MINNEAPOLIMEDIA NEWS | Healthcare & Public Policy: Hennepin Healthcare Cuts Jobs, Services as Lawmakers Weigh Tax Plan to Address $50M Deficit

MINNEAPOLIS, MN

Hennepin Healthcare is implementing workforce reductions and service changes amid a projected $50 million operating deficit for fiscal year 2026, as state lawmakers consider a proposal to redirect local tax revenue to stabilize the system’s finances.

Hospital officials have said the system is under significant financial pressure and requires near-term intervention to maintain current operations.

Deficit and Structural Pressures

Hennepin Healthcare’s financial challenges are tied to long-standing structural issues in how safety-net hospitals are funded. Approximately 70 percent of its patients are covered by Medicaid or Medicare, which typically reimburse below the cost of care.

Hospital leaders have indicated this results in more than $100 million annually in uncompensated or undercompensated care. The system is also projected to face longer-term financial strain if its funding model is not adjusted.

Layoffs and Workforce Changes

In late January 2026, Hennepin Healthcare eliminated approximately 100 positions across both union and non-union roles.

Affected positions included nurses, physicians, social workers, and other clinical and support staff. Employees were notified beginning January 26, with most separations completed by March 31.

Unionized employees, including those represented by the Minnesota Nurses Association and AFSCME Council 5, were eligible for contractual “bumping rights,” allowing more senior employees to retain positions.

Service Closures and Consolidations

Hospital leadership has also reduced or restructured several specialty services as part of its cost-containment strategy.

Reported changes include:

• Closure of acupuncture and chiropractic services, with patients referred to external providers
• Closure of a standalone sleep clinic, with screening incorporated into primary care
• Consolidation of weight management services into the Clinic and Specialty Center
• Integration of certain geriatric and extended care services into general primary care
• Shifting portions of pain management services, with more complex procedures referred externally

These adjustments are intended to preserve core emergency and trauma care services.

Capacity Reductions and Cost Controls

To manage operating costs, Hennepin Healthcare has reduced staffed bed capacity by approximately 100 beds, bringing total capacity to about 390.

Additional measures include freezing employer retirement contributions and pausing planned capital and infrastructure projects.

Legislative Proposal Targets Funding Gap

State lawmakers are considering House File 4841, a bipartisan proposal that would repurpose and expand an existing Hennepin County sales tax originally used to finance Target Field, home of the Minnesota Twins.

Key provisions of the proposal include:

• Increasing the county sales tax from 0.15 percent to 1 percent
• Generating an estimated $305 million to $340 million annually
• Directing the majority of revenue, more than $300 million, to Hennepin Healthcare
• Providing additional funding, up to approximately $24 million annually, to regional trauma providers including North Memorial Health
• Increasing annual allocations for stadium-related capital needs from $1 million to about $7 million

The bill was heard by the House Taxes Committee on April 9 and was laid over for possible inclusion in a broader omnibus tax package. Legislative decisions are expected before the session adjourns in mid-May.

Leadership Transition and System Role

On April 10, the Hennepin County Board appointed Dr. John Cumming as interim chief executive officer to lead the system during the current financial period.

Hennepin Healthcare serves as one of Minnesota’s primary Level I trauma centers and a major teaching hospital. Officials have stated the system treats tens of thousands of patients annually and plays a central role in training a significant share of the state’s physician workforce.

Hospital leaders and lawmakers have described the system as a critical component of Minnesota’s healthcare infrastructure and have urged action during the current legislative session.

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