Llano Regional Hospital: A New Beginning Amid Challenges

The Llano Regional Hospital (LRH), formerly under Mid Coast Health System, is undergoing a major transformation. With a renewed focus on independence and community-driven healthcare, the hospital is overcoming past challenges to forge a stronger future. The News sat down with President of the Llano County Hospital Authority Board, Pat McDowell, and LRH CEO Hatch Smith for an exclusive discussion about the past, present and future of the hospital and the journey that has led the institution back to its local roots. 

Llano Regional Hospital (LRH) is the newly rebranded Llano County Hospital, emphasizing its role as a regional hub serving Llano, eastern Mason, and San Saba counties. To bolster its relaunch, the hospital has partnered with Austin-based Groundswell Marketing, a healthcare-focused firm recommended by the Texas Organization of Rural and Community Hospitals (TORCH). A grant will help cover much of the firm’s services, ensuring a robust marketing strategy.

“It was a natural fit,” said Smith. “We are closely monitoring every penny and every dollar, but you can't really pinch pennies when it comes to marketing, rebranding, and PR. They’re doing the whole nine yards. It’ll be more robust than what we’ve had and more focused on Llano.”

The company sent out their first press release on Tuesday, April 1, announcing the rebrand with a fresh new logo featuring a rendition of the Roy Inks Bridge, stating "effective today, MidCoast Medical Center - Central Llano becomes Llano Regional Hospital and will no longer be part of the MidCoast Health System." 

Under Mid Coast’s leadership, Llano Hospital faced severe financial and administrative mismanagement that nearly crippled its operations. 

While Mid Coast Health System initially appeared to be a lifeline for Llano in 2021, their leadership ultimately created more obstacles than solutions. "Mid Coast was a godsend at the time—we had no one else," said McDowell. "We would have made the same choice again. But back then, we didn’t know what we know now." The relationship, which started strong, deteriorated over time as Mid Coast’s financial instability became apparent.
 

Decision-making was centralized in El Campo, far removed from the hospital’s day-to-day needs, leading to a disconnect that directly impacted patient care and financial stability. 

In early 2024, Mid Coast stopped paying bills and vendors, refusing to respond to emails or calls from those seeking payments. Instead of addressing the problem, they attempted to shift the burden onto the county, falsely claiming it was the county’s responsibility to intervene. This lack of financial accountability forced the hospital into a precarious position, ultimately resulting in Mid Coast’s withdrawal. 

Additionally, critical staffing cuts were made without a plan for sustainability, including the furlough of 12 employees in December 2024, among them CEO Hatch Smith, who continued working unpaid to prevent further collapse. The mismanagement extended to the failure to pay the lease for the Llano clinic at 102 W. Dallas St., which led to its eviction and the departure of its key provider, Dr. Horner. 

“There’s a perception that we’re putting in the same management that failed before, which is absolutely incorrect,” McDowell stated. 

The Hospital Authority Board chose Smith to continue his role as CEO because of his deep-rooted commitment to the community and his dedication to the hospital’s success. As McDowell points out, Smith was never truly aligned with Mid Coast; instead, he was a "Llano guy" who spent much of his time advocating for the needs of the hospital while butting heads with Mid Coast over decisions that negatively impacted the facility.

The leadership above Smith has been replaced by locals who are better attuned to the community’s needs, and when searching for the best person to take the hospital forward, it became clear that Smith wasn’t just the best choice—he was the only choice. His passion for the hospital comes from being a sixth-generation local with a family history tied to the hospital from its very beginning. 

As he says, "I just want to see it succeed," and if in the future someone else is better suited for the role, he is open to that. His commitment is driven by the feedback he receives from the community, with patients expressing how much it means to be able to receive care locally rather than having to travel far distances, like to Austin. 

The community is mourning the departure of Dr. John Horner, a highly respected rural physician. The hospital authority board had planned to retain him, but without an entity legally capable of signing a contract, negotiations stalled.

“We were committed to signing that contract, we just didn’t have an entity in place,” Smith explained. “He got concerned waiting and waiting. He’s the best rural doctor in the country. Period. But he had to make a decision for his family, and we understood that.”

Dr. Horner had given notice to Mid Coast and agreed to stay on through May, but when Mid Coast failed to pay the lease and was evicted from the Llano clinic, his departure was moved up to March 31. “We wanted to keep the clinic (on W. Dallas) but losing our provider and with capital being so precious, we didn’t think it was prudent to continue with an empty lease,” Smith explained. “We begged him to stay, but too much had happened, and we needed more time." 
 

The Mid Coast-affiliated clinic in San Saba has already closed, and the Kingsland clinic will go dormant in April due to provider Kara Hackert’s departure. While LRH aims to eventually open its own clinics in those areas, recruitment efforts for new providers are ongoing.

“There’s going to be a bit of dead time, but we’re getting it up as fast as we can,” Smith assured. “We’re working on creative solutions, even looking into using retired family practice doctors as a stopgap.”

Despite the challenges, Smith remains optimistic. “Some people will go get a provider somewhere else, but I’m confident that our new clinic will offer conveniences that no one else can match. We’re offering a personalized Llano system. For the first time in 15 years, this is truly a Llano hospital—not under Baylor, not under Mid Coast, but our own.”

Under Mid Coast, the hospital authority board was planning ahead. "We made a conscious effort in 2021 to put our own money into securing equipment," Smith said. "We raised funds to make sure that equipment never left. Mid Coast doesn’t get to take anything." This foresight ensured that once Mid Coast pulled out, Llano still had state-of-the-art technology, including one of the best rural hospital radiology suites in the region. "We have top-tier mammography, bone density, CT, heart scanning, and X-ray," Smith noted. "The only missing piece is ultrasound, and we’re in the process of hiring a tech to bring it back."
 

The hospital’s future includes the implementation of a 340B prescription drug program in partnership with Corner Drug, providing lower-cost medications while generating hospital revenue. “We’ve been wanting to do this for four years,” said Smith. “Now we can.”

New leadership is also stepping in to improve patient care, including Lewis Westerfield, a locally-based ER-trained internist who will oversee the emergency department. “He’s going to bring back that ‘good old country doc’ feel to the ER,” said Smith. “When people come in, they don’t feel well, they don’t want to be here, and we have to go the extra mile to provide excellent care.”

Another major priority is improving relations with local emergency medical services. “EMS is hugely important to our survival,” Smith noted. “We anticipate that the new leadership there is open to having a good, warm relationship with us.”

Funding remains an ongoing concern. “Without a hospital taxing district, the hospital will always need some level of support,” said McDowell. “We are one of maybe two rural hospitals in Texas that doesn’t have one. The more the community uses our services, the less dependent we are on outside funds. 

LRH will rely on philanthropy, county and city support, and strategic partnerships. The Llano Hospital Foundation, established in 1991 by Smith’s grandfather Philip Smith Jr., Dr. Dan J. Hoerster and Henry Buttery is being revitalized to fund essential medical equipment and facilities.

Meanwhile, the hospital authority board is funding payroll to ensure stability during the transition. “Employees could have gone somewhere else for more money, but they stuck with us because they know this hospital works,” said McDowell. Employees of the hospital are still technically under Mid Coast, but they have not paid the payroll since December. When asked about the possibility of future litigation, Smith said it would be up the county. 
 

“There are a lot of financial intricacies people don’t realize,” Smith said. “Hospitals in rural areas don’t make money. It’s a blend of public and private funding, and you have to balance it carefully. Swing beds, for example, were one of our best revenue sources in 2023, but because we did so well, the federal government is now asking for some of that money back. It’s a constant dance.”

LRH is currently in a transition phase, finalizing tax IDs and employment structures. Marketing efforts will ramp up in mid-April, with full operational independence expected by May 31, 2024.

“We’re getting all of our ducks in a row,” McDowell said. “By mid-April, you’ll see the changes. By the end of May, we’ll be fully independent.”

As the hospital embarks on this new chapter, leadership remains committed to proving that Llano Regional Hospital is here to stay, with a focus on quality healthcare, community support, and a vision for growth. “It’s going to get so much better when we have control, visibility on financials, and the ability to make our own decisions,” McDowell emphasized. “For the first time in years, our future is in our hands.”