University Health voted this week to keep its property tax rate at 0.27 per $100 of valuation, the same rate it has held for several years. Hospital district leaders will present their proposal to Bexar County Commissioners Court on Tuesday.
Changes in federal funding and the opening of two new community hospitals will make finances tight for University Health next year. But the hospital district’s leadership say that they expect things to rebound once their new hospitals — Palo Alto on the South Side and Retama in Northeast San Antonio — open and start seeing patients in 2027.
University Health is also in the midst of reopening a shuttered CHRISTUS hospital in the South Texas Medical Center as Babcock Specialty Hospital.
“Toward the end of this year and then next year, as we prepare to open those hospitals, we will probably go negative from a financial standpoint for just those first six months of next year,” University Health chief financial officer Reed Hurley told the hospital district’s Board of Managers on Tuesday.
Bringing two new community hospitals online comes with expenses this year and next year. This includes hiring and training new staff as well as backfilling staff who move over. The hospital is also anticipating needing to replace aging equipment at their flagship hospital in the medical center.
University Health’s tax rate makes up a small portion of its overall revenue, about 14%, according to Reed Hurley, the hospital system’s chief financial officer.
The rest comes from Medicaid and Medicare, commercial insurance and directed payment programs, which ensure hospitals are paid a certain amount of money for treating patients — especially important for safety-net hospitals like University Health.
Some of these programs are under federal pressure from the Trump administration, which is seeking to restrict financial mechanisms used to increase payments to providers.
Hurley said that the hospital will feel more impacts in 2028 as the president’s federal reconciliation bill, H.R. 1, goes into effect, which will bring more restrictions to directed payment programs and cut Medicaid spending by over $900 billion over 10 years.
University Health leadership is also expecting changes to the 340B drug pricing program. This federal initiative requires drug manufacturers to sell drugs at discounted prices to safety net providers.
An increase in the uninsured population is also having an impact on University Health, but it’s relatively small, Hurley said.
All told, despite the myriad of financial challenges, Hurley said that they are not currently forecasting needing to increase the property tax rate and actually hope to bring it down in the future.
