Texas’ rural hospitals are — once again — at grave risk of closing

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Texas hasn’t had a hospital close since 2020, a much-needed relief following the previous decade of closures that were predominantly seen in rural communities.

That could change soon: A new report from Kaufman Hall, a health care consulting agency, that was made public Wednesday shows that nearly 1 out of every 10 Texas hospitals are now at risk of closure, twice as many as before the coronavirus pandemic began in 2020.

“Ultimately, our concern is this will impact patient care,” said John Hawkins, president of the Texas Hospital Association.

The report highlights the pandemic’s striking toll on hospitals in the state as they face growing strain from surges in respiratory illness, workforce shortages and rising costs of medication, medical supplies and labor. This has caused hospital expenses to increase greatly — the total expenses for Texas hospitals this year have cost $33.2 billion more than before the pandemic.

While the risk is greater for all Texas hospitals, it’s higher for rural hospitals than for urban facilities — a 26% risk of closing compared with a 5% risk. Hawkins said there is concern about the challenges rural hospitals could face in the near future.

Health experts have long credited support from the federal spending spurred by the COVID-19 pandemic for lessening the closure risk in 2020 and 2021. Those funds are expiring soon, leaving hospitals without that financial safety net. Nearly half of all Texas hospitals are in negative operating margins because revenue is not covering the cost of patient care.

“We know, as that federal funding runs out, we’ve created a fiscal cliff,” Hawkins said. “These operating challenges are going to continue to be real for rural hospitals.”

John Henderson, CEO of the Texas Organization of Rural and Community Hospitals, said the threat facing rural hospitals is already underway.

“After two years without rural Texas hospital closures, we now have about a half dozen on the ropes,” Henderson said.

Hawkins explained that hospitals are already cutting service lines and closing access points to balance the finances, and that could continue to happen even if a hospital doesn’t close entirely. The community a hospital serves would be impacted by either scenario, as it would lead to a loss in the workforce.

“Hospitals are pretty typically one of the largest employers in a community, particularly small areas,” Hawkins said. “So as they constrain services and can’t fill those positions, it has a ripple impact on the economy.”

Disclosure: The Texas Hospital Association and the Texas Organization of Rural and Community Hospitals have been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.