Push to save HCMC from financial crisis

Lawmakers at the Minnesota State Capitol received new updates Tuesday on the plan to address Hennepin County Medical Center’s looming financial crisis.

Former Health Commissioner Jan Malcolm, who is now serving as a senior adviser to Gov. Tim Walz on hospitals and health care systems, testified before the Senate Human Services Committee on the challenges facing HCMC and other hospitals around the state.

Right now, HCMC faces a budget deficit of more than $50 million, and Hennepin Healthcare, the nonprofit that runs the hospital, warns it could close down later this year.

One major issue for HCMC is patient care going unpaid. Records show unpaid bills cost the hospital more than $100 million in 2024, up from $40 million in 2020.

Hospital representatives say the dissolution of UCare, a reduction in Medicaid enrollment and rising drug costs have also contributed to HCMC’s financial woes.

To make up for lost revenue, HCMC has already made cuts by reducing patient beds, freezing 401(k) contributions, cutting travel expenses and laying off staff.

The pitch to keep HCMC solvent

A handful of solutions have been put forward to save the hospital, including a bill to redirect sales tax revenue currently used to pay off the bond for Target Field and increase the rate from 0.15% to 1%.

Malcolm emphasized HCMC’s critical role as a Level 1 trauma center that doubles as a safety net for the most vulnerable patients in Hennepin County and beyond.

“It’s one of the only hospitals in the health care system that always says yes to patients and community needs, and that has come under some discussion as to whether that’s a sound business strategy, but it is a fact of their operating philosophy that all have come to rely on, to some degree,” Malcolm said.

Sen. Mark Koran, R-North Branch, pressed Malcolm on how she believes Hennepin Healthcare should be managed to prevent future financial catastrophe.

“We are all going to be asked … what’s going to be the short-term, mid-term and long-term solution, but one of it’s going to be with who’s going to govern it?” Koran asked.

Malcolm said an independent hospital board worked well when it was first conceived but had become “more politicized” in recent years. In August, the Hennepin County Board of Commissioners voted to dissolve the hospital board and temporarily take over governance of HCMC.

“I think one of the suggestions — and I’m glad to see that the county itself has said it intends to reestablish a community board — my hope would be that it would be a professional board made up of people with the requisite skillsets to manage a complex health care organization,” Malcolm said.

Committee members say they plan to present a proposal on Wednesday.