New Report Paints Negative Financial Picture of Minnesota Hospitals

November 16, 2023

On November 13, the Minnesota Hospital Association (MHA) released an analysis of hospital and health system finances that shows losses growing at many of the state’s major healthcare providers.  

Data collected from MHA members show ongoing financial losses nearly tripled in some cases. Key findings of the analysis include: 

• Median hospital and health system operating margins declined from -.5% in 2022 to -2.7% in the first half of 2023. 

• 67% of hospitals and health systems in the MHA analysis had negative operating margins, which means they were losing money. This is up from 55% of hospitals and health systems that had negative margins in 2022. 

• The costs of labor grew by 7%, and supply and service costs grew by 6%. 

• Nearly a quarter of member hospitals and health systems reported labor costs rising by double digit percentage points, and a third of hospitals said supply and service costs had risen by more than 10% over 2022.     

The losses also correspond to a rise from 62 percent to 64 percent in the proportion of Medicare and Medicaid patients reported by nearly every hospital. Those programs continue to reimburse providers well below the actual cost of providing care, routinely underpaying an estimated 27% below cost for Medicaid, and 20% below cost for Medicare.     

Programs have closed and care has been cut at more than 50 hospitals across the country already in 2023 and hundreds more could follow. Nearly 30% of U.S. rural hospitals are facing closure, according to the Center for Healthcare Quality and Payment Reform, and that could include as many as a half dozen in Minnesota if urgent action is not taken.     

The non-public financial data referenced in the analysis is provided voluntarily by hospitals and health systems in Minnesota. It is not audited financial data, but is more current than public financial reports issued by the hospitals and health systems. The data comes from more than 70 hospitals that are members of the MHA. It includes both large health systems and small rural hospitals in Minnesota.