San Antonio’s mental health system is bracing for a sharp drop in inpatient capacity this week as Laurel Ridge Treatment Center prepares to significantly scale back operations following the loss of its Medicare and Medicaid provider status.
The operational changes come as Laurel Ridge also prepares for significant staffing cuts. A notice filed with the state under the federal Worker Adjustment and Retraining Notification (WARN) Act shows the facility plans to lay off approximately 648 employees, with separations expected to take effect June 26.
Eric Epley, CEO of the Southwest Texas Regional Advisory Council (STRAC), a health care coordination organization that tracks hospital capacity, told Bexar County commissioners on Tuesday that the 330-bed psychiatric hospital plans to remain open while it fights the Medicare/Medicaid determination — but reduce its patient count from about 86 currently to between 20 and 40 by Friday.
“Laurel Ridge’s commitment is that they’re going to stay open with a very small unit,” Epley said. “They’re going to reapply for their CMS status because they can’t bill Medicare, Medicaid, and many private contracts without it.”
In the meantime, the move effectively removes what Epley described as the equivalent of a 330-bed facility from the region’s inpatient psychiatric capacity.
There were about 759 civil psychiatric beds total across the San Antonio area in 2025, according to STRAC.
A 2022 t=study commissioned by the University Health Hospital system recommended that Bexar County’s mental health bed capacity should grow — not shrink — in the coming years as the county adds more residents.
Laurel Ridge’s 330 beds made up roughly 40% of that total capacity. While Laurel Ridge was not always operating at full capacity, the loss of most of its beds affects the system’s maximum capacity, meaning their loss limits how many patients can be treated when demand spikes.
Epley warned commissioners that the impact of Laurel Ridge’s reductions could be immediate and widespread, affecting psychiatric centers, emergency rooms, shelters and the county jail — the front-line services that often end up encountering these patients if they don’t have access to a bed.
“I would encourage our health care partners to remember 2015 and 2016 — that’s where we’re going back to on Friday morning,” he said. “It’s going to impact every part of our society. And it’s coming like a freight train.”
The impact also includes publicly supported mental health capacity. Epley said 22 of the 330 beds at the facility are publicly funded “contract beds” through state funding distributed by the Center for Health Care Services, the region’s mental health authority.
Jelynne LeBlanc-Jamison, president and CEO of CHCS, said the agency is already working to redistribute those 22 publicly funded beds across other hospital partners in the region.
“We’ve been talking to our partners and asking them to ramp up and take more of our contract beds,” she said.
Hospital partners, including the Methodist Healthcare System, San Antonio Behavioral Health, Clarity Child Guidance Center and Cedar Hills have agreed to absorb portions of the displaced capacity, she said.
Those beds are often used for patients in crisis who rely on publicly funded mental health services, raising concerns about where those individuals will be treated as capacity shrinks.
All 22 of those beds are expected to go offline as Laurel Ridge scales back this Friday. An additional eight beds funded through temporary federal pandemic relief dollars are also set to disappear by Friday at midnight.
LeBlanc-Jamison said most patients in those contract beds at Laurel Ridge had already been discharged or were nearing discharge, with only one remaining patient still awaiting final placement as of Tuesday.
Even with those efforts, LeBlanc-Jamison warned the loss will add pressure to an already strained system. A study commissioned by the University Health Hospital system in 2022 recommended that Bexar County’s mental health bed capacity should grow — not shrink — in the next 10 years as the county adds more residents.
“This loss of 330 beds exacerbates the need that we identified in 2025 for an additional 148 beds and then an additional over 200 beds by 2030,” she said. “This just exacerbates the situation that we were already dealing with and were already made aware of.”
Still, she acknowledged there is no clear contingency plan to replace the lost capacity in the short term, even as hospital partners work to absorb the 22 publicly funded contract beds previously housed at Laurel Ridge.
“We’re going to have to figure out how we absorb this loss,” LeBlanc-Jamison said. “We will have to continue to work and collaborate with our hospital partners and our governmental entities to address the needs we have in Bexar County.”
LeBlanc-Jamison said the reduction could increase pressure on emergency rooms and law enforcement if patients in crisis are unable to access care.
“We were in crisis mode in 2015 and 2016,” she said, referring to a period when emergency departments were overwhelmed with psychiatric patients. “We don’t want to go back there.”
Laurel Ridge CEO Ashley Sacriste did not respond to requests for comment Tuesday, but previously said the facility is already pursuing legal action to challenge the federal decision and is working to restore its eligibility to participate in those programs.
Even with that process underway, Epley said the timeline remains unclear for when the facility could regain compliance.
“There will be a waiting period before they’re allowed to reapply,” Epley said. “They don’t know: It could be three months, it could be six months, it could be a year. … We’ll know that hopefully next week.”
Epley emphasized that the federal action did not come suddenly, noting regulators had been working with the facility for months before moving to terminate its provider status.
“This didn’t happen overnight,” he said. “CMS takes this action about seven to 10 times a year across the entire United States.”
Federal regulators moved to terminate the facility’s participation in Medicare and Medicaid after inspections found serious safety and oversight failures, including incidents that placed patients in what officials described as “immediate jeopardy,” the most severe level of deficiency.
