‘It was just shocking’: Rainbow Health workers push for answers on abrupt Minneapolis shutdown

Rik Kutcher moved to Minnesota three decades ago from a part of the country he says provided almost no support for people living with HIV — a diagnosis that, at the time, felt like a death sentence while being shrouded with stigma.

Kutcher credits his longevity to the help he found in the Twin Cities from groups like Rainbow Health, a nonprofit agency in Minneapolis providing health and social services for LGBTQ clients. Rainbow Health abruptly shut down last week.

The agency connected Kutcher with everything from addiction treatment and housing assistance to temporary financial help, all critical to his long-term recovery.

He also found employment at Rainbow Health, which means Kutcher is among dozens of former workers who say they can’t understand what drove the financial meltdown at the nonprofit.

“That moment when they told us that there was nothing — and we were finished by the end of the day — was shocking,” Kutcher said.

Rainbow Health was created about six years ago in the merger of two nonprofits, including the Minnesota AIDS Project, which dates back to the early 1980s.

It wasn’t a clinic where patients would go to see their doctor, Kutcher said, but home to a variety of health and social service programs — everything from HIV testing and a preventive medicine pharmacy to financial assistance and case management. The nonprofit added behavioral and mental health services, as well, with some 20 practicing psychotherapists when Rainbow Health closed.

“We, as a community of folks affected by HIV, often are dealing with poverty, addiction, isolation,” Kutcher said. “It doesn’t affect everyone this way, but it affects many.”

Rainbow Health ran the only program in Minnesota where HIV patients could tap federally funded Emergency Financial Assistance for rent, utilities and certain medical expenses. The state Department of Human Services (DHS) said about 1,500 people accessed this help via Rainbow Health between July 2023 and May 2024.

“At DHS, implementing rapid solutions to assure basic needs for people with HIV, like those addressed with Emergency Financial Assistance, continues to be a top priority,” the department said. “DHS is identifying other possible community resources for support while also prioritizing finding a solution to redirect DHS resources that had been contracted to Rainbow Health.”

Hennepin County, which partners with the state on this program and others funded by the federal Ryan White act, said in a statement: “At this point we do not have any information that would confirm that there is missing money. ... We are focused on working with DHS and Rainbow Health to ensure the continuity of services for clients impacted by this closure.”

Therapists and their patients have experienced a significant rupture, as well, said Lee Start, one of about 20 psychotherapists who worked at Rainbow Health. Some clients likely didn’t know about the closure, Start said, and have been showing up for appointments.

“This was all very, very sudden and shocking,” Start said during a news conference Monday. “I had to figure out how to be able to let my clients know where I’m going to end up next. ... I can’t just take their info with me, that would be against my licensure.”

Kutcher and Start joined other workers represented by SEIU Healthcare MN & IA during the Monday news conference to describe how the closure is impacting clients as well as their livelihoods. The union is pushing for negotiations with Rainbow Health’s board of directors to make sure workers are compensated for unused PTO benefits and receive a final month’s worth of pay, since contract terms call for a 30-day notice of termination.

Workers also want answers about exactly what went wrong.

Tax filings for Rainbow Health show the agency in 2021 had revenue of about $9.9 million and, after paying expenses for the year, a margin of $168,477. The following year, revenue increased to nearly $14 million. After expenses, the nonprofit had a margin of nearly $2 million in 2022.

It’s unclear whether the improvement stemmed from a grant announced in March 2023 by the philanthropic arm of Minnetonka-based UnitedHealth Group. The company’s charitable foundation said it would provide a three-year, $2 million grant to Rainbow Health to address disparities related to suicide, depression and anxiety among LGBTQ youth and young adults of color in Minnesota.

Even so, workers say obvious signs were emerging of significant financial trouble, including cash flow problems.

This spring, three or four workers were laid off, said Ash Tifa, the group’s legal services coordinator. It also was clear, she said, that the agency wasn’t meeting fundraising goals.

The chief executive’s compensation was linked in part to fundraising success, yet the CEO still got bonuses, alleged Uzoamaka Mclaughlin, a case management coordinator, during the union’s news conference. The CEO left Rainbow Health just a few days before the shutdown, according to union officials.

“As a staff, we have been made to take the fall that the board is supposed to take — in the sense that they knew that these moneys were not coming in, and they were still approving a lot of things,” McLaughlin said.

“We have been begging and demanding answers to the financial situation for months now. … Staff was aware there was serious financial turmoil,” Tifa said.

CEO Jeremy Hanson Willis and Board Chair Kathleen Brenk did not immediately return phone calls seeking comment. Following the news conference Monday, the Rainbow Health board of directors issued a statement saying it deeply regretted the abrupt and distressing closure.

“Due to growing and insurmountable financial challenges, including decreased funding, grants that were not renewed or fully funded and unforeseen cash flow issues, we reached a point where continuing operations were no longer possible,” the statement said. “The board chose to close the organization immediately to ensure employees receive compensation for the time they have worked since their last pay period.”

The directors added: “Rainbow Health’s mission has always been to support and empower our community, and we are heartbroken that we can no longer continue this important work.”

When Kutcher was diagnosed with HIV in 1986, he felt his life was over. He lived in Florida at the time and soon moved back home to Kentucky, but came to Minnesota in 1993 in hopes of accessing emerging AIDS treatments. He found critical help from doctors here, including revolutionary drugs introduced a few years later that helped transform HIV/AIDS into a chronic condition for many patients.

Groups like Rainbow Health provided him with services that wrapped around the medical care in crucial ways.

“By the grace of God, I’m 61 years old — I made it,” Kutcher said.

His work at Rainbow Health was an offshoot of the remarkable history of treatment improvements. Kutcher was focused on providing services and support for people aging with HIV.

The agency closing wasn’t actually that surprising, Kutcher said, considering how workers “had dealt with so much nonsense, for quite some time, and so much lack of transparency on our financial situation.”

Over the past six months or so Kutcher mentioned to friends a sense that the ship might be sinking, he said.

But he didn’t see the sudden shutdown coming at Rainbow Health, including its financial consequences for workers.

“What are we going to do?” Kutcher asked. For many workers, “we’re a paycheck away from not being able to pay the rent. … It was just shocking the way it was handled.”