Bexar County commissioners approved University Health’s 2026 budget as the hospital seeks to build three new hospitals over the next two years, contend with potential federal cuts and a roaring increase in patient volumes.
University Health is heading into fiscal year 2026 budgeted for $4.27 billion in operating revenue and $4.11 billion in expenses.That’s compared to $3.9 billion in revenue in 2025 and $3.6 billion in expenses, 9% and 14% increases, respectively.
Most of the hospital system’s revenue comes from patient revenue and Community First revenue, the organization’s health insurance company. Around 21% of patients who go through the hospital are uninsured.
University Health could also feel the impacts of expiring health care tax credits set to end in two weeks if Congress doesn’t strike a deal on extending them. It’s estimated that over 234,000 Bexar County residents who rely on the Affordable Care Act marketplace for insurance could see their premiums spike as a result. That’s looking increasingly likely as the end of the year approaches with few signs that a deal will be struck before then.
“Worst case, there might be a $75 million reduction in payments we get now if they go from being insured to uninsured,” University Health chief financial officer Reed Hurley told Bexar County commissioners during their Tuesday meeting, adding that the full effects are difficult to estimate.
University Health president and CEO Ed Banos added that “this next year, because of the [federal] cuts, for a lot of not-for-profits, it’s putting a sense of urgency that we all need to work together to put our resources together and figure out how we can manage this together rather than individually.”
Growing patient volumes
It’s been a busy year for University Health.
In August, they purchased CHRISTUS Health’s shuttered four-story hospital and 45-acre property on the South Texas Medical Center in a $71 million deal. The property is twice the size of the one University Hospital sits on, offering an opportunity for them to treat more patients there, Banos said.
It’s tentatively set to open in summer 2026 as Babcock Speciality Hospital. University Health also recently opened its $18 million Wheatley Health Clinic on the East Side and its Vida Clinic on the South Side.
Construction workers have made progress on University Health’s two new five-story hospitals, the Palo Alto Hospital on the Southside, set to open in 2027 with 166 beds and the Retama Hospital in Northeast San Antonio set to open the same year with 146 beds.
Both are being constructed with capacity to eventually expand to nearly 300 beds.
The projects are on schedule for completion in late 2027, though the Palo Alto building is slightly behind due to a utility and infrastructure challenge, Banos said.
The system is continuing to see patient volumes soar at its main hospital in the South Texas Medical Center, where they have seen record-breaking monthly patient discharges. The increase is also due to the hospital moving patients through their system faster, Hurley said.
“Discharges are still just roaring,” Hurley said during a Nov. 18 Board of Managers meeting. “October now is the highest discharge month ever. We’re well on our way to break 4,000 discharges.”
Since 2014, the hospital has seen a 77% increase in total emergency room visits from around 76,000 annual visits to over 134,000 this year. The hospital also receives 10,000 transfer requests a year from smaller hospitals in San Antonio and South Texas that can’t perform special procedures or offer advanced care.
The hospital is only able to accept 60% of those patients currently, because of the limited capacity.
The next big challenge for the hospital system will be filling roughly one thousand jobs at the new hospitals, which Bexar County Commissioner Tommy Calvert previously described as “a herculean effort.”
Officials carved out $20 million in the budget for salaries in the new year, according to Hurley. Banos said that the employment squeeze they and other hospitals felt after COVID-19 has started to ease.
Hurley said he expects that the hospital system will experience dips in revenue in 2027 and 2028 as they get their new community hospitals up and running.
One goal for the system in the new year, Banos said, is ensuring that they’re doing their part in providing mental health support in the community. He highlighted their collaborations with the Bexar County Sheriff’s Office, including their opioid recovery program and health intake screenings.
“We don’t want the criminal justice system and inpatient psychiatric to be where our patients have to come for care,” Banos said. “This will be a goal for myself in the upcoming year, making sure that we have the outpatient services, the community programs, so that we can get treatment in the community.”
