Hennepin County Board abandons deal to help North Memorial Hospital pay to care for the poor

The Hennepin County Board cut short an agreement with North Memorial Health Hospital created to subsidize the cost of caring for residents without insurance and on medical assistance.

The board voted 5 to 1 on Jan. 2 to end a deal it initially approved in May that would have allocated $48 million to the Robbinsdale hospital by the end of 2024. It was designed as the first step toward a more permanent cost-sharing pact, but county and hospital leaders apparently could not come to terms.

In a statement, North Memorial officials said they were disappointed in the County Board's decision to "terminate our 2024 contract." County officials said the board decided to refocus its efforts on Hennepin Healthcare Systems, which runs HCMC.

Before the vote, board members noted the cost of the short-lived subsidy agreement with North Memorial and the ongoing financial challenges of HCMC, the county's primary safety-net hospital. The county budgeted $28 million to help HCMC pay for uncompensated care in 2024.

"We cannot be a blank check," Commissioner Kevin Anderson said. "I really hope we can find a way forward to formalize some kind of agreement between our organizations, so we can provide responsible care and be responsible with taxpayers' money moving forward."

Commissioner Jeff Lunde, who represents the First District, where North Memorial is located, was the only vote against ending the deal. He worries that without ongoing financial help North Memorial will be forced to scale back its charity care.

"It will be the people who can least afford it that will pay the price," Lunde said. "I believe strongly that the county needs to support people, no matter where they are in the county. In my district, North is our hospital."

North Memorial's statement noted the hospital "lost more than $60 million" in 2023 serving Hennepin County residents with government insurance, like medical assistance. The hospital received $24 million in 2023 from Hennepin County, under the deal the board voted to end, to offset the costs of that care.

"[T]his contract was vital to helping fund and support the health care needs of residents — especially those covered by government programs," the statement said. "The critical nature of this health care challenge only worsens with time, and we are determined to do all we can to take care of our community, but we will need help."

Dave Albright, the hospital's chief financial officer, said North Memorial also spent more than $15 million on uncompensated care for patients without insurance. He noted that 80% of the hospital's patients are from Hennepin County. Only about a quarter of patients have private insurance, with the rest on some type of government coverage.

"We are basically another safety-net hospital in town, like HCMC," Albright said.

Hospitals across Minnesota and the nation are facing tough financial times. The Minnesota Hospital Association reported in November that two-thirds of the state's hospitals are losing money and facing rising labor and supply costs.

A big driver of those budget challenges is the growing number of patients on Medicare and Medicaid, which pays significantly less than private insurance for care, the hospital association reported.