Texas Hospitals: Invaluable – and Imperiled

THA is quantifying the wide-reaching importance of its hospitals – and the many headwinds threatening to reduce or erase patient care in communities across the state.

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In the broadest sense of the word, Texas hospitals equal health.

Not just in the obvious, medical sense – tied to health care facilities’ mission to keep Texans living and thriving – but also economic health.

Hospitals net jobs from Lubbock to Laredo. They generate millions in economic activity from Midland to Mount Pleasant. For reasons that certainly include healing the sick and injured, but go well beyond, a Texas without hospitals is unthinkable.

Yet if you trace a path across those same statewide stretches, you’ll find numerous health care facilities navigating myriad difficulties threatening the health of the hospitals themselves – and the availability of care in their communities.

Staffing shortages, insurer impediments to care and payment denials, and Texas’ nation-worst coverage crisis are just a few of the strains creating struggles at scores of facilities, leaving many of those hospitals and clinics – and by extension the health of their regions – with uncertain futures.

This year – during its wide-scale effort to correct and reshape false and misleading narratives about hospitals – the Texas Hospital Association is educating lawmakers and the public about the full extent of its member facilities’ value to their community. And with another pivotal session of the Texas Legislature on tap for 2025, THA is detailing the critical challenges that are rendering the hospital industry unsteady – challenges that require attention at both the state and federal levels. In some localities, readily available patient care faces severe limitations – or even extinction.

Lone Star Lifeblood

Though many people may not think about hospitals until they need them, their impact on the communities they serve is a constant that ripples well beyond the round-the-clock patient care they provide.

“THA is trying to constantly remind the policymakers that hospitals are not only one of the largest employers in your community,” said Jennifer Banda, J.D., THA’s senior vice president of advocacy and public policy. “They’re the place you go for 24/7 care, and now, also the place you go for your outpatient care to keep you out of the hospital. It really is an economic health driver in a community.”

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Anyone who comes into a hospital emergency room and requests examination or treatment must be screened under the federal Emergency Medical Treatment and Labor Act that governs Medicare-participating hospitals – which must also stabilize any emergent condition, regardless of a patient’s ability to pay or whether the patient takes Medicare. But those requirements just scratch the surface of how hospitals and clinics deploy a safety net across their coverage areas. Hospitals have physicians and specialists available 24/7, admit patients with complex and critical care needs, and, of course, save lives and deliver brand new ones into the world.

It’s the economic invigoration that hospitals provide, however, that’s perhaps as stealth as it is vivifying for cities, towns and counties all over Texas. Recent data illustrate just how much hospitals across the state mean for its employment and buying power:

  • Hospitals in Texas reported employment of more than 445,000 people in 2022 – including over 358,000 full-time employees, and not including thousands of contracted staff and physicians with privileges to practice at the facility. And they’ve been an enhanced driver in a post-pandemic world – overall, Texas hospitals employed 35,000 more people in 2022 than in 2020. That year, hospital jobs accounted for roughly one of every 12 jobs in the state.
  • Goods and services that hospitals buy from other businesses create additional economic benefit, with those ripple effects ultimately meaning that one Texas hospital job is worth 2.6 other jobs.
  • Every dollar spent by Texas hospitals creates more than $2 of additional economic impact.

Communities enjoy these extensive fiscal boons even while Texas hospitals – governed by one of the nation’s strongest charity-care laws – provide uncompensated care well above the state’s rigorous thresholds. In 2022, Texas nonprofit hospitals provided almost $2.4 billion in charity care, and exceeded the standard most commonly used to meet the law by 32%, or $576 million. Every single nonprofit hospital in Texas met the state’s charity care standards in 2022.

But a confluence of threats to hospitals hamstring many facilities’ ability to serve as their community’s lifeblood – or to even exist to do so.

Headwinds Galore

Less than two years ago, a report by Kaufman Hall underscored “the existential financial and operational threats Texas hospitals continue to face” following the beginning of COVID-19. Almost one out of every 10 Texas hospitals was at serious risk of closure, Kaufman Hall found, and for rural hospitals, that risk spiked to one in five.

One year after a very difficult state legislative session – one that mobilized THA and its 450-plus members into defense mode to stop potentially devastating legislation – the same strong, persistent headwinds that plague facility operations, and operating revenue, continue to fester.

Start with the availability of nurses and other key professionals in the hospital workforce and its pipeline. While Texas hospitals still employ hundreds of thousands of people, various battalions in the state’s patient care army have dwindled. In 2022, Texas hospitals reported almost 50,000 vacancies, with the registered nurse vacancy rate tripling to 18% between 2019 and 2022. And last year, Texas nursing schools turned away just over 13,700 qualified applicants because of a shortage of faculty, clinical space and nurse preceptors. THA has greatly stressed the need to replenish the nurse pipeline and supported the successful passage of Senate Bill 25 during last year’s legislative session. The bill aims to infuse the pipeline with nurses and nurse faculty through scholarships, grants and loan repayments.

Unfortunately, what Texas lacks in workforce fortification, it more than makes up for in its numbers of uninsured. A nation-leading raw number (5 million Texans) and percentage of citizens (17%) broadly stress the system; the uninsured tend to delay their care and to seek it in the more expensive emergency room setting. And an increase in uncompensated care for hospitals drives up the cost for everyone else. THA is continuing to support comprehensive coverage for every Texan.

Government underpayments – meaning reimbursements that fall short of the cost of care – and the “slow pay, low pay and no-pay” tactics of commercial health insurers also propel some of hospitals’ strongest headwinds. Government sources such as Medicare and Medicaid account for about half of total hospital payments – and Medicare is now paying hospitals a historic low of 82 cents on the dollar. Unreimbursed charity care – which numbered in the billions for Texas facilities during 2023 – also creates a strain.

And the administrative burdens required to navigate health insurers’ prior authorization requirements and other hassles continue to be both drainers of both time and expense; administrative expenses account for as much as 31% of total health care spending.

Across the spectrum, Banda notes, these myriad challenges “can be summarized in efforts to pay hospitals less for the high-quality care that they’re providing the communities, in an inflationary environment where workforce costs have gone up. And the end result of cutting payments would be the potential to have less hospital availability or less patient care in a community.

“The impact in rural areas could be hospital closures,” she added. “In other areas, the impact is going to be more a limitation of outpatient care or inpatient service lines – which, of course, the impact of that is that we’ll have more people come back to the emergency room, which we’ve been trying to pivot away from in the last decade.”

These challenges and more are summarized in the THA white paper, “The Value of Hospitals to the Community – and the Challenges They Face to Serve It.” It’s one of 11 new or updated explainers available at the top of the THA White Papers & Reports webpage for hospital advocates to use – and to distribute to policymakers – this year and in 2025, when the Texas Legislature reconvenes.

Making everyone in Texas aware of what hospitals mean to their communities – and everything a shuttered hospital or clinic takes with it – will be paramount. Banda expects the anti-hospital rhetoric that marred the discourse during the 2023 Legislature to demonstrate staying power next year.

“I think we can expect all the same attacks, and more, on hospitals and hospital reimbursement systems,” she said, “whether it’s facility fees, site-neutral payments, the provision of charity care and community benefits and the potential to cap payments. I think it’s all out there, and I think it’s all coming back.”

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