Hospital bankruptcies spiked in 2023 with 12 filings compared to a total of 11 filings in the previous three years combined. Three of those bankruptcy filings were by hospitals in Texas, with another four hospitals in the state either closing or sharing plans to close as inflation, staffing shortages and other financial headwinds continue to challenge healthcare providers.
Dallas-based Steward Health Care on May 1 closed Texas Vista Medical Center in San Antonio, resulting in 827 layoffs. The 325-bed hospital was already struggling financially when Steward acquired it in 2017, and the pandemic exacerbated its losses.
Traditionally, the hospital served lower-income patients; nearly 25% of its patients cannot and do not pay for medical services, according to the health system.
Steward, which is trying to to sell four of its hospitals amid financial difficulties, will also close the Medical Center of Southeast Texas in Beaumont, effective Feb. 2. All care offered at the Beaumont location will be taken in by the center's Port Arthur campus. The physician-owned hospital "was severely underutilized given the needs in the region," a spokesperson for Steward told Becker's.
Another Texas physician-owned hospital, West Lake Hills-based the Hospital at Westlake Medical Center, closed its emergency department on Dec. 29. The decision came three months after the hospital filed for Chapter 11 bankruptcy protection, citing significant debt that was exacerbated by the COVID-19 pandemic.
La Grange-based St. Mark's Medical Center also closed its doors Oct. 12 after unsuccessful efforts to fulfill its financial obligations. After cutting nearly half of its staff in February, the hospital converted to a rural emergency hospital designation to preserve its emergency department services and most outpatient care. However, the hospital found it could no longer sustain the $13 million of mortgage debt, as it had been paying less than the full mortgage since 2020.
Lion Star LLC, the group that operates Nacogdoches Memorial Hospital, filed for Chapter 11 bankruptcy in November. The filing outlines that the hospital owes as much as $50 million to creditors. At least 200 creditors have claims against Lion Star, and the largest 20 credit claims total more than $8 million.
One other Texas hospital, Trinity Regional Hospital Sachse, filed for bankruptcy last year but is expected to be acquired by Nashville, Tenn.-based HCA Healthcare for about $41 million by the end of the month.
Trinity Regional, a 32-bed facility, opened in November 2021 but defaulted on about $70 million of municipal bonds that were issued in 2020. The hospital's owner listed assets of $50 million to $100 million and liabilities of $100 million to $500 million on the bankruptcy petition.
HCA's proposed acquisition of the hospital is one of many transactions the for-profit hospital operator has announced in the Lone Star State in recent months. HCA has scooped up multiple hospitals, freestanding emergency departments and surgery centers in Texas, a state where it sees a significant opportunity for market growth.