University Health is spending $5.2 million to buy a two-story office building at 5107 Medical Drive, the third property the public hospital system has scooped up near the former CHRISTUS Santa Rosa Medical Center campus in San Antonio's Medical Center area. The Bexar County Hospital District Board of Managers has already approved the deal, and the district plans to close on the 27,494-square-foot building on December 1, 2026.
The building's current tenant is expected to vacate by the end of 2026, according to the San Antonio Express-News, which first reported the purchase. The Bexar County Hospital District's own August 25 board agenda identifies the seller as San Antonio Real Estate Investments, L.L.C., and includes approvals for related construction, furniture, fixtures, equipment and IT infrastructure spending tied to the acquisition, according to University Health. The property sits on 2.69 acres and includes parking, per the same account.
University Health plans to spend another $8.3 million renovating the building once it takes ownership. The first floor will house women's and children's services, while the second floor is slated for primary care, with several clinics relocating there from leased locations elsewhere in the city, the Express-News reports.
Why University Health Keeps Buying Near Babcock Road
The Medical Drive purchase is the latest piece of a much larger consolidation effort. University Health purchased CHRISTUS Health's shuttered Santa Rosa hospital for $71 million after the facility closed in April, and it also bought two adjacent medical office towers at 2829 and 2833 Babcock Road for $50 million. Those towers, totaling 200,833 square feet, were purchased from San Antonio MOB NW Medical Tower LLC and will be connected to the hospital campus by skybridge, according to San Antonio Report. The towers, built in 1986 and 1992, had already undergone $5.2 million in common-area upgrades before the sale, per Community Impact.
The old Santa Rosa hospital itself is being renamed Babcock Specialty Hospital and is set to reopen in 2027 following a $20 million renovation of the facility, per the Express-News. State regulatory filings reviewed by My Neighborhood News put the interior renovation cost at $33.65 million across 157,619 square feet, with construction scheduled to run from Friday through March 15, 2027. Once complete, the facility will operate as a 40-bed acute inpatient hospital with a 15-bed emergency department projected to handle 18,000 to 20,000 annual emergency visits under management by SCP Health, according to staffing documentation cited by PracticeMatch.
A System Stretched Thin on Beds
University Health President and CEO Edward Banos has said that moving patients to the former CHRISTUS facility would free up space for higher-acuity patients at University Hospital, the system's flagship. The need is significant: University Health receives more than 10,000 annual inquiries about transferring patients into its system but accepts only about 53% of those requests, a gap the Express-News attributes to bed shortages at the flagship hospital.
The medical towers acquired on Babcock Road will house specialized outpatient clinics, part of a broader push to centralize patient access and improve operational efficiency across the system. That strategy allows University Health to shift lower-acuity specialty and outpatient services out of its main hospital, freeing higher-acuity trauma and surgical capacity for patients who need it most, per the Express-News.
Two New Hospitals Also Getting Bigger Before They Open
The Medical Center buying spree runs alongside a separate, even larger build-out: University Health's construction of two new five-story hospitals on the south and northeast sides of San Antonio, both on track to open in early 2027. The Bexar County Hospital District Board of Managers recently authorized an additional $90 million for extra patient beds and exam rooms at the University Health Palo Alto and University Health Retama campuses, using $60.7 million in construction budget surplus and $30 million in reserve funds, according to San Antonio Report.
Banos said the $90 million decision followed analysis of expected patient care volumes and continued population growth. That spending will push University Health Palo Alto's final capacity to 227 beds and University Health Retama's to 167 beds once additional bed finish-outs are complete in 2028, per University Health. Both community hospitals are still scheduled to open initial phases in early 2027 before those extra 80 beds come online.
The city of San Antonio's Strategic Framework Plan projects Bexar County's population will grow by 1.1 million residents by 2040, a demographic surge cited by the San Antonio Express-News as a driving force behind health systems' capacity expansions countywide. University Health now operates on a nearly $4 billion annual operating budget overseen by Bexar County commissioners, who review the public hospital district's property tax rate and multiyear capital plans, according to Texas Public Radio.
Competitors Racing to Fill the Gap
CHRISTUS Santa Rosa's closure didn't just create an opportunity for University Health — it also pulled dozens of acute-care beds out of the Medical Center area, prompting a response from rival Baptist Health System, which announced a $20 million build-out at St. Luke's Baptist Hospital to expand inpatient space and absorb capacity demands left behind. University Health's expansion program, which now totals $1.5 billion by the Express-News's count, aims to provide care closer to home for more Bexar County residents as the region grows.
Banos took over as University Health's president and CEO in mid-2024, succeeding longtime executive George B. Hernández Jr., who led the public system for nearly two decades and oversaw major projects including the Sky Tower before handing the reins to Banos. Alexia Massoud contributed to the Express-News report on the Medical Drive purchase.
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