How building a new hospital cost this rural Texas town a place to deliver babies

By Eleanor Klibanoff and Shelby Tauber, The Texas Tribune
November 13, 2025

OLNEY — On April 14, Texas’ oldest operating rural hospital gave way to its newest.

Olney Hamilton Hospital had been serving this small town, 100 miles west of Fort Worth, for more than a century, bearing witness to generations of births, deaths and everything in between, while struggling to survive amid the slow hollowing out of rural health care in Texas.

But, thanks to a windfall from nearby wind farms, the hospital was getting a once-in-a-generation opportunity to replace the aging building and outdated technology with a modern, updated facility.

Community leaders and hospital employees gathered on a stretch of grass across from the old facility, posing with beribboned shovels as they prepared to break ground.

“If the old hospital’s walls could talk, they would confess that they are weary,” Dale Lovett, president of the hospital board, told the crowd to applause. “These walls long for renewal.”

But behind the camera-ready smiles, the project was breaking down, felled by the same forces that have made it so hard for Texas’ rural hospitals to survive, let alone thrive. Facing a budget shortfall and rising costs, the hospital board had decided to cut what has long been its costliest service.

Olney’s shiny new hospital, designed to serve the region for the next 100 years, would not be able to deliver babies.

The decision divided the typically tight-knit town of about 3,000 people, angering residents, frustrating local employers and economic development leaders, and pitting the doctor who still wants to deliver babies against the hospital board members who have to balance the budget.

“We cannot make it make sense for us, financially,” Lovett told The Texas Tribune in an interview. “We all want the same thing, to deliver babies and offer every service we can, but it wasn’t an option.”

Olney Hamilton Hospital joins the almost 60% of rural Texas hospitals that do not deliver babies, leaving large swaths of this state without a nearby place to give birth. Between 2010 and 2022, Texas lost a dozen rural obstetrics units, according to the University of Minnesota Rural Health Research Center, and one-fifth of those that remain are at risk of closing.

As Olney was breaking ground on its new hospital, the Texas Legislature was debating how to address this crisis in rural maternity care. After decades of slowly starving hospitals with bottom-of-the-barrel Medicaid reimbursement rates, lawmakers this session allocated more than $100 million in grants and reimbursement enhancements to stave off the worst of the closures in rural areas. Some of that funding is specifically earmarked for hospitals with labor and delivery units.

But for hospitals like Olney’s that have already been forced to stop delivering babies, the help comes too late.

“I think some of our elected officials want to see this not just stop the sliding, but restart some [obstetrics] programs that have suspended service,” said John Henderson, CEO of the Texas Organization of Rural and Community Hospitals. “It’s going to take a lot more to make that happen.”

Olney Hamilton Hospital first opened in a house in 1908, and moved to its current location in 1927. Its founder Dr. George Hamilton deeded it to the town upon his death, and after World War II, Lovett’s father and uncle took over as town doctors.

Lovett grew up playing with his brothers and shadowing their dad in this building.

“Of course, when I had my tonsils out, my dad said, ‘these rooms are for paying patients,’ and I had to do my rehab at home,” he said with a laugh.

In 1964, a wave of rural health funding from the federal government helped Olney add on the “new hospital,” as some folks still call it, an extension with a six-bed emergency room, 100 patient rooms, a labor and delivery suite, a lab and a gift shop.

While his brother followed in their father’s footsteps, Lovett took up “a different kind of brain surgery,” and became a teacher. But Olney Hamilton Hospital was in his blood, so in 2005, he joined the hospital board to help manage this essential community asset.

When Lovett stands in the lobby, next to oil portraits of his father and uncle, he can still see the building for what it was in its prime — a modern facility that served as the beating heart of a booming little town.

“Dr. Hamilton, my dad and my uncle, they all had the same goal, which was to provide the best medical care for the people at that time,” Lovett said. “I feel we’re still living that purpose, but times have changed.”

The last few decades have not been kind to Olney. The town was hit hard by the oil bust, and the savings and loan crisis of the 1980s. A generation of families moved away, the bustling downtown grew vacant, and property values fell, taking the precious taxes the hospital district relied on with them.

People still needed a place to go when they were having a heart attack, broke their arm or had pneumonia. But with a shrinking population, paltry insurance payouts and growing overhead costs from an aging building, keeping the hospital afloat became more precarious by the year. They only collected 37 cents on every dollar of medical care provided, because of uninsured and under-insured patients who weren’t able to pay their full bill.

Like at most rural hospitals, delivering babies was among the greatest financial burdens. Babies come when they want to, so hospitals must be ready to deliver around the clock, even if they only get two or three deliveries a month. The fixed costs — doctors, nurses, equipment, malpractice insurance — are staggeringly high, but insurance companies typically pay a flat fee per birth.

Texas has made it particularly hard, paying hospitals very little for Medicaid deliveries, which account for about half of all births in the state. Even after the Legislature allocated an extra $1,500 per rural birth starting in 2023, Texas’ Medicaid reimbursement rate for obstetrics remained eighth worst in the nation as of last year.

Young County’s other hospital, in Graham, stopped delivering babies in 2015, saying at the time that they were only reimbursed for 39% of expenses per birth. Olney inherited Graham’s equipment and some of their patients, who would have to drive 25 minutes to give birth.

Closing a rural labor and delivery unit increases the rate of preterm births, delays prenatal care and makes it more likely women will deliver outside of a properly equipped and staffed obstetrics unit, research has shown.

But every month, when Olney’s board got together to look at their precarious finances, there was that line for labor and delivery, slowly draining them dry. Of the hospital’s $27 million annual operating budget, a million of that went to covering the unreimbursed costs of delivering babies, Lovett said, money they also needed to fix the roof, replace aging equipment, or stave off concerns from inspectors.

Lovett can still remember the panic he felt when an inspector told them their medical lab was out of compliance with federal standards, and they’d have to shut it down if they couldn’t quickly scramble together a million dollars to remediate the issues.

He’d lay awake at night, ruminating on all the other crises hanging over their heads, and wondering how they were ever going to do anything more than limp along. He dreaded the day they might have to close Olney Hamilton Hospital’s doors, erasing his family legacy and leaving this town without medical care.

“We’re not out to make money, but … you have to keep the lights on,” he said. “We can’t wait til the inspector walks in the door and says, ‘We’re shutting you down.’”

In the end, the answer to Olney Hamilton Hospital’s financial woes did not come from the state or federal government. Instead, it arrived on a stiff breeze.

Over the last 15 years, wind farms have sprouted across Young County, drawn in by the vast prairies, existing energy infrastructure and relative proximity to Dallas-Fort Worth. In addition to energy, the wind farms also generated taxes, which Olney Hamilton Hospital, as the local hospital district, could cash in on.

In 2010, the hospital board used $10 million of wind farm tax revenue to pay for a new clinic and wellness center. Five years ago, a company called Plug Power started prospecting the area for a massive hydrogen plant. Talk of solar farms, battery farms and data centers followed.

This renewable energy boom was a “once-in-a-generation opportunity” to move Olney Hamilton Hospital forward, Lovett told the board at a meeting in August 2023. They could take out a bond, backed by the anticipated tax revenue from these projects, and build a new hospital without asking residents to pay more in taxes. The new hospital would cost about $33 million, although Lovett warned that if they ran over budget, they “may have to trim up this and that.”

“We can’t just sit on it,” he told the board. “It’s going to get more expensive so we can’t … let this opportunity get by.”

Even though it wouldn’t cost them anything, voters still had to approve the bond, so Lovett and the board embarked on a public relations blitz. A promotional video shared online showed a mock-up of a modern, two-story facility suffused in golden light, as the mayor excitedly discussed the promise of “the best medical care,” at “zero tax burden on the citizen.”

At a meeting between local business leaders and the hospital board in October 2023, Mark McClelland, CEO of Tower Extrusions, one of Olney’s biggest employers, said it was clear Olney needed a new hospital — but he was worried about tethering such a big project to such an uncertain industry.

“What if Plug Power goes broke? What if it fails?” he asked the board, according to the Olney Enterprise. “That’s the main concern I hear in the community is, can we afford it?”

Hospital administrator Mike Huff said they were confident in the plan, as long as the “supply chain stays okay.” And in the end, Lovett said, they didn’t have much choice — rural hospitals didn’t get a windfall like this every day.

That November, voters approved the bond on a two-to-one margin.

No one was more excited for the new hospital than Dr. Chantel Taylor.

Originally from New Jersey, she fell in love with family medicine while in school, and tacked on an extra year of training so she could deliver babies. She moved to Olney in 2020, promptly met the man who would become her husband, moved her parents to town and settled in for what she hoped would be decades of caring for Olneyans.

Taylor had learned to work within the hospital’s limitations, with its walls so thick Wi-Fi struggled to pass through and hallways so narrow C-section patients had to be wheeled most of the way around the hospital to get to the operating room. When plans for a new hospital started circulating, Taylor eagerly weighed in, helping design the facility she planned to spend the rest of her career in.

But then, less than a year after issuing the bonds, everything changed.

The costs of the project had skyrocketed. Since getting the first estimates, inflation, global economic uncertainty and supply chain issues had driven the estimated price per square foot from $550 to $720, leaving a $9 million gap between the hospital they’d designed and the hospital they could afford.

And the income they’d been expecting from the wind farms was suddenly in question, thanks to a court ruling from 250 miles away. Val Verde County had been taxing wind farms based on their appraised value — including the value of federal green energy tax credits these farms received. A San Antonio appeals court ruled in 2024 that those tax credits should have been excluded from the valuation, a ruling that led to the reappraisal of wind farms statewide — including in Young County.

This ruling cost the hospital close to a quarter of its anticipated income from the wind farms, seemingly overnight, Lovett said, right as the increased cost estimates came in. The board was on the hook to pay back $27 million in bonds over the next three decades, whether the tax revenue came through or not.

So at an emergency meeting last June, the board voted to scale back the proposed new hospital to one floor and axe the second operating room.

And that’s when they encountered the third problem. While Olney Hamilton Hospital had successfully delivered babies for over 100 years with one operating room, federal regulations require new hospitals to have two ORs if they want to offer labor and delivery services.

Cutting the second operating room would save them $7 million. But it would cost them the ability to keep delivering babies.

The nearest place to give birth was now 30 minutes away, and some of Taylor’s patients who came from surrounding towns already drove that far just to get to Olney, stretching their commute to close to an hour.

“The radius between hospitals is just wild now,” Taylor said. “It’s just the worst decision in the world.”

She wasn’t alone in her anger. Dr. Jeremy Johnson, a board member, missed the meeting where they voted to cut the second operating room because he’d been delivering a baby. At the next meeting, he grilled Lovett on whether they’d considered all options before cutting labor and delivery.

“I thought we wanted more [obstetrical] services at the hospital,” he said at the meeting, according to the Olney Enterprise. “What is a bigger factor in people’s lives [than] helping them bring their child into the world?”

Some board members pushed to pause the project, but Lovett said it was the “critical break point” for an opportunity that wouldn’t come around again.

Taylor was devastated. She’d built up a small but steady stream of patients who wanted to deliver with her at their local hospital, and she knew the challenges they would face if they had to travel long distances for check-ups and delivery. She worried about the babies she’d end up delivering in the emergency room, without proper equipment or staffing, let alone a second operating room.

“It’s just common sense that limiting access for women’s health is never a good idea,” she told the Tribune. “This was not my decision to make, I realize, but I guess money speaks louder than dead babies will.”

After 100 years of delivering babies at Olney Hamilton Hospital, the last one came in a hurry. Taylor lives six minutes from the hospital — and she made it there in three — but she barely had time to get gloves on before she was catching the newborn.

“It worked out perfectly,” she said. “And it made me so paranoid, because it’s the last delivery we’d get to do.”

On June 1, Olney Hamilton Hospital stopped delivering babies. They’re still a year out from opening the new hospital, but with everything costing more than expected, they decided to wind down the exorbitantly expensive service line early.

No longer keeping a nurse anesthetist on call around-the-clock will save them half a million dollars a year, Lovett said. They’ve used some of that to hire a gynecologist to provide other women’s health services.

“We’ve decreased one service and added five more, because the population will support those other five,” Lovett said. “But they don’t see that,” he added with frustration.

The hospital board has faced a lot of blowback over the last year, not only for cutting labor and delivery, but also going back on their promise not to raise taxes. Last August, two months after the meeting to cut obstetrics, the board voted to increase the tax rate from 19 cents to 45 cents per $100 of property value to cover the district’s bond obligation amid the wind farm funding gap.

Lyndsey Miller was the only board member to vote against the tax hike, but it didn’t stop people around town from confronting her about the sudden changes to the plan.

“You wake up at 2 a.m. and you’re like, ‘How do I fix this?’” Miller said. “You feel such a responsibility that the town trusted you with this job, and you feel like you’ve failed them. We’ve lost a lot of trust, and I can’t say I blame them.”

Miller and other board members has been working with Tom Parker, the head of the town’s economic development corporation, to find solutions, looking into stand-alone birthing centers, historic tax credits, any revenue streams they haven’t yet considered.

For Parker, the work he and others have put into attracting industry, jobs and housing to Olney is meaningless without a place to give birth.

“If you don’t have a high school and a hospital where you can have babies, that town’s not going to get up off its knees,” Parker said. “It might have been something once, but if you don’t have youth, if you don’t have new babies, you don’t have hope.”

Having a place to give birth is key to attracting the young families rural Texas needs to sustain the agriculture, energy and tourism economies the rest of the state — and the country — relies on, according to a group of more than 50 local leaders, maternal health advocates and rural hospital CEOs who pled their case to the state Legislature this session, asking them to bring rural labor and delivery units back from the brink.

Lawmakers adopted some major proposals — in addition to $50 million in new grants to stabilize hospitals facing closure, rural hospitals that deliver babies can now collect an increased reimbursement on all Medicaid services, not just obstetrics, to incentivize hospitals to keep delivering babies.

It’s the most significant rural health legislation in a generation, Henderson said.

But rural hospitals can’t wait around for once-in-a-generation investments to decide how to pay their bills each month. While the Legislature was debating these proposals, both Olney and a South Texas hospital stopped delivering babies, and several others are facing such significant budget shortfalls it is nearly impossible to continue, Henderson said.

“When you have to make hard decisions, that seems to be the service line that gets suspended first,” he said. “But when you stop taking care of moms and babies, you start circling the drain and you give them a reason to leave your community.”

Hospitals need sustainable income to provide sustainable services, Lovett said. Windfalls from the state, or the $50 billion Congress allocated for rural hospitals earlier this year, sound good, but it’s impossible to build a budget off of them, he said.

“We don’t have that money in the bank,” Lovett said. “It gets diluted and watered down and a tiny little portion gets to our bank account, eventually, maybe. The promises from the domed capitals don’t always make it to the people.”

Taylor never thought it would be this hard to find a place that would let her perform the full range of medical care she’s trained for.

She’s still offering prenatal care in Olney, but transferred her patients to the hospital in Seymour 30 minutes northwest of Olney, for delivery. She spent more than one night sleeping in a trailer behind the hospital after an overnight delivery before schlepping back to see her full roster of patients.

But then Seymour hired a full-time provider who also wanted to deliver babies, and the small hospital, from the same era as Olney, couldn’t support both. Taylor transferred her patients again, this time to Jacksboro, 40 minutes southeast of Olney.

It’s a newly renovated hospital, with two operating rooms, and she’s so grateful to have a place to deliver. But it’s a slog. She wakes up most days at 3 a.m. to stay ahead on paperwork. Since she’s not a full-time staffer at Jacksboro, she pays her own medical malpractice insurance.

Taylor worries constantly about her patients racing to the hospital on winding backroads; her husband worries the same about her. For her sake, but more for her patients, she just wants to be back in Olney.

In September, the skeleton of the new building went up downtown, across the street from the historic old hospital. It’s designed to allow for a second operating room to be added on if the board ever finds a way to return labor and delivery services to Olney.

Miller, the board member, is committed to making it work, eventually. She thinks about her own experience giving birth at Olney Hamilton Hospital, five minutes from home, in an ice storm. She thinks about the women who won’t have that option. She thinks about her three-year-old daughter who might want to raise her family in Olney one day.

“I don’t want to have to look her in the eyes and say, ‘I’m sorry. You have to drive 45 minutes because I couldn’t figure this out when I was on the board,’” she said. “You just have to keep fighting. You have to keep trying.”

This article first appeared on The Texas Tribune.