Hospital Districts

In Texas, hospital districts are local government entities created to provide healthcare services, particularly to underserved or low-income populations.

Hospital districts have the authority to levy taxes, issue bonds, and receive federal funds to finance their operations. Hospital districts are governed by their own board, appointed by the commissioners court in the county in which they are created.

Hospital districts may include one or more counties.

Power to Tax

Hospital districts are authorized by the Texas Constitution to levy a tax not to exceed seventy-five ($ .75) cents on each $100 dollars valuation of all taxable property within the district.

Hospital districts in small counties (those with a population under 75,000) may also impose a sales tax, with voter approval, but the rate varies by district.

A hospital district’s annual budget and tax rate are subject to final approval by the county commissioners court.

In addition to local tax revenues, hospital districts may receive federal funding. However, the Texas Health and Safety Code prohibits the state legislature from making a direct appropriation for the construction, maintenance, or improvement of a facility of the hospital district.

Uses of Revenue

Hospital districts often allocate funds for capital improvements, medical equipment, staff salaries, and operational costs. Hospital districts may also use revenue to repay bonds issued for large projects like hospital construction and equipment purchases.

Governance 

Each hospital district is administered by an appointed board whose members serve a two-year term, except that some members may be appointed to only a one-year term in order to stagger terms. 

In general, the members are appointed by the commissioners court of a county in which a district is created, and the each board is typically composed of five to seven members.

However, special statutory provisions govern the appointment of members in hospital districts in Travis County, Dallas County,  and El Paso. For example, the nine-member board in Travis County includes some members appointed by the City of Austin.

Creation of New Hospital Districts

The creation of new hospital districts in Texas is authorized by the Texas Constitution and requires approval from the voters within the proposed district. The process begins with the Texas Legislature, which can pass a law to create a new hospital district in a specific county or multi-county area.

However, before a district can be officially established, a referendum must be held in which the voters in the affected area approve the creation of the district. This ensures that local residents have a direct say in whether they want a hospital district to be formed to address healthcare needs in their community.

An election may also be held to dissolve a hospital district. To initiate such an election, at least 15 percent of the registered voters in a district must sign a petition asking for the election.

Comparison of Hospital Districts in Texas

Hospital districts in Texas vary widely in terms of size, scope, and the healthcare services they provide. The state’s largest hospital districts, such as Harris Health System in Harris County and Parkland Health & Hospital System in Dallas County, operate multi-hospital networks and offer a broad range of services, including specialty care, trauma centers, and comprehensive outpatient programs. These districts serve large urban populations and face the challenge of managing high volumes of patients, often including a significant number of uninsured or underinsured individuals.

In contrast, smaller, rural hospital districts tend to focus on providing basic medical care, emergency services, and outpatient care to less densely populated areas. Districts such as those in West Texas or Northeast Texas might operate a single hospital or a few smaller facilities, with additional services provided through partnerships with regional medical centers or local clinics. These districts often face unique challenges in recruiting medical professionals and ensuring access to care for remote communities. Their budgets are typically smaller, and they may rely more heavily on state and federal funding.

One notable example of a more unique model is Central Health in Travis County (Austin). Unlike other districts that run their own healthcare facilities, Central Health primarily acts as a funding mechanism, directing revenue toward partnering healthcare providers, such as Seton Healthcare Family and other community health organizations.

Another prominent example is the University Health System in Bexar County (San Antonio), which operates a large teaching hospital, University Hospital, in addition to numerous outpatient clinics. University Health System focuses heavily on academic medicine, partnering with the University of Texas Health Science Center to train medical professionals while delivering healthcare to the community.

Overall, while all hospital districts in Texas share the common goal of improving healthcare access, the ways in which they operate and the services they offer vary widely. Larger districts tend to focus on comprehensive healthcare services, specialized care, and community outreach, while smaller districts may prioritize emergency care and basic services.

History of Hospital Districts in Texas

Hospital districts in Texas evolved in response to the growing need for healthcare infrastructure, particularly in rural areas, during the mid-20th century. As healthcare became more reliant on hospitals, communities faced challenges in funding construction and operations. The federal Hill-Burton Act of 1946 provided financial incentives, but local governments still needed a reliable funding mechanism, leading to the establishment of hospital districts. These districts were designed to address the shortage of medical facilities and attract healthcare professionals to underserved areas.

The state constitution was amended in 1954 to allow the creation of county-wide hospital districts with voter approval. Over the next few decades, further constitutional amendments expanded the creation of hospital districts to include smaller counties and allowed for more flexibility in their boundaries and tax rates. These districts were empowered to levy taxes to fund hospital services and were governed by locally elected or appointed boards.

Despite initial resistance and challenges in convincing voters to approve hospital districts, they eventually became a part of Texas’ healthcare system. By the 1960s, the Texas Legislature gained the authority to create hospital districts without a statewide vote, allowing for the establishment of over 140 districts across the state. Today, these districts continue to play a significant role in providing healthcare services in certain areas, alongside private healthcare providers.