More patients in the wards have not necessarily meant more money in the bank for Hennepin County Medical Center, which announced Wednesday that it will make staff cuts next year to address looming financial shortfalls.
Payments by the state Medical Assistance program don’t fully cover costs, and the hospital has seen an uptick in patients covered by the program along with other financial headaches, said Scott Wordelman, HCMC’s senior vice president of ambulatory delivery and support services.
“Based on what we’re seeing this year — wages, the demand for health care, the cost of benefits, the cost of pharmaceuticals, the cost of supplies — they’re all going up at a rate a little bit higher than general inflation,” he said. “Frankly, the payments we receive don’t keep pace with that inflation.”
How many jobs will be trimmed — either by attrition or layoffs — will be determined by next March for the county’s safety net hospital.
The announcement caught some off guard, considering HCMC’s recent growth, rebranding campaign, and ongoing construction of a $225 million outpatient and specialty center across from the main hospital in downtown Minneapolis.
Publicly available data offer a mixed picture of HCMC’s finances and patient activity levels.
HCMC patients spent fewer days in lucrative specialties such as cardiac care and obstetrics in 2014 than in 2011, according to the Minnesota Department of Health’s Health Care Cost Information System. Over the same period, patient activity increased in lower-margin specialties such as chemical dependency and mental health care.
Expanded health insurance access under the Affordable Care Act, also known as Obamacare, helped reduce the hospital’s uncompensated care from $64 million in 2011 to $60 million in 2014, records show. But HCMC’s operating margin nonetheless shrank from 1.7 percent to 1.2 percent during that time.
And HCMC posted an operating loss in the 2016 fiscal year, according to a statement from spokeswoman Christine Hill.
Wordelman said the new Ambulatory Outpatient Specialty Center is funded by bonds — largely separate from the operating budget — and is part of the strategy to stabilize HCMC’s finances by enticing more privately insured patients.
“We’re never going to abandon our core mission,” he said, “but we actually have had success in growing our commercial business.”