Facility Fees Keep the Lights On, Not Line Pockets

It’s no secret that the cost of health care has spiraled, and both patients and hospitals are feeling the strain. As the cost of care continues to dominate headlines, several misconceptions have emerged about what is actually driving those increases.

John Hawkins, President/CEO, Texas Hospital Association

Outpatient payments — more commonly known as facility fees — have taken the brunt of this scrutiny. Critics often portray them as unnecessary charges designed to pad hospital profits. In reality, this couldn’t be further from the truth.

Facility fees are the real costs of care. They cover everything beyond the physician’s time: nurses and clinical staff, building costs, medical supplies, drugs and technology – everything needed to provide safe, high-quality care to patients. And those costs are rising. The price of drugs and medical supplies continues to climb, inflation is driving up operational expenses, and persistent workforce shortages are forcing hospitals to compete for critical staff. Together, these pressures are pushing hospitals into increasingly unsustainable financial territory and contributing to the overall rise in health care costs.

Facility fees are not designed to line the hospital’s pockets – they keep the lights on. They allow hospitals to pay staff, stock materials, and acquire the necessary drugs and medications to treat patients. These fees, while critical to providing care, also help maintain and improve specialty care – such as cancer, transplant and behavioral health care. The cost of care has continued to rise because, just that, the cost of care has risen.

Despite this reality, several legislative proposals have sought to ban facility fees altogether. Doing so would have serious consequences for access to care. Texas hospitals are already operating under immense financial pressure, with many facilities—particularly in rural and underserved areas—at risk of closure. Eliminating a critical funding stream would only accelerate that trend and further strain an already fragile system.

If hospitals are forced to scale back outpatient services or close their doors, patients will feel the impact immediately. Care will become harder to access, wait times will grow, and more people will be pushed into already overcrowded emergency departments for treatment that could otherwise be handled in outpatient settings.

Dismantling outpatient care by banning facility fees would not lower patients’ costs. Instead, it would shift care to more expensive settings and make health care harder to obtain.

Facility fees have increasingly become the villain of health care costs, but that focus overlooks the much larger issue of insurance failing to cover the full cost of care. When insured patients see medical services being billed directly to them, they should ask why their insurer has failed to pay for this cost. Hospitals and providers are not trying to profit at the expense of the patient; they are working to keep services available in their communities. The reality is, while hospitals provide necessary, life-saving care, insurers refuse to pay for it, shifting the financial burden onto patients.

Texas hospitals care about Texans and ensure patients receive the best possible care. Preserving the resources that make that care possible is essential—not just for hospitals, but for every Texan who relies on them.