COVID-19 funding halted rural hospital closures across Texas, until now

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LA GRANGE — A last ditch effort to save St. Mark’s Medical Center failed this week, forcing the only hospital in Fayette County to close amid ongoing financial struggles.

The 18-year-old hospital announced last week that it would close on Thursday, eliminating more than 50 full and part-time jobs in La Grange, a rural town of about 4,400 people.

On Monday, as patients trickled in and out of the hospital to say goodbye to their favorite receptionists and to pick up medical records, a private company called Progressive Health Group emerged to try to help keep the hospital afloat.

An emergency meeting was called on Wednesday afternoon, but the hospital board decided to continue with the closure as planned. Board president Dudley Piland said there were too many unanswered questions and insufficient time to analyze the finances of Progressive Health Group.

“It was a great hail mary,” Piland said. “Had it happened weeks earlier, we probably could have taken a different path. We were just so far down this path that reversing it without solid information was not feasible.”

St. Mark’s closure marks Texas’ first rural hospital closure since the COVID-19 pandemic started in early 2020. Federal relief funding helped stave off hospitals’ closures over the past two years, but now that the funding has dried up, Texas hospitals, especially those in rural areas, are again at risk of shuttering. A 2022 report found that the percent of Texas hospitals at risk of closure nearly doubled since 2020.

During the decade preceding the pandemic, Texas already led the nation in rural hospital closures, with 26 closures across 22 communities, including one community hospital in Colorado County about 21 miles south of La Grange, which closed its doors in 2016. Other hospitals near Fayette County, including hospitals in Rockdale, Cameron and Bellville also shuttered within the past 20 years, leaving a health care desert in the region. Without St. Mark’s, patients now have to travel about 20 miles to Smithville or 26 miles to Columbus for the nearest emergency care.

First: Registered Nurse Stacie Schramek files paperwork on the last day of service at St. Mark’s Medical Center. Last: Medical equipment is stored inside the pre-operative holding area. Credit: Eli Hartman/The Texas Tribune

Nationally, more than 120 hospitals have closed during the same time frame. Rural hospitals are especially at risk because patient volumes are low, the uninsured population is relatively high and reimbursement rates are inadequate. Texas has the highest uninsured population in the country and is one of 10 states that have elected not to expand access to Medicaid.

St. Mark’s Medical Center had been a point of pride in La Grange, which sits between Houston and Austin. Residents now fear La Grange may suffer stagnation and economic decline due to the job losses and lack of easy access to health care.

“It’s going to be bad,” said Twila Thurman, a former patient at St. Mark’s. “I would like for it to stay, but they’ve been struggling for years.”

Efforts to save St. Mark's

Before this week, community members and the board had tried to save the facility. But in 2019, Fayette County voters rejected a proposition to create a taxing district for St. Mark’s, which would have helped keep the hospital open.

In February, the 65-bed hospital suspended inpatient services and applied for the Rural Emergency Hospital designation, a federal program that offers financially struggling rural hospitals the ability to maintain emergency and critical outpatient services if they can’t sustain a full community hospital. Hospitals that receive the designation get increased reimbursement rates and a monthly facility payment from Medicare.

St. Mark’s is one of four Texas hospitals that have received the designation since the program launched in January.

The program helped the hospital stay afloat for a few months, but was not enough to keep them out of the red. The rising costs of health care coupled with inflation and a $13 million mortgage were ultimately too much, said CEO Mark Kimball. The hospital laid off 64 employees in February and now is losing 49 full time positions, 7 part-time positions and 37 contract roles, Kimball said.

“It’s sad for the community and sad for the employees,” Kimball said. “This is a national problem that needs to be addressed at the federal level, or you’re going to continue to see more and more small rural hospitals like St. Mark’s close.”

In the spring, a local group of concerned citizens came together in La Grange to try to save the hospital. They formed a nonprofit called Hospital Center of Excellence and raised about $5.3 million, the amount they determined was needed after spending 1,300 hours with the hospital’s management. The group needed a guarantor for a $1.5 million loan, though, and turned to the city.

During a closed session at a special-called council meeting last week, council members tabled further discussion on the issue. Interim City Manager Frank Menefee said that before the council could reach a decision, they needed to conduct research to determine whether it was legal and advisable to guarantee the loan. But the Hospital Center for Excellence said they could not stall the decision for longer.

“It’s really a shame that the county and city has not been more supportive of what it would take to save this hospital,” said Sam Wilson, who organized the Hospital Center of Excellence.

First: The Fayette County Courthouse at La Grange. Last: Hunter Callis, left, and Shelby Dixon peer in the window of an antique store in downtown La Grange. Credit: Eli Hartman/The Texas Tribune

John Henderson, executive director of the Texas Organization for Rural and Community Hospitals, said St. Mark’s likely would have closed earlier had it not been for the COVID-19 relief funding.

Now, the town’s future is in jeopardy. If other hospitals are any indication, the closure does not bode well for La Grange, Henderson said.

“What we’ve seen in other communities is they lose their hospital and then they lose their pharmacy and their grocery store and their bank,” Henderson said. “I worry that you’ll go back in a couple of years and in some ways, the community will fall down because it was that hospital that was holding them up.”