The Brief Hennepin Healthcare expects to end this fiscal year $36 million in the hole. The health system’s financial woes are in large part due to the number of uninsured and under-insured individuals that they serve, and low Medicaid reimbursement rates. HCMC has lost money seven out of the last eight years.

One of the state’s biggest hospitals is in dire financial straits, as executives at Hennepin Healthcare say Medicaid reimbursement rates and rising supply costs have pushed the hospital system to its brink.

Hennepin Healthcare financial struggles

What they’re saying:

Hennepin Healthcare CEO Thomas Klemond says the Hennepin County Medical Center (HCMC) prides itself on treating low-income patients who don’t have insurance or rely on Medicaid, but with low reimbursement rates and rising costs, it’s getting harder to support the hospital’s mission.

Klemond said the end of the COVID-19 Public Health Emergency de-enrolled many people from Medicaid and more patients lost insurance.

The change accounted for a $67 million decline in revenue compared to 2022, with 10% of patients now uninsured or under-insured – up from 6% in 2022. Leadership says they believe this is the new normal.

When asked if the hospital faces closure if the situation doesn’t change, Klemond said: “I think we have to say that’s a real possibility.”

HCMC not alone

Dig deeper:

The Minnesota Hospital Association (MHA) reports that 67% of hospitals across the state had negative operating margins in the first half of 2023.

“It’s not one single thing, it’s a thousand paper cuts,” said Vice President of Finance Policy at MHA Joe Schindler.

Schindler says dropping insurance reimbursements is killing health systems, with Medicare and private payers alike not matching rising costs.

HCMC reports supply costs have increased 8% in recent years.

Staff and service cuts likely

Big picture view:

While HCMC says it is trying to avoid cuts, they admit it’s likely unless they receive a cash infusion.

In a statement, the union that represents nearly 1,400 Hennepin Healthcare employees said they strongly oppose any cuts, saying in part:

“Hennepin Healthcare executive leadership should take responsibility for the financial ‘crisis’ they helped create… We already work short-staffed, underpaid, and overstretched—and we strongly oppose any frontline cuts to jobs, wages, or benefits.”