Hennepin County Medical Center’s recent decision to pull the plug on plans for a $53 million outpatient clinic in Minnetonka shows how precarious the task of balancing its multiple missions has become.

“It’s a battle for us,” Hennepin County Board Chairman Mike Opat said of HCMC’s perpetual scramble to treat the indigent and train the next generation of doctors while decreasing costs, increasing revenue and providing cutting-edge patient care. “We’re going to have to start over here to a certain extent and decide what is our strategy behind buildings.”

Opat and County Commissioner Jan Callison sit on HCMC’s board, which decided to scrap the clinic during a closed-door meeting late last month. Opat and Callison say they are disappointed but eager to find an alternative that will help the hospital lure more privately insured patients into its clinics.

HCMC has satellite clinics in other suburbs, most of them inner ring. But the goal of a new Minnetonka clinic had been different: to provide outpatient surgery and tap the rich base of privately insured patients in the western Twin Cities suburbs who don’t venture downtown for care.

But HCMC’s subsequent review showed that the proposed clinic was too far west, too big and unlikely to entice those with private insurance.

Like health care administrators everywhere, Hennepin County seeks ways to stay competitive amid broad, tumultuous change flowing from the federal government. Controlling costs and expanding the mix of patients are key. And because the hospital’s mission is to treat everyone, even the uninsured, it navigates a more challenging course than hospitals with a higher percentage of privately insured patients — and the higher reimbursements they bring.

“Health care is not for the faint of heart,” Callison said.

With a budget of $732 million this year, HCMC’s operation is massive. Of the 150,000 patients who visit the hospital annually, about 46 percent are on Medicaid, the program that reimburses hospitals at the lowest rate and actually costs the hospital money. At other Twin Cities hospitals, only about 10 percent of patients are on Medicaid, according to an HCMC spokesman.

Another 26 percent of HCMC patients are on Medicare, and only 15 percent are privately insured. About 8 percent have no insurance.

Unlike private hospitals, Twin Cities health care analyst Allan Baumgarten said, HCMC fights the stigma of being a public hospital and the hurdle of getting new, privately insured patients downtown. Removing the Minnetonka clinic from plans “is in a sense back to the drawing board if they’re still interested in getting a better mix of” insurance carried by patients, he said, adding “I think it’s a huge challenge for them.”

The consequences of failure could be costly. “We’re a public safety-net hospital. That doesn’t mean we won’t do our best to diversify the patient base,” Opat said. “The alternative is to subsidize HCMC with the property tax. We’d rather subsidize with patients with better insurance.”

‘Not the best place ...’

The proposed 121,000-square-foot Minnetonka clinic was to have been built at 10955 Wayzata Blvd., just east of Hopkins Crossroads on Interstate 394. The clinic plan stemmed from a suburban strategy driven by former CEO Arthur Gonzalez, who left last year. New CEO Jon Pryor started Monday, days after the Minnetonka clinic decision was made.

Scott Wordelman, HCMC’s vice president of ambulatory administration, said research showed the clinic wouldn’t work that far west, but he declined to call the decision against it as a step backward. “When we got all of our facts together, this was not the best place to use our resources to achieve our growth goals,” he said. “There are better options, likely closer to the core.”

Providing outpatient surgery, which is cheaper than inpatient, was another goal of the Minnetonka clinic. “We’re looking at ways to reduce the cost of care — that’s the endgame we’re after,” Wordelman said.

Finding the right prescription

HCMC already has made big changes aimed at reducing costs. In late 2011, Hennepin Faculty Associates, the independent physicians group, merged into Hennepin Healthcare System Inc., the public subsidiary that runs HCMC’s trauma and academic center downtown, as well as primary-care clinics in Brooklyn Center, Brooklyn Park, Richfield, Minneapolis and St. Anthony, as well as clinics at Wal-Marts in Bloomington and Eden Prairie plus a neurology clinic in Chanhassen. The county plans to open another primary-care facility in Golden Valley and already is in preliminary talks for another location.

In the Minneapolis core, adjacent to the main hospital, HCMC plans a new free-standing outpatient clinic so patients can visit doctors without descending into the bowels of the hospital as they do now. Providing a better experience for outpatient and primary care is critical to building patient loyalty for inpatient stays, hospital officials say.

“We have outstanding providers here, so we want to create an experience that matches the quality,” Wordelman said. “Trying to find the right buildings and models in which to do that is core to our planning.”