Data Shows Minnesota’s Hospitals Under Intense Strain

October 27, 2022

On October 25, the Minnesota Hospital Association (MHA) released new data that highlights plunging hospital and health system financials that are being exacerbated by the spiking healthcare staffing crisis. 

There is an intense strain on the state’s hospitals and health systems currently due to the following factors: 

• an almost 250% one-year increase in job vacancy rates,  

• a 172% decline in year over year financials for acute care hospitals, exponentially rising labor and supply costs, and  

• the need to rely on temporary staffing. 

“Our hospitals and health systems are committed to being there when Minnesotans need them, and they need help as the perfect storm - the financial effects of the pandemic and the workforce shortage - worsens with every passing day,” said Rahul Koranne, MD, MHA president and CEO.      

The data represented in the 2022 MHA Workforce Report is based on a statewide analysis of MHA members. Data shows:        

• The overall vacancy rate in 2022 is about 21%, compared to only about 6% in 2021. 

• More professionals within healthcare are opting for a part-time work schedule, making it more difficult for hospitals and health systems to meet operational needs. For the first time, more than half (57%) of registered nurses (RNs) are not working full-time.  

• Overall, 44% of all hospital employees are less than full-time, up from 37% in 2016.  

• This trend is higher among select professional groups, including:  

• 68% of nursing station technicians  

• 64% of certified nursing assistants  

• Younger professionals are more likely to opt for part-time job status versus their more experienced colleagues.  

• The operations and finances of Minnesota’s hospital and health systems are being additionally strained by retirements.  

• Physicians are projected to be the top occupational group at or above retirement age within 10 years, followed by licensed practical nurses (27%), and peri-anesthesia RNs (25.1%).  

• This is on trend nationally. The Association of American Medical Colleges (AAMC) reports that more than two of every five active physicians in the U.S. will be 65 or older within the next decade.     

• Minnesota’s hospitals and health systems have increased the number of black, indigenous, and people of color (BIPOC) new hire representation by nearly 140% since 2016, striving towards a workforce that better reflects the communities we serve.       

The workforce crisis is compounding an already dire financial situation. In mid-2022, a MHA analysis of acute care hospitals in the state found that the median hospital and health system operating margin for the first and second quarter of 2022 was -1.5% versus 2.2% in 2021, a 172% drop year over year. This is estimated to be more than $200 million in losses.     

“We must secure immediate support and form innovative partnerships to recruit, retain, train, and engage a strong workforce that will be able to care for Minnesota’s future generations,” said Koranne. “As we continue to see our nonprofit hospitals and health systems - the 24/7/365 epicenters of health in our communities - in increasing distress, the time has come for our lawmakers to intervene before matters get even worse.”      

MHA advocates for:  

• Legislative partnership in rethinking government reimbursements. Medicare reimburses hospitals at 20% below cost on average, and Medicaid at 27% below cost, creating a financial model where the math just does not add up.  

• Loan forgiveness and scholarships for students in all areas of healthcare, including allied health professionals.  

• Significant investment to build the healthcare workforce pipeline, including programs for career laddering and exposing students to healthcare careers at an earlier age. 

• Accelerated entry into the professional workforce through simplification of the administrative processes at the healthcare licensing boards.