Emails, Don McBeath, director of government relations, Texas Organization of Rural & Community Hospitals, May 6 and 13, 2015

4:59 p.m.

May 6, 2015

I have attached a list of Texas rural hospital closures since 1995 and a factsheet on Texas rural hospitals.


Each of these rural hospitals closed because they were no longer financially viable meaning they lost money. We don’t have any hospital specific financial data, but there are various contributing factors to their losses and ultimate closure including high levels of uninsured, Medicare cut backs, Medicaid cutbacks, penalties and costs incurred under the Affordable Care Act (Obamacare), new mandates such as electronic health records and coding systems, decline in patients, and even bad management. While all or many of these issues come into play with each closure, there is no question that the big drivers in the closure of rural hospitals are high uninsured, Medicare and Medicaid cutbacks.


While Texas continues to deal with high levels of uninsured at 25% statewide, many rural areas experience uninsured levels above 40%.


(As I mentioned on the phone, 5 of the 10 closures were hospitals owned by Dr. Tariq Mahmood of Dallas. He was convicted of Medicare billing fraud. The hospitals closed because no one was willing to take them over from him because they had a history of financial struggles. I believe that if Dr. Mahmood had not been associated with fraud, these hospitals would have most likely closed anyway)


As to the question of failure to address the high levels of uninsured (through Medicaid expansion or some other effort) directly causing the recent hospital closures, my response is that would be partially true. It is a factor, but probably not the sole contributing factor.


If the state addressed the uninsured, paid more appropriate Medicaid rates, and Medicare cuts were erased……would these hospitals be open today? I think yes.


Hope this helps.


Don McBeath

Director of Government Relations

Texas Organization of Rural & Community Hospitals (TORCH)

From: Selby, Gardner (CMG-Austin) []

Sent: Wednesday, May 13, 2015 3:57 PM

To: Don McBeath

Subject: FW: Fresh inquiry for a fact check due Wednesday

FYI, the state’s response to us about the hospitals closing. Make sense?


From: Van Deusen,Chris (DSHS)

Sent: Wednesday, May 13, 2015 2:09 PM

To: Selby, Gardner (CMG-Austin)

Subject: RE: Fresh inquiry for a fact check due Wednesday

Of the 10 hospitals on your list, eight are closed.  Central Texas Hospital in Cameron had a change of ownership effective 10/8/13. It is now Little River Healthcare – Cameron Hospital. Cozby-Germany Hospital in Grand Saline had a change of ownership effective 7/1/14. It is now Texas General Hospital – Van Zandt Regional Medical Center LP.

You can find our current roster of hospitals at Directory of General & Special Hospitals - Excel file (XLS, 419KB)

Column E shows the date they were initially licensed, if you want to look at hospitals that have recently opened or changed ownership.

We don’t license clinics and don’t have information on them.


Chris Van Deusen

Press Officer



5:58 p.m.

May 13, 2015

I do understand the state’s response. Of the 10 rural closures in 2013 and 2014, two of those hospitals have reopened under new ownership. Cameron changed ownership in October of 2013 but did not reopen as an operating hospital until Nov 2014 from our records. We were not aware that Grand Saline (Van Zandt County) had reopened but that is because it was just last month. I called the hospital and they told me they didn’t reopen until last month. That hospital closed in August of 2013.

I am not sure what you are trying to show but it sounds like you want to say that 10 rural hospitals are not closed because 2 reopened. I don’t dispute that. I don’t believe we have ever stated that 10 rural hospitals are closed. Our statement has always been that 10 hospitals closed in a two year period which is a fact, compared to 1 or 2 a year in the prior years. It is good news for these two communities that the hospitals reopened, but there were significant gaps in service where the communities were without access to care and that might have been avoidable. Also understand that when a hospital does reopen after closure, it does not necessarily afford immediate access to care. Many residents’ insurance plans changed what hospitals they could go to and it may take months to get the reopened hospital back into the insurance plan. Local doctors may have moved because there was no hospital, etc. There are long term implications from even a short term closure.

I know you have quizzed a number of folks about why these closures occurred. Again, there is no single reason in our opinion. Every closure is unique and has its own dynamics. But, hospital administrators and financial consultants all seem to concur that this is due to  a series of problems with the primary driving factors being high levels of uninsured (no Medicaid expansion), low payment cuts in Medicaid (cut 10% in 2011 on outpatient plus 40% cut for non- urgent use of the ER), and Medicare cuts. There are also many lesser factors.

Our financial projections are that Medicaid outpatient and ER cuts in Texas now cost rural hospitals $30+ million a year and Medicare cuts cost Texas rural hospitals $25+ million a year. That is $55+ million a year pulled out from under rural hospitals in Texas since 2011, which coincides with the increase in closures.

The Dr. Mahmood hospital closures obviously have an added mitigating circumstance, but it is also clear they were not financially viable because no one reopened 3 of them and the other two had a gap of several years.

This is a complicated issue and is hard to pack into a yes or no answer, or even a few column inches.

Don McBeath

Director of Government Relations

Texas Organization of Rural & Community Hospitals (TORCH)