Hennepin Healthcare's crisis is a warning for safety net hospitals
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Hennepin County Medical Center is not only at "real risk of closing." It's a canary in the coal mine for safety net hospitals everywhere, experts say.
Why it matters: HCMC is Minnesota's largest emergency room, trains a raft of future medical professionals, and serves patients whose needs or incomes often prevent them from seeking care anywhere else.
- Experts predict it won't be the last hospital pushed to the brink by mounting threats to Medicaid funding.
"Everyone's standing at a precipice. It's just that Hennepin Health's precipice is much more precarious," University of Minnesota health care economist Sayeh Nikpay told Axios.
The big picture: Three in four patients seen by Hennepin Healthcare, which runs HCMC, are uninsured or publicly insured.
- That makes the system deeply dependent on Medicaid — and Medicaid faces $1 trillion in cuts from the One Big Beautiful Bill Act (BBB) starting next year.
Yes, but: Hennepin Healthcare's problems were mounting before those cuts.
- The system saw a 44% increase in unpaid patient bills between 2023 and 2024.
- That "breathtaking" leap likely followed thousands of patients losing Medicaid coverage as pandemic-era protections expired, Nikpay said.
Zoom out: The Big Beautiful Bill could accelerate this unpaid bill problem — and not only at HCMC — by limiting payments to hospitals and stripping Medicaid coverage from enrollees who don't meet new work requirements.
- Uncompensated care totals could rise nationwide by $443.4 billion over the next decade, the advocacy group America's Essential Hospitals projects.
Friction point: Recent federal cuts aren't entirely to blame. HCMC posted operating losses in seven of the last eight years.
- AFSCME Council 5, whose affiliate unions represent many HCMC workers, has previously blamed "poor management decisions" for swelling the hospital's deficit.
The intrigue: In 2022, state officials moved to shore up HCMC's finances by creating a "directed payment program" that boosted Medicaid funding to Hennepin Health.
- "If fewer people are on Medicaid, those directed payments now become less valuable," Nikpay said.
- The Big Beautiful Bill froze similar directed payment programs nationwide — and will effectively cut payments to hospitals in 34 states.
Threat level: "Those looming financial pressures are so great that we are going to see hospitals close in smaller communities, maybe larger urban centers. It would not be a surprise if that happens," Beth Feldpush, senior VP at America's Essential Hospitals, told Axios.
- Locally, North Memorial Health leaders — which runs a regional trauma center in Robbinsdale — have warned the system was "already under great financial strain" before the Medicaid cuts kicked in.
What we're watching: Hennepin County commissioners are asking state lawmakers for permission to repurpose a Target Field sales tax to support the hospital.
- Without it, HCMC "is going to close," commissioner Jeff Lunde told Twin Cities Business.
If that happens, HCMC's most vulnerable patients will likely need to travel farther — and pay more — for care, Nikpay said.
- "Minnesotans deserve healthcare, not austerity," AFSCME Council 5 executive director Bart Andersen told Axios in a statement, "and our union members deserve to work in a health care system that's well-funded."