Rural Hospitals in Texas Under Spotlight After New Legislation
AUSTIN — Texas rural hospitals are gaining some attention following the enactment of the One Big Beautiful Bill Act (OBBBA). This includes the Rural Health Transformation (RHT) program, which has a $50 billion budget earmarked for rural healthcare facilities. Funding will be shared evenly among the states, while the remaining half will be distributed by the Centers for Medicare and Medicaid Services (CMS). States that want extra financial support will need to submit their applications by early November.
On this occasion, the Texas Health and Human Services Commission (HHSC) conducted a public hearing, inviting healthcare professionals from across Texas to voice their concerns and outline priorities for the RHT applications.
Before the hearing, HHSC stressed the significance of local control over funds.
“These funds are yours if we can get them,” stated Victoria Grady, director of provider finance at HHSC. “They belong to the residents of rural Texas, and we want to emphasize local control as much as possible, aiming to secure as much of that $50 billion for our state as we can.”
After the hearing, KXAN reached out to two medical experts: Paula Grumman, an independent pharmacy owner, and Terry Scoggin, the interim CEO of the Texas Rural Community Hospital Organization (TORCH).
Scoggin highlighted a significant challenge facing these hospitals: their difficulty in negotiating with large insurance companies, which often leads to much lower reimbursement rates than their urban counterparts.
“Let’s be clear: rural hospitals are having a tough time throughout Texas,” he remarked. “We reimburse urban hospitals almost a third of what they receive. Out of 156 rural hospitals, 91 are actually independent. So when you try negotiating an insurance contract, it’s tough. In my 15 years as a CEO in rural settings, I can say that we often get paid much less than what urban hospitals do.”
He also pointed out concerns regarding the financial sustainability of rural hospitals today. A recent analysis found that 84 of Texas’ 156 rural hospitals are potentially at risk of closing, with 21 of them being in immediate danger.
“We’ve been receiving calls weekly from hospitals looking for a lifeline. Payroll is due soon, and they are running out of funds,” Scoggin shared. “This funding opportunity could be a game-changer for rural hospitals in Texas.”
However, while OBBBA has initiated the RHT, it’s not all positive news for rural healthcare. Scoggin expressed worry over forthcoming Medicaid cuts, which he believes will disproportionately impact rural hospitals. He anticipates a 3% to 6% increase in uninsured patients as a result.
“When someone arrives at the emergency room, we have to provide care,” he explains. Although the Medicaid cuts in Texas aren’t as severe as in other states, he worries that the state’s control over Medicaid is lagging behind in crucial areas like infrastructure and workforce.
Grumman discussed how pharmacists are often underutilized beyond merely dispensing medications. She sees the RHT funding as a “great chance” for pharmacists to play a larger role.
“They’re saying, ‘We’ll allocate this funding to states with effective plans. We want to contribute to the solution.'” We are ready to step up and serve our communities,” she noted.
Speaking further on the underappreciation of pharmacists, Grumman highlighted the scarcity of pharmacists who aren’t recognized as providers by Medicare.
“Since we aren’t part of big hospital clinics, we lack the ability to collaborate effectively and get reimbursed for our services. That limits our opportunities in rural locations. So when we spend a substantial amount of time educating patients about conditions like diabetes, there often isn’t compensation for that,” she explained.
CMS is expected to announce RHT grant allocation details by the end of the year.
