Your Health In Mind with Michael Storm and Dr. Dean Lloyd, March 18, 2026 Hour 1
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Hospital problems..Today’s topic 3-18-26
U.S. hospitals are facing a severe financial and operational crisis in 2026, driven by high labor/supply costs, labor shortages, and rising administrative burdens (e.g., insurer claim denials). Over 60% of expenses go to staffing, which saw a 5.6% increase in 2025. Key challenges include treating a sicker, aging population, high inflation, and significant cybersecurity threats. Key Operational and Financial Challenges:Financial Instability: Operating margins remain slim or negative, leading to a record number of mergers, acquisitions, and divestitures.Workforce Shortages & Burnout: Persistent shortages of doctors and nurses have forced reliance on expensive, temporary staffing (locum tenens).High Costs and Inflation: In 2025, total hospital expenses grew 7.5%, outpacing revenue growth, with supply costs rising by 9.9% and drug costs by 13.6%.Administrative Burden: Hospitals spent $43 billion in 2025 on costs related to prior authorization and insurer claim denials.Supply Chain Disruptions: Over 20% of essential medical supplies experienced high scarcity rates, leading to daily challenges in sourcing critical items.Infrastructure Issues: Aging facilities require costly repairs, contributing to closures, particularly for independent and rural hospitals. Service and Patient Care Impacts:Increased Demand for High-Acuity Care: Hospitals are managing a higher volume of sicker patients, causing capacity issues.Emergency Overcrowding: Closures of nearby hospitals or specific departments (e.g., obstetrics) are causing overcrowding and longer travel times for care.Technology Failures: Increased reliance on digital systems has led to severe disruptions, such as major software outages affecting multiple hospital systems.Cybersecurity Threats: Over 180 ransomware attacks hit healthcare providers in 2024, costing nearly $900,000 on average to resolve. Strategies for Mitigation:
- Staffing Solutions: Increasing use of temporary “locum tenens” providers.
- Operational Changes: Reorganizing, reducing staff, and focusing on high-revenue services to improve efficiency.
- Strategic Partnerships: Merging with larger systems to manage costs
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U.S. hospitals are currently facing a “perfect storm” of financial and operational pressures as of March 2026. Data from the American Hospital Association (AHA) indicates that hospital expenses grew by 7.5% in 2025, more than double the growth rate of hospital prices.
Critical Financial PressuresReimbursement Shortfalls: Hospitals are frequently losing money on essential services. Approximately 56% of hospital costs are tied to service lines—such as behavioral health, obstetrics, and burn care—where reimbursement fails to cover the cost of care.Government Underpayment: Medicare and Medicaid underpaid hospitals by an estimated $130 billion in 2023. Medicare currently pays roughly 82–83 cents for every dollar spent on patient care.Insurance Administrative Burden: Hospitals spent $43 billion in 2025 alone trying to collect payments from insurers for care already delivered. Commercial insurer practices, including frequent claim denials and excessive prior authorization requests, have increased “friction costs” significantly.
Operational and Workforce ChallengesWorkforce Shortages and Costs: Labor remains the largest expense, accounting for roughly 60% of hospital budgets. Hospitals face critical shortages of nurses and physicians, fueled by burnout and an aging workforce.Rising Input Costs: In 2025, spending on drugs increased by 13.6% and supplies by 9.9%. Drug shortages have reached a decade-high, adding up to 20% to hospital drug budgets as they scramble for alternatives.Aging Infrastructure: The “average age of plant” has increased by over 10% in recent years, indicating that many hospitals lack the capital to reinvest in critical facility upgrades and new medical technology.
Service and Infrastructure RisksCybersecurity Threats: Hospitals have become prime targets for ransomware, with attacks rising nearly 50% between 2022 and 2023. The 2024 Change Healthcare attack highlighted how a single breach can paralyze revenue cycles and patient care nationwide.Hospital Closures: Between 2010 and 2023, 300 hospitals closed, with rural areas hit particularly hard. Many remaining facilities, especially in states like Colorado, are operating with “unsustainable” margins below the 4% required for long-term survival.Increased Patient Complexity: Hospitals are treating more patients (up 5.3% in 2025) who are increasingly sicker and medically complex, requiring more intensive staffing and resources per case.
Would you like to focus on the specific challenges facing rural versus urban hospitals, or see more details on cybersecurity impacts?
Hospital closures and service reductions along the U.S.-Mexico border, particularly in Texas, New Mexico, and Arizona, are part of a broader, accelerating national crisis affecting rural and underfunded healthcare facilities. As of 2025, over 40% of rural hospitals are considered at risk of closure due to financial insolvency, with Texas having the highest number of such closures in the nation.
Primary Reasons for Border Hospital ClosuresBorder hospitals face a unique combination of financial and demographic pressures, exacerbating the typical causes of rural hospital closures: Financial Instability and Low Reimbursement: Border hospitals often serve high-poverty, uninsured, or Medicaid-dependent populations. Low reimbursement rates from Medicare and Medicaid, combined with a high volume of uncompensated care (care provided without payment), create unsustainable financial losses.High Uncompensated Care Costs: Hospitals in the region bear the burden of treating uninsured patients, including migrants and residents without coverage, which has been described as a major contributor to financial stress.Operational Strain from Migrant Influx: The surge in migration has put immense, sometimes overwhelming, pressure on already limited staff and resources, particularly in emergency departments.Traumatic Injuries from Border Wall Falls: Increased height of border fencing (up to 30 feet) has resulted in a5-fold increase in severe trauma injuries, such as falls, placing a significant, high-cost burden on border-serving hospital trauma units.Proposed Funding Cuts (2025-2026): Proposed federal “Big Beautiful Bill” cuts to Medicaid, which accounts for up to 30% of revenue for some hospitals in New Mexico, threaten to trigger a “domino effect” of closures.Staffing Shortages: Border areas often struggle with a poor ratio of patients to providers, making it difficult to maintain services.
Key Affected Areas and TrendsTexas: Texas leads the nation in rural hospital closures, with 15 specific rural hospitals identified as at-risk of closing in 2025 due to Medicaid cuts.New Mexico: Hospitals in northern New Mexico face closure risks due to high Medicaid reliance, with significant cuts threatening to shutter services.Arizona: Rural Arizona hospitals are facing closures or the elimination of labor and delivery units, with more anticipated in 2025 than in 2024.
Impact on Border CommunitiesThe closure of these institutions has profound consequences, including:Loss of Essential Services: Residents lose access to emergency care, maternity wards, and intensive care units.Increased Travel Distances: The median distance to access hospital care has increased significantly (sometimes up to 40 miles) for residents in affected areas.Economic Decline: Hospitals are often the largest employers in small communities; their closure leads to job losses, which in turn erodes the local tax base, impacting school and other public services.Reduced Public Safety: The loss of ER services means longer waits for emergency medical services (EMS) and limited access to trauma care for both residents and migrants.
While some urban areas have seen closed hospitals converted into outpatient facilities, rural border hospitals frequently shut down entirely___________________
While there has not been a single, mass “border-wide” shutdown of all medical facilities, hospitals in U.S. border regions—particularly in
Texas, New Mexico, and California—are currently facing a critical wave of closures and financial instability in 2025 and 2026. This is primarily due to a combination of rising uncompensated care costs from border-related injuries and major federal funding shifts.
Recent Closures and Facilities at RiskGlenn Medical Center (California): This facility, located in a rural area near the border, announced plans to close its emergency department and hospital services in late 2025.Taos Holy Cross Medical Center (New Mexico): Serving approximately 50,000 residents, this hospital has warned of potential closure due to anticipated federal reimbursement cuts.Palo Verde Hospital (California): Located in Blythe, this facility faced a severe financial crisis in late 2025, with negative cash flows of $1 million per month leading to a potential sale or shutdown.Texas Rural Hospitals: Over 76 rural hospitals in Texas are currently on “life support,” with several at immediate risk of closing within the next two to three years.
Why These Hospitals Are ClosingSurging Emergency Costs from Border Infrastructure:
- Since the border wall was raised to 30 feet, trauma centers in regions like San Diego and El Paso have seen a massive spike in severe “border fall” injuries.
- In San Diego, annual admissions for these traumatic injuries rose nearly ten-fold, with costs jumping 636% to $72 million between 2020 and 2022.
Federal Funding Cuts:
- Many hospitals relied on “Critical Access” status for federal funding. Facilities like Glenn Medical Center lost this status due to technical mileage disputes with the Centers for Medicare and Medicaid Services (CMS), making operations unaffordable.
- Recent legislative changes, such as the One Big Beautiful Bill Act (OBBBA), are expected to result in roughly $1 trillion in Medicaid cuts over the next decade, further squeezing hospital margins.
The “Uncompensated Care” Gap:
- Border hospitals serve a high percentage of uninsured patients, including both local residents and migrants.
- Unlike other regions, border facilities lack a robust mechanism for reimbursement for these patients, forcing them to absorb up to a 35% cut in gross income.
Workforce and Operational Struggles:
- Severe shortages of specialized staff (especially in maternity and emergency care) and rising costs for facility repairs have made independent operation unsustainable for small border facilities.
Impact on Border CommunitiesWhen these hospitals close, residents often face ambulance rides of 40 miles or more to reach the next nearest emergency room. This has led to specialized “maternity deserts” along the border, where nearly one-third of counties lack any obstetric providers.
Would you like to see a map of specific hospital risks in a particular border state like Texas or Arizona?_____________________
Advocate in CO
A health care advocate in Colorado, often designated via a Medical Durable Power of Attorney (MDPOA), must be over 18, willing to serve, and able to make decisions based on your wishes. The procedure involves selecting an agent, filling out a Colorado-specific form (no notary or witnesses required for the standard MDPOA, though recommended), and distributing copies to providers. Steps to Appoint a Health Care Agent in ColoradoSelect an Agent: Choose someone over 18 who is willing to manage your medical care and communicate with doctors if you become incapacitated.Complete the Form: Utilize the Colorado Medical Durable Power of Attorney form to formally name your agent.Sign the Document: The form should be signed, and while not legally required, it is highly recommended to have it notarized for validity.Distribute Copies: Provide copies to your chosen agent, family members, and all healthcare providers.Understand Authority: The agent can access records, consult doctors, and make treatment/placement decisions based on your stated wishes. Additional InformationAlternative Options: You can use the “Easy to Read Colorado Advance Health Care Directive” to combine a medical decision-maker with specific end-of-life care instructions.Other Documents: Consider a Medical Orders for Scope of Treatment (MOST) form for serious illnesses, which requires a physician’s signature.Mental Health: Colorado has a specific process for a Psychiatric Advance Directive.Assistance: Organizations like the Colorado Cross-Disability Coalition can assist with advocacy. For legal, professional advocates, it is advised to have a signed contract detailing specific services, fees, and availability.
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