Half of Texas’ 160 rural hospitals are at risk of closing, prompting the Texas Health and Human Services Commission (HHSC) to use grant funding as a solution.
Thirty hospitals—around 19 percent of all rural hospitals—face immediate risk of closure due to severe financial problems, according to the Center for Healthcare Quality Payment Reform’s (CHQPR) July report.
CHQPR’s report says rural hospitals struggle financially because they lose money providing patient services, have insufficient financial reserves due to debt or lack of assets, and do not have adequate alternative revenue to offset such losses.
Alternative revenue can come from federal funding or state grants, which are not stable because their funding availability fluctuates. However, the report says many hospitals have managed to stay open due to this type of funding.
HHSC is using its own temporary funding to help support struggling rural hospitals. The agency’s Rural Hospital Advisory Committee (RHAC) held a meeting last week. Committee members discussed three grants targeting rural data sharing, emergency neonatal care, and general financial stabilization.
April Ferrino, director of the Office of Rural Hospital Finance and Coordination at HHSC, said the agency recently awarded a $450,000 grant to the Texas Organization of Rural and Community Hospitals (TORCH), which advocates for and supports rural hospitals across the state.
“This is actually to extend access to a set of data tools and analysis that, currently, [only] critical access hospitals (CAHs) have had access to,” Ferrino said. “We’ll be extending this so all Texas Prospective Payment System (PPS) hospitals can have this through the data analytic platform TORCH has created.”
The data tools were originally made available to CAHs through the Medicare Rural Hospital Flexibility (Flex) Program, which allowed TORCH to create the TORCH Hub for Analytics.
Ferrino said expanding access to the platform will create a more level playing field for all rural hospitals. Having access to the information will also help map out risks, identify problems earlier, and provide hospitals with resources so they do not reach critical situations, she added.
John Henderson, CEO of TORCH, said he is appreciative that HHSC was able to fund the extension of data tools to all rural hospitals.
“We’ve already been working with [CAHs]; we do a lot of out-migration analysis, analytical tools, and information for strategic planning purposes,” Henderson said. “But the thing that we kept hearing from the PPS rural hospitals in Texas was, ‘What about us?’”
Ferrino highlighted another funding opportunity called the Maternal Care Operations Grant, which will award certain rural hospitals $35,000 for emergency maternal and newborn supplies. In order to qualify for the one-year grant, hospitals must not have inpatient labor and delivery services.
“The purpose of this is to ensure that the funding is used to purchase neonatal supplies, equipment, and/or training for hospitals that experience emergency deliveries so the mother and baby can have the best possible outcome until they can be transferred to a facility that handles those things on an inpatient basis,” Ferrino said.
According to CHQPR’s Rural Maternity Crisis report from last month, 97 rural Texas hospitals—59 percent—do not have labor and delivery services. The median travel time from a non-maternity care hospital to the nearest maternity care hospital is 36 minutes.
RHAC Chair and Electra Hospital District CEO Rebecca McCain said the grant will allow hospitals like hers—which does not have inpatient labor and delivery services—to update its equipment and be prepared in emergency situations when families cannot reach a hospital with full obstetrics services in time.
“This is going to help with the really basic things we need,” McCain said. “Because we do have people that come to our emergency room and deliver, either on their way or once they’re there.”
HHSC released a request for applications for the grant on Monday. The application deadline is Sept. 13.
HHSC also announced that 40 hospitals have been awarded stabilizing funds through the Texas Rural Hospital Financial Stabilization Grant.
“[The grant] was focused on certain hospitals [with] 25 beds or less,” Ferrino said. “They had to be the sole provider within their county as well as meet certain financial need criteria in order to be awarded a grant.”
The funding comes in three tiers based on need, and each hospital will receive a lump sum payment in fiscal year (FY) 2024 and FY 2025. In FY 2024, three hospitals will receive tier one funds equaling $100,000, 12 will receive tier two funds at $175,000, and 25 will receive tier three funds at $250,000. In FY 2025, tier one awardees will receive $50,000, tier two awardees will receive $87,500, and tier three awardees will receive $125,000.
Hospitals may spend the funds on supplemental operational expenses, debt repayment, facility repairs, and equipment purchases or rentals.
Ferrino said HHSC is in the process of creating contracts to send to the 40 hospitals, and after contracts are signed and before payments are issued, the agency will identify and implement reporting requirements the awardees will need to follow.