Hospital District Property Taxes Commonly Asked Questions
What is a hospital district?
A hospital district is a political subdivision of the state of Texas, considered a public agency, responsible to the people, apart from the city or county governments. It is able to act independently to finance, administer, control and operate the hospital system.
What exactly does the hospital district tax dollars support?
Hospital district property taxes directly support OmniPoint Health Hospital operations only and are primarily used to help offset the losses incurred from the Anahuac hospital’s 24/365 operations (such as salaries, supplies, utilities, etc.), and the hospital’s indigent healthcare.
In fiscal year 2021, the district’s operating expenses and indigent care costs totaled $22.3 million – property taxes covered approximately $3 million of those costs. With the recent 15-cent tax drop in fiscal year 2022, the district will generate about $2 million from property taxes, effectively lowering its burden to the taxpayer by about $850,000.
Do the hospital district tax dollars fund the clinics or operations outside of mid-County?
Given the significant losses sustained by the hospital annually, it is safe to say that nearly all tax money collected from the district are utilized to offset the more than $3 million dollar loss sustained annually by the district for operating the hospital in Anahuac.
Following this logic, it is also safe to say that property taxes do not support the freestanding primary care clinics in Anahuac or those outside of the hospital district. In fact, the high utilization of those facilities and their profitability helps offset the hospital’s losses and in turn contribute to lowering tax rates. Early in 2021, following a strategic planning session, the district and clinic board members voted unanimously to expand into Dayton. The community leaders of Dayton wrote letters to William Kiefer, CEO requesting he provide Dayton with primary care services and the boards saw fit to do this as it is part of the health care system’s mission to provide quality care to rural communities in need.
As federally qualified health centers, the clinics have also been awarded more than $6.25 million in grants over the past two years and they will continue to pursue outside funding. The majority of the clinic’s revenue is generated from billed services to insured patients, in conjunction with federal and state grants which support the delivery of primary health services.
If we eliminate the hospital district property tax what would happen?
It is the goal of OmniPoint Health to reduce its dependency on property taxes by seeking additional revenue streams to make the health system financially independent. However, if the property tax was lowered or eliminated faster than the healthcare system was able to absorb the financial losses incurred by the hospital, then the Anahuac hospital and its emergency room would have to close.
“I always caution hospital district boards from only focusing on slashing operating costs because while they may lower the tax rate, the hidden cost is ultimately closing the hospital or a loss of vital services,” said John Henderson, President/CEO of Texas Organization of Rural & Community Hospitals (TORCH). “The fact that this hospital district lowered its tax rate during a pandemic speaks volumes to their diversified portfolio and focused investment on profitable initiatives versus cutting costs by any means.”
What area is taxed for the hospital district?
The same boundaries as the Anahuac Independent School District (mid-County).
How is the tax rate determined each year?
Tax rate is set annually by September 30 of each year. The maximum set by law is 75 cents per $100 valuation. The hospital district’s tax is currently at 32.8 cents.
The CEO presents the district’s budget, which includes all operating entities with a recommendation on tax rate based on a number of financial factors. Setting the tax rate should include the review prior losses, expected operational expenses, potential revenues, healthcare trends, and state and federal funding.
Based on what’s needed to operate a hospital system, they prepare an amount they’ll need in tax funds based off of the valuation of property located in the hospital district to ensure that the hospital remains viable and ready to care for the healthcare needs of its constituents.
The governing board reviews a hospital district’s budget, considers expenses vs. revenues to decide on the tax rate for the following calendar year. The hospital district follows the effective tax rate, rollback rates guide to set the tax rate. The tax rate must then be voted on by the board, after they hold two separate tax hearings which are open to the public.
There are uncontrollable factors taken into consideration when preparing the hospital district’s annual budget, such as the current pandemic, Medicare and Medicaid reimbursement, changes in federal and state funded programs, staffing shortages and inflation.
What is being done to lower the tax rate for residents?
By making strategic investments and establishing key partnerships, the health system is increasing utilization and cash flow as well as continuously identifying growth opportunities inside and outside of the district that will generate revenue and allow the system to offer more services. The health system is also creating efficiencies to lower costs that would not only increase profitability needed to lower taxes but do so in a way that in turn elevates the quality of service for local residents.
The more insured patients who come through the door, the more the health system can offset the costs of the hospital and continue to add more specialty services.
What can residents do to help lower the tax rate?
OmniPoint Health is working hard to improve the quality of its services for residents as well as explore options for new and diverse sources of revenue by adding additional services both inside and outside the hospital district boundaries.
Utilization of the services helps increase the hospital district’s profitability and helps in its pursuit of financial independence from the property taxes. The bottom line is the more people use OmniPoint Health’s services (whether at the clinics or at the hospital), the more profitable the health system becomes, it lowers the dependency for the property tax without having to close the hospital.
Why do we need a hospital or emergency room in Anahuac?
The hospital was built in the 1950s to provide needed healthcare to Anahuac residents as there were no nearby medical facilities.
Local lifesaving medical care is vital in emergency situations – when minutes count, rural hospitals can and do save lives.
Studies show that residents of rural areas are less like to have health insurance, access to internet or use mobile health technology and 40 percent of rural counties lack public transportation. This leads to higher health risks of rural residents who are not receiving ongoing preventative care.
OmniPoint Health is here for its residents when they need us most and has saved or improved countless lives. It also cares for all residents regardless of their ability to pay as it is our mission to keep our community healthy and safe.
Quality healthcare is also a driver to the economic prosperity of a community. Access to quality healthcare and emergency services plays a significant role in attracting business and industry to spur economic development.
When, why, and how was the hospital district created?
In the 1940s, a group of Chambers County citizens recognized the need for a hospital. With the closest emergency services many miles away, they knew minutes count to treat critical patients and save the lives of its residents.
Making this vision become a reality was truly a community effort — the county made plans to operate the facility after the hospital’s land was donated by several generous residents. The new publicly owned, 36-bed facility known then as Chambers Memorial Hospital opened on October 15, 1950, and delivered its first baby just four days later. The hospital was operated by the county for 25 years.
In the early 1980s, financial difficulties threatened to close the hospital. Chambers County citizens banned together again and formed a ‘Save Our Hospital’ committee to create Chambers County Public Hospital District No. 1, through the Texas State Legislature Bill 44940.
An election was held June 8, 1985, where 1,519 residents voted on Chambers County Public Hospital District No. 1 taking over the hospital’s operations.
On June 10, 1985, the Commissioners’ Court met in regular session with the following member present: Kenneth Bettis (Commissioner Precinct 1), Sidney Desormeaux (Commissioner Precinct 2), Earl Porter (Commissioner Precinct 3), Carolyn Adair (Commissioner Precinct 4), Alma Turner (County Judge), R.T. Pinchback, Jr. (County Engineer), F.E. Williams (County Auditor), and Norma Rowland (County Clerk).
A motion was made by Desormeaux and seconded by Porter that the results of the June 8, 1985, Creation, Tax, Bond, and Trustee Election held in Chambers County, Texas be canvassed and certified by the Commissioner’s’ Court as the official results. The Hospital District became effective on October 1, 1985.
A year later, Chambers Memorial Hospital was renamed to Bayside Community Hospital.
Why aren’t other parts of the county taxed for the hospital district?
When the hospital district was originally formed in the 1980s, the residents who elected in favor of its formation were within the same boundaries as Anahuac ISD. To expand the hospital district taxing area, the residents of those areas would need to vote on the taxation to support the hospital district.