Many Texas hospitals at risk of closing as Medicare cuts

Texas health officials are sounding the alarm as nearly half of the state’s hospitals operate on red alert.

More than 9% of hospitals in the Lone Star State are at risk of closing, compared with 4.7% in 2020, according to a report released this week from consulting firm Kaufman Hall. The company determined a hospital’s risk of closing based on unsustainable trends with operating margin, days of cash on hand, and debt-to-capitalization ratio.

Hospitals across the country are struggling to break even due to high labor costs, inflation and a weak investment market. Rural hospitals face disproportionate risk, according to the report — 26% of rural hospitals in Texas are at risk of closing this year. The Center for Healthcare Quality and Payment Reform estimates 30% of the approximately 1,800 rural hospitals nationwide are at risk of closing.

John Hawkins, president and chief executive officer of the Texas Hospital Association, said federal funding to tackle the COVID-19 pandemic has stabilized many facilities in the short term, but that has not been the case. enough.

“I think part of the misconception out there is that somehow thanks to all this federal funding, the hospitals are in pretty good shape. … A lot of federal funding actually went to areas of the country that received or experienced spikes prior to the two spikes that Texas experienced,” Hawkins said at a news conference. on Wednesday.

Health officials in Texas hope Congress will delay further reduce Medicare payments through isolation. The 1% drop began on April 1, following a pause during the COVID-19 pandemic. The cuts increase to 2% on July 1. Another 4% reduction in Medicare reimbursements is planned for next year through the Pay-As-Use Act.

Beginning in 2023, the Centers for Medicare and Medicaid Services will proposed designating “Rural Emergency Hospital” for facilities to phase out inpatient care and expand in outpatient settings. The program, authorized in 2020, is intended to help hospitals downsize their operations while maintaining some critical services.

According to Kaufman Hall, Texas hospitals have reported a loss of $3.2 billion this year.

“I think that financial strain will eventually affect patient care,” says Hawkins. “Those Medicare cuts are [for] all providers, so that’s a big deal especially for doctors and then obviously home health care, nursing. All those people are dealing with a lot of the similar structural problems in the future.”

He said leaders are also monitoring the impact of Medicare Advantage on rural facilities, some of which are hesitant to negotiate with MA insurers and handle authorization requests. prior rights.

Hawkins advocated the expansion of Medicaid, which he said would benefit small businesses and service-level workers, while reducing the need for charity care.

Some Republican lawmakers have long pushed back against the expansion in their respective states, arguing that the program is ineffective and creates an additional tax burden. For example, last month Republicans in North Carolina pushed for additional discussion about expanding Medicaid into next year. Despite Republican opposition in South Dakota, the state’s voters approved the expansion in November, leaving 11 states yet to adopt the changes authorized by the Affordable Care Act.

The Texas Hospital Association is specifically promoting Medicaid coverage for mothers one year postpartum and for behavioral health patients, something lawmakers have previously appeared open to. Hawkins said lawmakers have also shown a willingness to raise prices for rural hospitals.


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