Rural Hospitals Threaten to Cancel UnitedHealthcare

A dispute between rural Texas hospitals and the nation’s largest health insurers over historically low reimbursement could soon have an impact on healthcare access at small town hospitals.

The TORCH Clinically Integrated Network, which represents 45 rural and community hospitals across Texas, announced June 9 that it has formally notified United-Healthcare of its intent to terminate its provider agreements, citing reimbursement rates that it says are too low to sustain rural healthcare services.

The termination would not take effect until at least June 2027 for the primary network agreement, giving both sides time to continue negotiations. TORCH officials said they hope the move will bring UnitedHealthcare back to the bargaining table.

TORCH executive director Paul Aslin said some hospitals have not seen reimbursement rates change in a decade. TORCH has never before terminated or threatened to terminate a provider agreement, he said.

“We didn’t make this decision lightly,” he said. “But we cannot continue operating under contract terms that make it financially impossible to keep the lights on, staff our emergency rooms, and provide the care our communities need. Something had to give.”

He said TORCH members, including Olney Hamilton Hospital, “would have to move forward and cancel their individual agreements.” United Healthcare insurance holders would have until next June to find a new provider, he said. “My hope is that they will reengage with us, and we won’t have to walk away,” he said.

Last summer, the Olney Hamilton Hospital board of directors voted to discontinue maternity services at both the current hospital and the new hospital now under construction. At the time, hospital officials cited persistent financial losses associated with labor and delivery services as well as state regulations.

Rural hospitals receive as much as 44 percent less reimbursement than metropolitan hospitals for maternity and obstetrical delivery services under commercial insurance contracts, according to data obtained by Texas A&M University. The disparity is contributing to the growth of maternity care deserts across rural Texas, TORCH said in a statement.

TORCH also cited data showing rural hospitals are paid up to 53% less than metropolitan hospitals for emergency department visits under commercial insurance contracts. The organization claims it has spent more than 560 days attempting to negotiate a new agreement.

United Healthcare reported 2025 revenue of $447.6 billion and net earnings of $19 billion. It served about 50 million consumers last year, according to a Jan. 26, 2026 earnings report.