Policy + Advocacy

A recent Minnesota Hospital Association analysis shows a troubling trend: financial losses are deepening for many state hospitals, some nearly tripling. This isn’t just an issue for hospitals and health systems—it’s a real threat to our statewide system of care. When hospitals struggle financially, Minnesotans might find it harder to get the care they need, where and when they need it. Addressing this issue swiftly is crucial to maintaining the quality and accessibility of health care across the state.

Findings

• Median hospital and health system operating margins declined from -0.5% in 2022 to -2.7% in the first half of 2023.
• 67% of hospitals and health systems in the MHA analysis had negative operating margins, which means they were losing money. This is an increase from 55% of hospitals and health systems that had negative margins in 2022.
• The costs of labor grew by 7%, and supply and service costs grew by 6%.
• Nearly a quarter of member hospitals and health systems reported labor costs rising by double digit percentage points, and a third of hospitals said supply and service costs had risen by more than 10% over 2022.

Urgent action is needed

Similar pressures have led to hospital closures and loss of services across the country, and nearly 30% of U.S. rural hospitals are facing closure. Minnesotans need the legislature to act to help stabilize our statewide health care system and protect patient access to care by:

• Increasing the Medical Assistance (MA) reimbursements to hospitals and health systems to better cover the cost of services provided to Minnesota’s low-income and underserved populations.
• Providing temporary financial support for hospitals and health systems to offset the high costs of patients boarding in hospital beds and emergency rooms.
• Providing funding for recruiting and retention efforts such as health care scholarship programs and health professional loan forgiveness.

Hospitals and nurses share the same goal — delivering safe patient care

Nurses, physicians, pharmacists, therapists, and staff from all disciplines work together as a team to support a culture of safety. Minnesota’s hospitals value the important and trusted role our nurses play in providing high-quality care. Every day, nurse leaders work with bedside and charge nurses to appropriately staff units based on individual patient needs and on the training, experience and capabilities of the care team.   

Nurse staffing plan resources

Legislators, hospitals, and the nurses’ union worked hard in 2013 to develop a lasting compromise that would provide for greater transparency and reporting of nurse staffing levels in Minnesota hospitals. Under the Nurse Staffing Plan Disclosure Act, staffing plans are shared with key hospital employees and annual nurse staffing plans are publicly posted. Hospitals are required to report on a quarterly basis how their actual nurse staffing levels and patient census compared to their nurse staffing plans. This information has been posted online since July 1, 2014 and is updated quarterly. Key data points available include average number of patients per 24-hour period and worked hours per patient day.

Landmark mental health legislation was passed by the Minnesota legislature in 2021. While this legislation addressed some gaps in our mental health system, there is more that can be done. More than 800,000 adults in Minnesota have a mental illness, and nearly 200,000 of those adults needed but did not receive mental health care. Hospitals and health systems are dedicated to fighting stigma and providing the most appropriate care to patients with mental illnesses, substance use disorders, and cooccurring conditions. Without continued policy emphasis and additional funding, access will remain inadequate; available workforce will still be insufficient; and the struggles to find appropriate, effective, convenient, and affordable services will continue to grow.

There is strong bipartisan recognition that mental health services are at a breaking point from unyielding demand for services and workforce shortages. One area of highest concern is the need to strengthen the continuum of care for adolescent mental health services that require residential treatment and homebased care.

MHA urges the legislature to build on its momentum by:

• Increasing the availability of Psychiatric Residential Treatment Facilities (PRTFs) that offer residential mental health services for adolescents who do not require inpatient services but still need a high level of care. 
• Seeking improvement of payment rates for mental health services. State and federal public health programs – including Medicare, Medicaid, and MinnesotaCare, as well as commercial health insurers – must increase reimbursement rates to mental and behavioral health. 
• Extending coverage of audio-only telehealth services. In 2021, the legislature expanded Medicaid and MinnesotaCare coverage for audio-only telehealth services through July 1, 2023, and directed the state agencies to conduct a study and develop recommendations on future coverage. 
• Funding additional Emergency Psychiatric Assessment, Treatment, and Healing (EmPATH) units, that use the emergency mental health care model. EmPATH units provide an alternative to an emergency room for individuals experiencing a mental health crisis, and are proven to reduce hospital admissions.

The 340B Drug Pricing Program has provided financial help to safety-net hospitals and clinics for over 25 years to manage rising prescription drug costs and preserve access to needed health care services. Under the federal 340B program, pharmaceutical manufacturers participating in Medicaid are required to sell outpatient drugs at discounted prices to eligible health care organizations that care for a large percentage of uninsured and low-income patients. This creates cost-savings opportunities for patients.

The 340B program is under attack.

• As a result of changes in reimbursement policies, the resources available through the program have significantly decreased.
• Despite the 340B program’s over 25-year track record of increasing access to care for vulnerable patients and communities, some including the pharmaceutical lobby, want to scale back or eliminate it. This would hurt patients while adding to the record profits of pharmaceutical companies.
• The pharmaceutical industry routinely overstates the amount of savings the program provides. In reality, less than 3%of the $457 billion in annual drug purchases made in the U.S. are even eligible.

The current health care workforce landscape in Minnesota and across the nation is dire. Minnesota’s hospitals and health systems have a current staffing shortage, with almost 10,000 open positions, and the future could be even more challenging. With an almost 250% one-year increase in job vacancy rates, exponentially rising labor and supply costs, and the need to rely on temporary staffing, there is an intense strain on the state’s hospitals and health systems.