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HCMC struggles with budget problems
by Dan Olson, Minnesota Public Radio
April 22, 2003

Hennepin County Medical Center is in budget trouble. A task force has been named by the county board to recommend some long-term changes in HCMC's operations. (Photo courtesy of Hennepin County)

Hennepin County officials say federal and state budget cuts are forcing them to reduce services at their medical center. Hennepin County Medical Center in downtown Minneapolis is the state's largest public hospital. A growing number of its patients don't have medical coverage and don't qualify for state or federal medical programs. County officials approved a plan Tuesday they hope will pull the medical center out of its financial tailspin.

Minneapolis, Minn. — The county board named a 14-member task force to suggest ways the Hennepin County Medical Center can become solvent over the long term. In the short term, medical center administrator Jeff Spartz says HCMC will need to make changes to address a projected deficits of more than $10 million a year for the next several years.

There are 42 public hospitals in Minnesota. Red ink at all of them is high, and rising, because of uncompensated care costs. Those are costs the hospitals are incurring because a growing number of patients don't have health coverage and don't qualify for welfare.

HCMC is the state's largest public hospital. It employs more than 3,800 people and has a budget of $418 million. Jeff Spartz says HCMC serves 133,000 patients a year. One way to save money, he says, is to reduce from five to four, or even three, the number of days each week those patients can schedule appointments with doctors.

The result, Spartz says, is some patients will have their medical appointments delayed.

It's not a good way to practice medicine, but it's the medicine of last resort for a lot of places, where you're just overwhelmed by the number of patients. - Jeff Spartz, HCMC

"Some might end up getting ill to the point where they have to come to the emergency room to be treated. Everybody who comes to the emergency department in an unstable condition must be treated, as a matter of federal law," says Spartz.

Cutting clinic days might save money at one end of the equation but may run up costs elsewhere, since most emergency care is more expensive than inpatient or outpatient treatment.

Spartz says the most draconian money-saving measure is to turn away some people who can't pay. He says a growing number of people coming to HCMC have no health coverage, and many don't qualify for welfare. The result is many of those without health coverage get sicker, and end up coming to the emergency room where they do get care.

"It's not a good way to practice medicine, but it's the medicine of last resort for a lot of places, where you're just overwhelmed by the number of patients," says Spartz.

Cutting services at HCMC has a ripple effect. Gary Cunningham is director of Pilot City Medical Center on Minneapolis's north side. He says his is the clinic of last resort for people -- mostly women and children -- who can't get medical care at HCMC. He says about 40 percent of the patients they see have no medical coverage.

"When we pick up costs for indigent or uncompensated care, those costs get charged back into the system. Just like anywhere else, somebody's going to pay. It's just a matter of how and when, and whether we have more severe health disparities because of the legislation," says Cunningham.

Some of Hennepin's uncompensated medical costs could be picked up by county taxpayers. However, medical center administrator Jeff Spartz says legal limits prevent the county from taxing residents for the entire amount.

Officials say the long term solution for the county's medical center financial problems is to change the way it does business. Spartz says a public hospital in Denver attained solvency by shedding some of its services.

"Denver Health, which was near bankruptcy about six years ago, spun out its outpatient clinics into what's known as a federally-qualified health care operation, which gets better rate reimbursement. They made changes in their other operations and last year, they turned a profit of nearly $10 million," says Spartz.

Suggesting long-term changes to Hennepin County Medical Center's operation is the assignment handed to a task force approved by county commissioners. Task force members include representatives from business, labor, and community groups. The task force will suggest changes by the end of the summer.

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