Hennepin County Commissioners Weighing Takeover Of HCMC Amid Mounting Financial Crisis

Hennepin County Commissioners Weighing Takeover Of HCMC Amid Mounting Financial Crisis

By MinneapoliMedia Staff | July 29, 2025

MINNEAPOLIS, MN — Hennepin County Commissioners are taking decisive steps toward a potential governance overhaul of Hennepin County Medical Center (HCMC), the region’s largest public safety-net hospital, amid deepening financial instability. On Tuesday, July 29, the County Board introduced a resolution to dissolve the governing board of Hennepin Healthcare System (HHS), the county-created public corporation that currently oversees HCMC operations.

This bold move reflects growing concern over HHS’s long-running financial woes. The health system has reported operating losses in seven of the last eight years, and it faces a projected $36 million deficit for the current fiscal year. These losses are attributed to persistent structural challenges, including low Medicaid reimbursement rates and an increasing number of uninsured and underinsured patients. Officials say the number of patients without insurance has jumped from 6% in 2022 to 10% in 2024, following changes to pandemic-era Medicaid coverage.

Created in 2007 by Hennepin County and the Minnesota Legislature, Hennepin Healthcare System operates HCMC and its affiliated clinics as a subsidiary. While the county still owns the hospital’s physical assets, HHS’s independent corporate board—comprised of community volunteers, hospital leaders, and county officials—manages daily operations. The current proposal would bring that control back under the direct authority of the County Board.

“The Hospital Has Identified a Crisis”

County Board Chair Irene Fernando, who also sits on the HHS board, stressed the urgency of the matter:

"The hospital has identified a crisis," Fernando said, warning that without intervention, HCMC could be forced to enact layoffs, reduce services, or, in the worst-case scenario, shut its doors altogether.

“In times of crisis, more oversight is necessary,” she added. “We are committed to ensuring this safety-net hospital remains viable, and that taxpayers understand how their dollars are supporting it.”

If approved, the resolution would dissolve the HHS corporate board and shift HCMC’s governance directly under the County Board. The change would require a super-majority vote (five of seven commissioners) and could significantly reshape oversight of the $1.6 billion public health system.

Community Input, Public Scrutiny

A public hearing on the resolution is scheduled for August 5, with a final vote expected August 12, during formal budget discussions.

The potential governance shift follows months of strained relations between the County Board and hospital administrators. Critics have pointed to growing executive compensation packages, reductions in employee benefits, and concerns from labor unions. The Hennepin County Association of Paramedics and EMTs (HCAPE) has publicly backed the proposal, calling for greater accountability and transparency in how HCMC is run and resourced.

The hospital’s interim CEO, Dr. Thomas Klemond, acknowledged the gravity of the situation during recent board deliberations. “Our finances are not very good on a good day… we are almost always on edge,” he said. HHS board chair Mohamed Omar added that without financial intervention, “That is really falling off a cliff for us.”

Broader Implications

The potential takeover highlights broader questions about how to sustainably fund Minnesota’s public hospitals. As state lawmakers continue to examine legislation that would grant counties more oversight in cases of persistent financial mismanagement, the outcome in Hennepin County may serve as a bellwether for other jurisdictions.

With essential services, public trust, and hundreds of jobs at stake, the August votes will be watched closely across the state.

MinneapoliMedia