North Memorial lays off 103 workers, ending outpatient mental health in Robbinsdale
North Memorial lays off 103 workers, ending outpatient mental health in Robbinsdale

Financial pressures are forcing North Memorial Health to eliminate 103 jobs as well as outpatient mental health services at its flagship hospital.

Officials say the health system is struggling at its Robbinsdale medical center with the continued growth of patients covered by government-sponsored health plans that pay less for services than commercial health insurers.

Additionally, North Memorial Health learned earlier this year that Hennepin County was eliminating a $22 million grant that helped cover costs in 2023.

The health system says it will work with about 3,400 current mental health patients to find new outpatient providers between now and Aug. 30, the expected end date. This reduction comes as demand for these mental health services has increased in recent years.

North Memorial also plans to eliminate its level two neonatal intensive care unit in Robbinsdale, meaning the hospital’s nursery will have staff and equipment only for newborns with normal births.

“We’re really at a point where we’re struggling to survive the headwinds that all of healthcare is facing, but more importantly to survive the payer mix that we serve here in Robbinsdale,” said Trevor Sawalish, CEO director of North Memorial, in an interview. “And it’s reaching a tipping point.”

The proportion of hospitalized patients covered by the lower-paying Medicare and Medicaid government insurance programs is significantly higher at Robbinsdale Hospital, Sawalish said, than the state average. North Memorial’s Maple Grove Community Hospital, meanwhile, had the highest share of commercial insurance coverage of any Minnesota hospital in 2022, according to data from the state Department of Health.

Commercial insurers are believed to provide the highest levels of reimbursement overall to healthcare providers. Medicare payments tend to be lower, hospitals say, followed by rates from Medicaid and related state-federal programs for lower-income residents.

The Minnesota Nurses Association criticized the announcement, saying nurses are among those losing their jobs while top executives at North Memorial continue to collect big paychecks.

“Blaming patients who can’t pay more for the vital care they need only highlights the real interests and motivations of these executives: the bottom line and the highest paying customers, like those on the more affluent suburban campus of North Memorial,” the union said in a statement. “These closures by North Memorial leaders follow a clear pattern: closing services that don’t make enough money — especially maternity and newborn care and mental health — in the neediest communities that can’t afford to pay more and that do not have easy access to alternative care options.”

North Memorial Medical Center in Robbinsdale is ranked as the 10th largest hospital in the state in terms of beds served for patients in 2022. The health system also operates 25 clinics, located primarily in the west metro, and a large emergency department medical support with 10 helicopters and 140 ambulances and other response vehicles.

It employs more than 5,000 people.

After layoff announcements last year at Allina (350 jobs) and Fairview (250 jobs), North Memorial Health becomes the third Hennepin County-based health system to cut a significant number of jobs in less than a year.

To varying degrees, all three health systems cited industry-wide challenges with labor costs and a lack of capacity in step-down facilities, meaning some patients stay in hospitals longer than necessary. Analysts said those trends could cause hospitals to cut services, including mental health, obstetrics and pediatrics, because those patients typically need fewer profit-making surgeries.

In 2023, North Memorial Health reported an operating loss of $8.5 million on about $1.1 billion in revenue, an improvement from an operating loss of $12.8 million the previous year. Last year’s results, however, include about $24 million in care funding for low-income residents that Hennepin County chose not to renew in January.

“I’m not in any way saying the county is the reason we’re struggling — they didn’t cause the problem,” Sawalish said. “But the fact that they canceled puts our hospital in a really precarious place and puts us in immediate danger.”

The 103 job cuts include workers in clinical and non-clinical roles, most of which are related to the Robbinsdale campus. The reduction does not happen suddenly.

Robbinsdale Outpatient Mental Health Services, for example, is slated to close at the end of August, affecting about 27 clinicians. In a statement, North Memorial Health said it is talking with “local partners throughout the community to identify alternative care locations and providers for our current patients.”

The timing of changes to the NICU is still being debated. Babies who are expected to need more complex care will be referred to other hospitals, such as Maple Grove.

“It will be a normal newborn nursery after this change,” Savalish said. “It’s something we’d really like to keep in this community because you never know when a mom or a family might need us.” But because of the low census and because of the cost, that was one of the areas that we felt we needed to fix.”

In addition to job cuts, North Memorial Health is seeking to shore up its finances through a change in state law that would allow the hospital to participate in the Medicaid Directed Payment Program. This could provide additional funding by pulling more federal Medicaid dollars, as long as there is new funding from state or local government.

Legislation was introduced to add North Memorial to the program, which currently helps cover costs at Hennepin Healthcare in Minneapolis, Sawalish said.

“If you look at who we serve and our service to some of the poorest zip codes around, we have a very similar population to [Hennepin Healthcare]” Sawalish said. “They will have a little more Medicaid, but overall the mix of government payments looks almost identical.”

Health Department data show that nearly 50 percent of all patients admitted to Hennepin Healthcare in 2022 were covered through Medicaid and related programs: the highest share of any hospital and higher than the state average of 22%. The Medicaid share at North Memorial Hospital in Robbinsdale at that time was 24.7 percent, while the rate in Maple Grove was 19.6 percent.

Medicare paid for 52 percent of all patients admitted to North Memorial Hospital in Robbinsdale in 2022, according to the Department of Health, while the state average was 44.7 percent. That year, Medicare’s share was 31.6 percent at Hennepin Healthcare and 23.4 percent at Maple Grove.

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