregon Health Authority, Gov. Tina Kotek and the Hospital Association of Oregon worked on the effort. The federal Centers for Medicare & Medicaid Services approved Oregon’s proposal, which is part of a directed payment program to strengthen available maternity care in rural regions in the state. Hospitals can use the funding for needs like staffing and outreach equipment. 

“I fought for these funds in my budget to stabilize services in Oregon because rural communities deserve reliable, high quality maternity care close to home,” Kotek said in a statement. “The Trump Administration’s cuts to Medicaid will make rural maternity care harder to sustain and I applaud the work by the agency to maximize state dollars to support Oregon providers.”

Under the plan, rural hospitals don’t need to apply and will automatically receive payments.

The 21 hospitals are in 17 of Oregon’s 36 counties. 

Ben Botkin covers politics and policy in Lane County. He has worked as a journalist since 2003, most recently at the Oregon Capital Chronicle, where he covered justice, health and human services and documented regional efforts to combat fentanyl addiction. Botkin has worked in statehouses in Idaho, Nevada, Oklahoma and, of course, Oregon. When he's not working, you'll find him road tripping across the West, hiking or surfing along the Oregon Coast.