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COVID Shutdown Causes Medical Center Hospital to Adopt Higher Tax Rate

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Reeling from unprecedented financial losses due to the economic shutdown and mandates imposed by Texas Governor Greg Abbott, one public hospital says it is now having to max out its property tax rate to meet their continuing obligation to provide care to a vast region of West Texas. 

Medical Center Hospital [MCH] in Odessa is not only the largest public hospital in the region, but serves the largest trauma area in the nation, covering some 48,000 square miles of rural West Texas. 

The hospital is governed by an elected board, elected by Ector County residents by single-member districts for four-year terms. The hospital collects both a portion of sales tax revenue and while it also collects ad-Valorem property taxes, it is the only hospital district in the state where the rate they may levy is capped at $0.15 per $100 valuation. 

At a meeting of the Hospital Board of Directors last Wednesday, the board voted 6-1 in favor of increasing the district property tax rate from $0.112720 per $100 valuation to the max rate of $.15 per $100, which the hospital says should yield roughly another $6 million in property tax revenue. 

Lone Star Voice sat down with MCH CEO Russell Tippin to discuss the reason the hospital needed additional revenue and some of the causes behind the need stemming from the recent shutdowns. 

Tippin took over the position as the hospital’s top official on late last year, just four days before one of the darkest days in Odessa history when a gunman committed a mass spree shooting leaving 8 dead and dozens more injured. 

From there Tippin said the hospital had just begun to gather themselves together when the COVID virus crisis struck, shutting everything down on March 17. 

“You know the Governor shut the state of Texas down for 60 days. We had 60 days where the sales tax went to almost nothing except for grocery stores and gas stations.” Tipped said. 

According to data from the hospital, their share of local sales tax revenue declined over 12 million dollars due to the economic shutdown. 

In addition to the lack of consumption-based tax, subsequent executive orders mandated that all hospitals in the state would be banned from conducting elective medical procedures – something that caused MCH a substantial monetary loss. 

“When we had to close elective surgeries in April, we lost about 40 million dollars in elective surgery revenue in a month. We rocked along in May, things were good, we come back in June and we get elective surgeries closed again (by the governor) and we lost about $30 million in revenue.” Tippin stated. 

Facing a substantial financial crisis, Tippin said that nothing was off the table as he started cutting expenses, laying off 120 employees, furloughing another 225, re-negotiating contracts, restricting the hospital’s bond debt, and making across the board pay cuts that are still in effect today. 

Lone Star Voice asked Tippin whether medical personnel were among the employees who were cut and furloughed, to which he responded saying that the patient-facing positions were not affected, however a lot of the out-patient related clinics were cut substantially. 

One physical therapy clinic went from seeing as many as 50 patients a day to only 1. 

“The taxpayer owns this hospital. The taxpayer elects the board of this hospital. And so not only are we trying to protect our patients, but we are trying to protect the taxpayer as well. But at the same time, this is a county hospital that cannot turn away any of our patients. We cannot be selective of our patients. We have to treat anyone who walks through the door, regardless of their ability to pay.” 

Tippin told Lone Star Voice that Abbott’s office never consulted directly with the hospital before imposing the restrictions, describing his actions as “sweeping” but said he did understand that the Governor had to look at the big picture. 

However, Tippin also stated that he felt that it would be best if the hospital was left to local control. 

“I believe local control is the most common-sense control. You know we were lumped in with the Baylor Scott and Whites, Houston Methodist, etc. and when they were having 500-700 COVID patients a day through the height of it, we went through a 20-day stretch where we had zero COVID patients. But yet we were still under the same restrictions as a downtown Houston hospital was.” 

Tippin also said he was immensely thankful for help from State Representative Brooks Landgraf (R-Odessa) in using his connections to get their voice into the Governor’s office. 

Lone Star Voice also spoke with MCH board member Bryn Dodd – the lone vote against the tax rate increase. Dodd elaborated on her vote saying it wasn’t because the hospital didn’t need the funds and issued an exclusive statement to Lone Star Voice. 

“There is no question the hospital needs additional revenue to meet our mandated obligations to provide health care to our community. I voted against the tax increase however, because it isn’t fair having to double tax the taxpayers to pay for something they already paid for in years past,” Dodd said.

Unfortunately, the unreasonable orders to stop elective surgery and subsequent economic downturn placed the hospital in desperate straits, and past administrative officials at the hospital who were reckless and wasteful with taxpayer dollars left us without sufficient rainy-day funds to weather this storm. 

“I would like to say I have full confidence in our current administration, and they have proven to be effective stewards of taxpayer resources while striving to provide the best medical care for our community. I couldn’t be prouder of our staff.” 

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