Children's Minnesota CFO, vocal in Blue Cross dispute, steps down

The chief financial officer at Children's Minnesota resigned last week, three weeks after the state's largest pediatric hospital settled an unusually public contract dispute with the state's largest health insurer.

Minneapolis-based Children's issued a statement Tuesday confirming that Todd Ostendorf stepped down on July 28, but the statement did not include an explanation. Ostendorf, who couldn't be reached Tuesday for comment, came to Children's as CFO in April 2016.

After the contract dispute between Children's and Eagan-based Blue Cross and Blue Shield of Minnesota went public in March, Ostendorf frequently provided public comments explaining the hospital's side of the negotiation.

Blue Cross pushed for cuts in Medicaid payment rates that threatened the hospital's long-term viability, Ostendorf told the Star Tribune in March.

"Ostendorf made significant contributions during his time at Children's, bringing balanced, mission-centric financial guidance to every conversation he was in," Children's said in a statement. "We thank Todd for all he has done for Children's and for his steadfast dedication to doing what's best for kids."

Becky Woitalewicz will serve as acting CFO. In a notice to bondholders last week, Children's said that Woitalewicz has been with the organization for 17 years.

The contract dispute between Children's and Blue Cross was unusual for including a social media campaign and newspaper ads, as well as its long duration. Insurers and hospitals periodically struggle to negotiate contract agreements, but they usually settle before patients are affected.

In the case of Blue Cross and Children's, however, the parties could not come to terms before a July 4 deadline, so the pediatric hospital was relegated to out-of-network status for Blue Cross subscribers for a few days last month. That meant significantly higher out-of-pocket costs for people with Blue Cross coverage who used Children's, although exceptions were made for many children in the midst of ongoing treatment.

Ultimately, state Attorney General Lori Swanson helped negotiate a settlement, which was announced July 7.

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck