Health & Science

The pandemic doubled the number of Texas hospitals at risk of closing

Rural hospitals in Texas are feeling the greatest financial pinch. A new report says 26 percent are at risk of closing.

Photo via Pixabay

A new report from Kaufman Hall, a health care consulting agency, said one in 10 hospitals in the state are at risk of closing, almost double the rate before the pandemic in 2020.

The pandemic has put unprecedented financial strain on hospital systems across the state, particularly when it comes to the staffing shortage. Burnout and early retirement have pushed hospitals to rely more heavily on contract work that can pay two or three times more normal wages.

A screenshot from "The Financial Impact of COVID-19 on Texas Hospitals" report by Kaufman Hall.
The use of contract labor has skyrocketed in Texas since the pandemic began in 2020.

"I don’t think I’ve ever seen this challenging of an operating environment in the 15 or so years that I’ve been advocating for hospitals," said John Hawkins, CEO of the Texas Hospital Association. "This data shows it doesn’t look like it’s going to reconcile very quickly, particularly on the workforce front."

The situation is even more dire for hospitals in rural parts of Texas — 26 percent are facing risk of closures. In the past two decades, Texas has led the nation in rural hospital closures.

Hawkins said before the pandemic, the main drivers of rural hospital closures in Texas were uncompensated care or low reimbursements. The pandemic has brought a host of new expenses — labor costs, as well as greater need for medical supplies and rising drug costs. Revenues, all the while, have not kept pace.

The impact will ultimately trickle down to patients, who will have to drive farther in order to receive health care. They will no longer have the flexibility of at-home rehabilitation. Outcomes and recovery will likely take a hit.

"This creates a real financial challenge, which will ultimately limit access to care," Hawkins said. "If you’re in a rural area, I think you really should have a concern about your hospital being able to continue to be viable and losing that access point."

Rural hospitals in Texas are at the greatest risk of closing.

Regardless of population density, the report indicates that all hospitals are feeling a financial pinch stemming from the pandemic. Almost half of Texas hospitals had negative operating margins in 2022.

Patients in urban areas will still likely have hospital access, but limited services and longer wait times, Hawkins said.

The industry-wide shortage of healthcare workers is already having a ripple effect on hospital capacity. The lack of staff at nursing homes, acute care facilities or home health aides keep patients in the hospital longer as they wait for a space to open up and further lengthen wait times.

The next Texas legislative session begins this January. The Texas Hospital Association is asking state lawmakers to further invest in recruiting and retaining health care workers across the industry. The organization is also pushing to get the Medicaid program fully funded, particularly for rural hospitals struggling financially.

"Our number one ask for the legislature is to actually invest in the workforce pipeline in the state to help us kind of engineer our way out of this current crisis," Hawkins said.

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