Because of increasing operating costs and decreased state funding, the University of Texas Medical Branch at Galveston may cease operating the Austin Women’s Hospital located at University Medical Center Brackenridge, a UTMB spokesman said.

Legislative budget cuts reduced UTMB’s budget by $114 million over the next two years. Spokesman Raul Reyes said the health system is responding by reducing its budget by 6.1 percent for the 2012 fiscal year.

“We are being more prudent in the way that we manage our costs and are implementing measures to ensure financial success,” Reyes said in a statement. “It is projected that UTMB will sustain a $1.5 million loss on the Austin Women’s Hospital contract for fiscal year 2011. We have to mitigate those losses.”

Reyes said one cause for the projected loss is a lower-than-expected number of patients.

“We staff based on the assumption that there will be a certain level of patients coming in the door, and we don’t have that level,” Reyes said.

Central Health, formerly known as Travis County Healthcare, owns University Medical Center Brackenridge. In 1995, it leased the hospital to the Seton Healthcare Family, a Catholic health care system.

After Seton could no longer provide contraceptive and sterilization services because of the Catholic Church’s Ethical and Religious Directives, the health department took back the fifth floor of the Brackenridge building in 2002 to open a “hospital within a hospital” that could provide those services Seton could not, according to Catholic Health East, a Catholic health system.

According to the UT System, in 2003 the city of Austin and UTMB reached an agreement for UTMB to run the Austin Women’s Hospital on the fifth floor of University Medical Center Brackenridge.

If UTMB does decide to withdraw from the hospital, there are currently no plans for Seton to take over the fifth floor for its own uses, said Seton spokeswoman Adrienne Lallo.

Reyes said no decision regarding UTMB’s withdrawal has actually been made.

“We’re considering our options,” Reyes said. “We just want to make sure we do the financially responsible thing for UTMB and Texas taxpayers.”

Printed on Thursday, August 4, 2011 as: Austin hospital put on chopping block