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
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:
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:
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.
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.
The health care workforce shortage – both nationally and in Minnesota – is nothing short of alarming. While hospitals and health systems will continue to do what we can, this problem cannot be solved exclusively by providers.
MHA urges the legislature to:
The Rural Emergency Hospital (REH) is a new Medicare provider type that provides 24-hour emergency services but does not include inpatient care.
Background
In December 2020, Congress passed the Consolidated Appropriations Act, which created a new Medicare provider type called the Rural Emergency Hospital (REH). The REH is a new rural hospital type that does not provide inpatient care but provides 24-hour emergency services. It was created in response to an ongoing period of hospital closures in rural communities and the concerns of access to emergency services in rural areas. According to the legislation, a critical access hospital or small rural hospital with no more than 50 beds can convert to a REH and begin providing services starting Jan. 1, 2023.
Payment
Under statute, REHs must be paid 105% of the Outpatient Prospective Payment System (OPPS) rate for covered outpatient services, plus an additional facility payment. The Centers for Medicare & Medicaid Services (CMS) finalized a monthly facility payment of $272,866 for CY 2023 – approximately $3.2M annually for each facility. In future years, the additional annual facility payment will be increased by the hospital market basket percentage. CMS will also broadly consider all covered outpatient department services as “REH services” and will pay at the applicable OPPS payment rate plus 5%. However, REHs are not eligible for the 340B Drug Pricing Program.
Conditions of Participation
REHs are aligned with most Critical Access Hospital conditions of participation and must be staffed 24 hours a day, seven days a week. They are required to provide:
REHs cannot exceed an annual average length of stay of 24 hours per patient. They also cannot operate swing beds but may maintain a distinct part skilled nursing facility. REHs can convert back to their previous CAH or PPS provider type, however they will lose any grandfathered necessary provider waiver.
MHA Community Outreach Toolkit
Use the following resources to help facilitate public conversations about REH conversion and explain the implications for local health care services.
Resources
Webinar Series
MHA hosted a webinar series providing an overview of the new provider type and the potential impact on Minnesota’s rural health care landscape. View recordings of the webinars on these topics:
This information is supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) as a part of an award totaling $79,000. The contents are those of the author(s) and do not necessarily represent the official views of, nor the endorsement, by HRSA, HHS, or the U.S. Government.
Medicaid—known as Medical Assistance in Minnesota—provides lifesaving coverage to 1.3 million Minnesotans, ensuring access to preventive care, maternal health, chronic disease treatment, and long-term care. 16 million Americans may lose health coverage nationwide by 2034 under H.R. 1’s Medicaid provisions and the expiration of the ACA expanded premium tax cuts, according to Congressional Budget Office estimates.
In Minnesota alone, 132,000 people would lose coverage in the first year, including:
Minnesota will face a $2.4 billion funding gap in the first year alone, forcing impossible choices.
Minnesota hospitals are already under severe financial strain, with Medicaid fee-for-service rates reimbursing hospitals at 27% below the cost of care. This underfunding particularly threatens rural communities, where Medicaid funding is vital for keeping local hospitals open and providing essential emergency and routine care access. Rural hospitals and clinics struggle to stay open under current reimbursement levels, and further cuts would dramatically increase uncompensated care as more individuals lose coverage and turn to emergency departments for treatment. Hospitals simply cannot absorb additional losses without jeopardizing patient services.
Resources:
The Community Hub offers event registrations and other members-only content.
The MHA Portal provides a single point of entry to our data submission applications.
Changes are coming to the MHA Portal. New information will be available here soon.
Need help logging in? Contact us.
