“Much of what influences our health happens outside of hospitals and clinics – in our schools, workplaces and neighborhoods,” said Dr. Rahul Koranne, president and CEO, MHA. “Just as our care teams devote themselves to meeting the needs of patients in the hospital or clinic setting, our hospitals and health systems are driven to address their communities’ needs in community settings. We know this support of communities will remain critical as we continue to navigate and emerge from the COVID-19 pandemic.”

Hospitals and health systems are fulfilling their missions of supporting their communities even as they experience financial fragility and declining operating margins. Hospitals and health systems reported fragile finances in 2019, even before the COVID-19 pandemic. The median operating margin fell in 2019 to 1.4% – a signal that Minnesota's hospitals and health systems are experiencing challenges including declining reimbursements from both government and commercial payers; health care professional shortages that bring higher staffing costs; and increasing costs of products and supplies such as pharmaceuticals, devices and technology systems for electronic health records.

Of the $3.3 billion in community contributions, Minnesota hospitals and health systems provided $675 million to patients who did not have health insurance or the means to pay for their care, an increase of 24% compared to 2018. Minnesota’s uninsured rate was 4.7% in 2019, leaving approximately 264,000 Minnesotans without health insurance coverage.

Uncompensated care includes charity care for patients from whom there is no expectation of payment and bad debt resulting from patients who could not or did not pay their share of the hospital bill. The widespread use of high-deductible health plans can lead to patients being unable to pay their deductibles or copayments, contributing to bad debt.

Bad debt expense increased by 46.5% to $510 million in 2019. Much of the bad debt growth is related to the expanding implementation of health plan products with higher out-of-pocket deductibles for enrollees to hold down premium growth.

While charity care costs have steadily increased in recent years, they decreased by 16% to $164 million in 2019. Some of the bad debt incurred would likely qualify as charity care, but hospitals and health systems are unable to categorize uncompensated care as charity care if patients do not complete financial assistance enrollment.

In addition to improving the health of the community, Minnesota hospitals and health systems reported providing:

• $179 million in proactive services responding to specific community health needs, such as health screenings, health education, health fairs, immunization clinics, subsidized health services and other community outreach programs, including in the areas of fitness, nutrition, weight loss, mental health and diabetes prevention. 
• $180 million in education and workforce development, including training for doctors, nurses and other highly skilled health care professionals. 
• $13.6 million in research to support the development of better medical treatments and to find cures for diseases. 
• $1.76 billion in government underfunding as a result of treating Medicare and Medicaid patients and receiving government reimbursements that are less than the actual cost of providing the care. This was 8.47% of hospitals’ and health systems’ operating expenses.

“Hospitals and health systems conduct community health needs assessments to ensure they are responding to specific needs of the communities they serve,” Koranne said. “In exchange for their tax-exempt status, nonprofit hospitals and health systems contribute these services to patients and communities.”

This community benefit report reflects 2019 financial information preceding the pandemic – the most recent data available – self-reported by Minnesota’s hospitals and health systems and supplemented with data reported to the Minnesota Department of Health. The annual report comprises an analysis of categories of community contribution activities on a statewide and regional basis.

MHA expects next year’s community benefit report to encompass the impacts of the pandemic on community needs and hospitals’ and health community contributions during fiscal year 2020.

Read the full report.

The Minnesota Hospital Association represents Minnesota’s hospitals and health systems, which provide quality care for their patients and meet the needs of their communities. 

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