Dec 1, 2022 - News

Increasing number of Texas hospitals at risk of closure, report finds

Illustration of a question mark with a dot shaped like a medical cross

Illustration: Annelise Capossela/Axios

While the coronavirus pandemic often feels like it's in the rearview mirror, Texas hospitals are still grappling with its aftermath.

Driving the news: Nearly twice as many Texas hospitals, or almost 1 in 10, are at risk of closure since before the pandemic, a new report from the Texas Hospital Association reveals.

  • The report, prepared for the association by consultant KaufmanHall, says hospital revenue is no longer covering the cost of patient care.

What's happening: Expenses have increased, length of stay has risen and patients are sicker than pre-pandemic levels because of delayed care, according to the association's report.

  • In Texas, 26% of rural hospitals are at risk of closing, compared to a 5% risk for urban facilities, the report found.
  • Meanwhile, Texas hospital operating margins remain under intense pressure and — with additional support from the federal CARES Act is set to expire — the association found that nearly half of the state's hospitals are reporting negative operating margins in 2022.

Of note: The report doesn't specify which hospitals are at risk of closure.

What they're saying: Texas Hospital Association CEO John Hawkins said larger hospitals in urban areas will be able to withstand those challenges, but it's possible that financial constraints can close service lines and pediatric space in urban areas.

  • "That financial strain I think ultimately does impact patient care," Hawkins told reporters Wednesday. "These operating challenges going forward are going to continue to be real for rural hospitals."

Flashback: More than 500,000 patients were admitted to Texas hospitals during the pandemic, pushing resources to the brink and leading to widespread burnout among hospital staff.

  • In Austin, COVID cases overwhelmed hospital staff and available intensive care beds.
  • Roughly 500,000 nurses are expected to leave the workforce this year, bringing the overall shortage to 1.1 million nurses, according to the association.
  • In 2020, when hospitals halted non-lifesaving medical care as COVID spread, many rural hospitals could no longer generate revenue through cancer care or preventative procedures.

Meanwhile, rural Texans are moving to more populous areas of the state, which has impacted independent facilities.

  • But hospitals that are part of larger systems or located in oil and gas counties are less at risk for closure, Hawkins added.
  • "If you're in an area like West Texas … you're going to have a little bit more of a challenge," he said. "But that doesn't necessarily mean the community doesn't need that hospital."

The bottom line: Hospital expenses have far outpaced revenue with no relief in sight, and the stability of the state's health care safety net remains "severely threatened," the report found.


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