Llano Hospital split from Mid Coast goes ahead; new designation sought

Llano Hospital at 200 W. Ollie St. Photo by Brittany Osbourn
Llano County is moving forward with negotiations to separate from Mid Coast Health System as manager of the financially unstable Llano Hospital. At the same time, county officials hope to acquire a new federal designation so the facility can keep its doors open.
The Llano County Commissioners Court on Jan. 13 unanimously voted to approve allowing County Judge Ron Cunningham negotiate a separation terms sheet with Mid Coast as well as proceed with any necessary legal actions to ensure the hospital remains in operation.
“We still have to determine how we are going to separate from Mid Coast,” Cunningham said during the Commissioners Court meeting Monday. “With that separation, there are still terms and conditions. Once we get (those) defined, we will be able to set the course of action.”
According to Llano Hospital Authority Board member Pat McDowell, the board and the county are in the process of seeking a Rural Emergency Hospital designation for Llano Hospital, which would open up $3.4 million in federal funding a year and allow the hospital to remain open with a different management firm.
“We really have to go to the (Rural Emergency Hospital designation),” McDowell told the court. “It’s got a more favorable financial structure, it’s got enhanced medicare payments. And the most attractive thing about it is it’s got a facilities payment on a monthly basis of $285,625.90 (about $3.4 million annually).”
McDowell explained that the Llano County Hospital Authority Board is using an accounting firm to get federal recognition for the REH designation and that Mid Coast is cooperating in helping the hospital acquire the required state designation before a full separation takes place.
Under the REH designation, Llano Hospital would still provide 24-hour care and observation services, but it could no longer have inpatient beds without being licensed as a “skilled nursing facility.”
The Rural Emergency Hospital designation is a federal program that came online in January 2023 to provide federal and state relief to hospitals in rural parts of the country that offer essential services. According to a 2023 study from the North Carolina Rural Health Research Program, 148 rural hospitals across the country closed or converted operations between 2010 and 2023. Of the rural hospitals that closed nationwide in that timeframe, 24 of the 148, or 16 percent, of them were in Texas.
Llano County has been processing a potential separation from Mid Coast since at least November 2024, when the Commissioners Court took emergency action to potentially fund operations of the hospital in the event of Mid Coast’s sudden departure. The county owns the hospital and has contracted with Mid Coast for its management since 2021.
Mid Coast and the county have gone back and forth about the infeasibility of managing the hospital since at least June 2024, when the health care provider told the county the hospital could not continue as is without county or other government contributions.
Mid Coast reportedly subsidized Llano Hospital with $3 million in 2024 and saw a 50 percent drop in patients between 2023 and 2024, according to CEO Brett Kirkham.
Kirkham furloughed 12 hospital employees in December 2024 to curb losses and cut back on payroll.
According to Judge Cunningham, more work has to be done before the hospital can acquire a new funding source and manager.
“In a perfect world, we would come in and say we’re going to (a Rural Emergency Hospital designation) and this is the plan, but we still can’t do that,” he said.