Financial Report Shows Concerning Circumstances for Texas’ Hospitals and Health Systems


A new study finds that Texas hospitals and health care systems are still reeling from the pandemic. Health care management firm, Kaufman Hall, recently explored the financial impact of COVID-19 on Texas hospitals and systems and found staggering results. Findings in the report highlight the existential threat Texas hospitals continue to face.

“Extreme pressure on life-saving hospitals creates risk for patients and the state’s overall health,” said John Hawkins, President/CEO of the Texas Hospital Association. “Hospitals are critical infrastructure for communities and serve as a backbone for health, safety, jobs and stability.”

Some of the key findings in the report include:

  • The number of hospitals at serious risk of closure has nearly doubled since the start of the pandemic.
  • Even with stimulus support, operating margins were below pre-pandemic levels. Nearly half of Texas hospitals have seen negative operating margins in 2022.
  • Expenses are continuing to creep higher – total expenses in 2022 for Texas hospitals are $33.2 billion higher than pre-pandemic levels. This is largely attributed to rising costs for labor and medical supplies.
  • Hospital volumes are below pre-pandemic levels.

These challenges are exacerbated for rural hospitals whose risk of closure remains higher than their urban counterparts.

Operating Margin Percent Change from 2019

The report highlights:

  • Texas hospitals’ operating margins were already beginning to shrink at the beginning of the COVID 19 pandemic.
  • Operating margins were 0.4% below pre pandemic levels in 2019, this includes financial support from the CARES Act.
  • Conditions slightly improved in 2021, however, those improvements were wiped out in 2022 showing margins 24.1% below pre-pandemic levels in 2019.

The reports findings continue to shed light on the challenges health care leaders face, particularly coming out of the pandemic when hospitals were the lifeline of the health system in the state. Texas hospitals cared for millions in the community and provide mass vaccinations and testing. While special funds were provided during that time those have since dwindled as hospitals to continue to care for COVID-19 patients while also facing the steep labor, drug and supply charges that soared during the past two years.

The full report is available on THA’s website.