No one disputes that Hennepin County Medical Center faces a looming fiscal crisis. In recent years, the state's largest publicly owned hospital has been battered by cutbacks in funding at every level of government, coupled with ever-increasing numbers of uninsured patients and spiraling health care costs. Hennepin County, which owns and administers the hospital, now spends some $20 million annually to subsidize the facility.
"The sky is falling," says Hennepin County Commissioner Peter McLaughlin. "I think there is general agreement about that."
On Tuesday of last week, the county board took a bold step to resolve the hospital's financial troubles. By a 5 to 2 margin, the commissioners voted to turn over operational control of HCMC to a nonprofit "public benefit corporation." This new entity would be overseen by a seven-member quasi-public board, which would include up to two county commissioners. The hope is that the new management structure would reduce costs and find additional sources of revenue. Before the proposed governance change can be implemented, however, it must be approved by the state Legislature.
Founded in 1887, HCMC is the state's premier health care facility serving low-income and indigent residents. Roughly 40 percent of its patients rely on some form of state-supported health insurance program. HCMC is also the preeminent teaching hospital in Minnesota, with nearly half of the state's doctors receiving clinical training at the facility. In addition, the hospital is highly respected, routinely earning a spot on a list of the country's elite hospitals compiled by U.S. News & World Report.
But in recent years HCMC's ability to provide top-notch care for rich and poor alike has been severely taxed by health care cutbacks. Last year's state budget agreement, which targeted a $4.2 billion deficit, slashed some $200 million from state-sponsored health care programs such as General Assistance Medical Care and Minnesota Care. As a result, some 38,000 poor people are expected to go uninsured. In addition, state-aid cutbacks mean that the hospital will lose $35 million in funding this biennium.
Owing to these dramatic drops in revenue, the hospital has been grappling with ways to ensure its future. A 14-member committee appointed by the county board initially proposed measures that could be taken to strengthen the hospital. Those recommendations were then refined by a five-person panel that included former Minneapolis Mayor Sharon Sayles Belton and RBC Dain Rauscher Chairman Irving Weiser before going to the county commissioners in September.
Even so, the proposed changes have led to widespread fears that the hospital's altruistic mission will be imperiled by the governance overhaul. Critics of the plan charge that it strips the hospital of public accountability by removing direct oversight by the county board, threatens employee wages, and fails to address the systemic fiscal problems facing HCMC.
At last week's commissioners' meeting, 15-year board veteran McLaughlin declared the proposal "the single worst step we've taken in my entire time on the Hennepin County Board." McLaughlin, who joined Gail Dorfman in voting against the measure, argues that tinkering with the hospital's governance structure simply obscures the larger crisis in health care funding that HCMC faces. "Changing the organizational boxes around is not going to solve the fundamental problems that the hospital has in terms of maintaining its ability to perform its mission of providing indigent care and medical training," he says.
Some community groups echo McLaughlin's concerns. Cathy Heying, justice education and action coordinator at St. Stephen's Catholic Church, worries that the hospital will become too focused on attracting revenue. "Quite frankly, those who are in poverty, those who are mentally ill, those who are homeless, they never help the bottom line," Heying says.
Opponents of the proposal believe that the changes envisioned to make HCMC more fiscally competitive--such as creating a nonprofit fundraising arm and upgrading the facilities to attract more paying patients--can be accomplished without relinquishing public control of the hospital. In addition, they note that the hospital still will get no reimbursement from Minnesota's 86 other counties or the state for taking care of indigent patients who aren't Hennepin County residents.
Hennepin County Commissioner Mike Opat, the biggest backer of the changes, dismisses the concerns: "This is anything but capricious. We've been at this for more than two years." Opat argues that the hospital's ability to treat poor and uninsured residents has already been seriously undermined and something has to change. "That mission is in jeopardy right now," he says.
Despite such reassurances, many employees remain skeptical of the plan. They worry that the drive to control costs and compete with the private sector will ultimately jeopardize employee salaries and benefits. The largest labor union representing HCMC workers, the American Federation of State, County, and Municipal Employees Council 5, is opposed to the plan.
And in recent months, in part because of the uncertainty about the hospital's future, nurses at the facility have been engaged in a unionization drive. Last month, the county board entered into a "card-check agreement" with the Minnesota Nurses Association (MNA). This means that if a majority of the facility's 900-some nurses sign cards indicating that they want the MNA to serve as their bargaining representative, the county will recognize the union without requiring an election to be held.
"I think that we are within a couple of months of having enough cards to bring the union in," says nurse Paul Couming, a 14-year veteran of HCMC who supports the organizing drive. Couming is ambivalent about the proposed management overhaul, but believes that employees need to protect their jobs. "I'm a little scared about it, but it potentially could do the hospital a lot of good," he says.
There was already a salary dispute earlier this year. In the past, HCMC has paid its nurses salaries equal to those negotiated by metro hospitals with unionized nursing staffs. Earlier this year, however, after unionized nurses at area hospitals received a 5 percent raise, the county board balked at matching the pay hike because HCMC was under a salary freeze. After a four-month delay, in October, the county board finally approved the salary increase.
"The nurses realized with that that there were no guarantees," says Kate Kline, lead organizer for the MNA. "When you have a contract, you know when you're going to get raises and what your salary's going to be for the life of the contract."
Opat takes the exact opposite lesson from the salary dispute, however. He sees it as proof that HCMC nurses, regardless of whether they're unionized, aren't well served by the current management structure. "We were the only hospital that did not give nurses a raise in a timely fashion and that is solely because of the way we're governed," Opat argues.
The future governance structure of the hospital remains in limbo, and it will have to be approved by the Legislature. Opat is confident that the proposal will receive bipartisan support at the Capitol. But not everyone is so optimistic.
Linda Berglin, chair of the Senate's Health, Human Services, and Corrections Budget committee, and the Legislature's most vocal supporter of HCMC, has voiced concerns about the management changes. Berglin's apparent position has underscored another nagging reality: Such resistance at the Capitol, even among HCMC boosters, could ultimately derail the proposal, and more.
"We're going to spend more time fighting among ourselves at a time when we ought to be cooperating with each other to create a unified front at the Capitol to get some of the things we need," argues McLaughlin. "If we end up with nothing on this, and we waste our political capital on this, that's a real setback for the hospital."
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