Why 1 in 10 Texas hospitals could be at risk of closing

AUSTIN — Half of the hospitals in Texas are operating in the red and nearly 1 in 10 is at risk of closure as the state's health care system copes with the ongoing fallout from the COVID-19 pandemic, a report released Tuesday finds.

In Texas' vast rural expanses, the situation is even more dire. The report compiled by the national research firm Kaufman Hall for the Texas Hospital Association warns that 26% of the hospitals in remote parts of the state are in danger of closing, accelerating a trend that began well before the coronavirus struck.

"Our concern is this will impact patient care," John Hawkins, the hospital association's president and CEO, told reporters in a video conference call just as the report was released.

The COVID outbreak that struck Texas and the rest of the nation in the early months of 2020 filled many hospitals nearly to the breaking point, and the strain was multiplied by a shortage of personal protective equipment and unproven treatments. Staff shortages accelerated by burnout followed, Hawkins said.

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Federal relief money in 2020 and 2021 helped hospitals bridge funding gaps and cover unanticipated expenses related to the pandemic. But, Hawkins said, those dollars are beginning to run out. Taken as a whole, Texas hospitals saw about $3.2 billion in lost income in 2022, according to the Kaufman Hall report.

"There is not likely additional fiscal relief in sight," Hawkins said.

The report does not break down data from specific areas of Texas. But it does show that hospitals in the state's more populated regions are in better financial health than in more rural areas.

One reason, Hawkins said, is that urban areas are generally served by better-resourced private hospital networks and by public hospitals with access to taxpayers' money.

To stretch dollars, Hawkins said, many hospitals are curtailing services and putting greater emphasis on outpatient care. However, backlogs in nursing and rehabilitation facilities often result in many patients extending their stays in the hospital, and often those extended stays are not covered by insurance or Medicare, he added.

"Those folks, in effect, are boarding in our hospitals," Hawkins said. "And the payment policies generally, whether it's government payers or the private market, have length-of-stay requirements (tied to) medical necessity. And so just because someone's staying in the hospital, doesn't mean we're necessarily getting paid for it."

To help hospitals cope with the bleak financial outlook, Hawkins said the association will encourage the Legislature when it convenes in January not to reduce rates for Medicaid, which covers medical expenses by qualifying low-income or indigent patients. He also said lawmakers should keep in place "safety net" funding for rural hospitals and trauma care facilities.

John C. Moritz covers Texas government and politics for the USA Today Network in Austin. Contact him at jmoritz@gannett.com and follow him on Twitter @JohnnieMo.