HCMC and rural hospitals squeezed as UCare collapse and unpaid federal claims threaten closures
Hennepin County Medical Center officials warn the downtown safety‑net hospital could begin a formal shutdown as early as May without legislative action after losing more than $100 million in 2024, being owed $115 million by collapsed nonprofit insurer UCare and relying on county payroll support and $38 million a year in property taxes while asking lawmakers to redirect roughly $55 million a year from the Target Field sales tax to stay open; UCare’s Medicaid payouts ballooned to about $620 million in 2025, the insurer stopped paying major hospital debts in December, and state regulators have taken control as the four largest systems are collectively owed nearly $500 million. Rural facilities face similar pressure—Mille Lacs Health System says Medicare owes $3 million and UCare $1 million, and a federal Medicare billing glitch that deactivated providers and rejected claims has created crippling cash shortfalls—highlighting how insurer collapse and unpaid federal claims threaten both metro and rural hospital closures.
📌 Key Facts
- Hennepin County Medical Center (HCMC/Hennepin Healthcare) is at risk of closure; county leaders warn a formal shutdown could begin as early as May unless the Legislature acts, and Hennepin Healthcare says it is “on life support” and only legislative action can stabilize operations.
- HCMC lost more than $100 million in 2024, is owed $115 million by collapsed nonprofit insurer UCare, and faces further federal funding reductions (projected $1.7 billion impact over the next decade under the Trump administration’s budget projections).
- Hennepin County is covering HCMC’s payroll, uses about $38 million a year in property taxes to cover hospital losses, and commissioners are asking lawmakers to redirect roughly $55 million a year from the Target Field 0.15% sales tax to keep the safety‑net hospital open; officials say the only alternatives are repurposing that tax or starting the closure process.
- UCare’s Medicaid payouts to providers ballooned from roughly $250–300 million a year (2018–2021) to about $315 million in 2022, nearly $500 million in 2024 and roughly $620 million in 2025, even though UCare reported a $325 million surplus in 2022 and told regulators the future impacts were “not expected to have a material impact” on its financial position.
- The four largest Minnesota hospital systems — Mayo, Allina, Fairview and Hennepin Healthcare — are collectively owed nearly $500 million by UCare; UCare stopped paying those debts in December, triggering legal disputes and concerns about cascading failures across the state’s hospital network.
- The Minnesota Department of Health (MDH) took control of UCare in December, is overseeing its shutdown and the transfer of members to Medica, and ordered the insurer to seek a merger because of mounting losses.
- An Allina attorney is arguing in court that the major hospital systems should have a say in how UCare’s remaining assets are allocated to prevent a “domino effect of failures” among hospitals.
- Reporters link HCMC’s crisis to similar strains at rural hospitals (such as Mille Lacs Health System), noting that federal failures — including a Medicare billing glitch that deactivated providers and rejected claims — and payer breakdowns are destabilizing both metro safety‑net hospitals and rural providers.
📊 Relevant Data
In Mille Lacs County, 29.8% of the population is enrolled in Medicaid, compared to 22% statewide in Minnesota, contributing to financial strain on rural hospitals reliant on public payers due to lower reimbursement rates.
Community Health Needs Assessment Report Mille Lacs Health System — Mille Lacs Health System
Mille Lacs County has a higher percentage of residents aged 65 and older (18.7%) compared to Minnesota's 17.8%, increasing hospital reliance on Medicare, which constitutes about 60% of revenue for systems like Mille Lacs Health System.
Community Health Needs Assessment Report Mille Lacs Health System — Mille Lacs Health System
In Hennepin County, racial composition includes 14% Black/African American, 8% Asian, 7% Hispanic/Latino, and 1% American Indian/Alaska Native, with projections showing the White population decreasing to 21% by 2053 due to increases in diverse groups, impacting safety-net hospitals serving higher uninsured rates among these populations.
2021-2025 Community Health Assessment — Hennepin County
The cost of MinnesotaCare for unauthorized immigrants has risen to over $550 million over four years as of 2025, with enrollment at 17,396, more than doubling the original projection of 7,700, adding to statewide healthcare funding pressures on hospitals.
Healthcare expansion for undocumented immigrants more than doubles costs — Minnesota House of Representatives
Rural hospitals in Minnesota, including those in areas like Mille Lacs County, face financial distress due to high reliance on Medicare and Medicaid, with nearly half operating on negative margins as of 2026, exacerbated by lower patient volumes and reimbursement rates.
Rural Hospitals Face a Funding Crisis — How It Could Get Worse — Commonwealth Fund
📰 Source Timeline (4)
Follow how coverage of this story developed over time
- FOX 9 explicitly links Hennepin Health’s potential shutdown to the same pattern hitting Mille Lacs Health System, framing it as "another" Minnesota hospital on the brink, not a one‑off.
- The article ties HCMC’s fate more directly to pending legislative action on rerouting Target Field baseball park tax dollars, emphasizing that lawmakers’ decisions this session will determine whether the downtown Minneapolis hospital can stay open.
- It highlights that a federal Medicare billing glitch — deactivating providers and rejecting claims — is a major driver of financial gaps at rural Mille Lacs, offering a parallel to how federal and payer failures are destabilizing metro hospitals like HCMC.
- FOX 9 obtained DHS data showing UCare’s Medicaid payments climbed from roughly $250–300M a year (2018–2021) to about $315M in 2022, then nearly $500M in 2024 and roughly $620M in 2025.
- Despite ballooning Medicaid payouts, UCare reported a record $325M surplus in 2022 and told regulators the future impacts were "not expected to have a material impact" on its financial position.
- The four largest hospital systems in Minnesota — Mayo, Allina, Fairview and Hennepin Healthcare — are collectively owed nearly $500M by UCare, and UCare stopped paying those debts in December.
- An Allina attorney is now arguing in court that the big systems should have a say in how UCare’s remaining assets are allocated to prevent a "domino effect of failures" in the state’s hospital network.
- MDH took control of UCare in December and is overseeing its shutdown and member transfer to Medica after ordering the insurer to seek a merger because of the mounting losses.
- County leaders are now openly warning that Hennepin County Medical Center could begin a formal shutdown process as early as May if the Legislature does not act.
- HCMC lost more than $100 million in 2024 alone and is owed $115 million by collapsed nonprofit insurer UCare; the Trump administration’s budget is projected to pull another $1.7 billion from HCMC over the next decade.
- Hennepin County is currently covering HCMC’s payroll and already uses $38 million a year in property taxes to plug hospital losses; commissioners are asking lawmakers to redirect roughly $55 million a year from the Target Field 0.15% sales tax to keep the safety‑net hospital open.
- Commissioner Angela Conley explicitly tied the red ink to HCMC’s role caring for patients who cannot pay, while Commissioner Jeffrey Lunde said the only alternatives are repurposing the tax or starting the closure process.
- Hennepin Healthcare released a blunt public statement saying 'Hennepin Healthcare is on life support and at risk of closure' and that only legislative action can stabilize operations.