Hennepin County Medical Center faces closure risk amid rising uncompensated care, insurer debt, federal cuts

A central safety-net hospital is warning of a narrowing financial runway

Leaders of Hennepin County Medical Center (HCMC) and Hennepin County officials have told state lawmakers the Minneapolis hospital is at risk of closing without additional, sustained funding. The warning comes as the county-run system reports escalating uncompensated care, delayed payments from a major insurer in rehabilitation, and anticipated federal policy-driven reimbursement reductions beginning next year.

HCMC operates as a safety-net provider, delivering care regardless of a patient’s ability to pay, and houses a Level I adult and pediatric trauma program that receives complex emergency cases from across the region. Hospital leadership has described the current situation as a “critical mass” moment in which short-term cuts have not closed the longer-term gap.

Uncompensated care has more than doubled since 2020

Hospital and county leaders have attributed a major share of the pressure to a sustained rise in uncompensated care—services provided without full reimbursement because patients are uninsured, underinsured, or otherwise unable to pay. Officials reported uncompensated care growing from roughly $40 million in 2020 to about $104 million in 2024. That shift, they said, coincides with broader post-pandemic coverage instability and higher medical operating costs.

In testimony to legislators, hospital officials said they had already cut $50 million from the 2026 budget and planned an additional $150 million in reductions by year’s end. The hospital’s leadership has argued that continued reductions risk undermining access to services that are difficult to replace elsewhere in the metro area, particularly trauma and other high-acuity care.

Program reductions and staffing cuts are already underway

In late January, the health system announced it would close or scale back five programs and cut approximately 100 positions as part of a cost-reduction plan. The affected areas included senior and extended care services, chiropractic and acupuncture, sleep clinic services (with screening shifting to primary care), interventional pain services (with some treatment shifting to primary care), and weight-management services. Officials have said patients would be referred to other providers where services are ending.

Unpaid insurer obligations add a liquidity threat

Separately, the system has asserted it is owed significant sums by UCare, a nonprofit managed-care organization undergoing a state-supervised wind-down and member transition. In court proceedings tied to the rehabilitation process, Hennepin Healthcare representatives said UCare owed the system about $115 million and had stopped making payments in late December. Multiple large Minnesota health systems have sought to participate in the rehabilitation case, arguing repayment timing and prioritization could affect provider stability.

Policy changes and a proposed local tax are part of the 2026 legislative debate

County and hospital leaders have also warned of more than $170 million in annual reductions beginning in 2027 tied to federal changes enacted in 2025. In response, Hennepin County officials have advanced a proposal for a permanent 1-cent county sales tax, presenting it as a mechanism to stabilize the hospital’s finances and preserve services. State lawmakers have not adopted the proposal, and the issue is now part of broader negotiations over health care financing and local revenue authority during the 2026 session.

Key pressure points cited by hospital and county leaders include rising uncompensated care, delayed insurer payments, and impending reimbursement reductions in 2027.

• Budget actions reported in 2026: $50 million cut already implemented; $150 million additional cuts planned.
• Uncompensated care trend cited: about $40 million (2020) rising to about $104 million (2024).
• Insurer arrears cited in court proceedings: approximately $115 million owed to the system.