Minneapolis-based Hennepin Healthcare is working to identify at least $50 million in savings during the first quarter of 2026 as interim leaders warn the system is operating in “crisis mode.”
In a Jan. 16 email to employees shared with Becker’s, co-interim administrators J. Kevin Croston, MD, and David Hough said the system’s cash position fell below zero in early January, requiring the use of a county line of credit to meet payroll. They said reliance on county backstop funding is no longer sustainable, and tens of millions more in savings could be needed by year-end.
The leaders outlined steps already underway to address issues in revenue cycle operations and reduce fixed costs, including board-approved service line adjustments. Additional actions are expected in the coming weeks to help improve the organization’s financial picture.
They also flagged long-term concerns tied to the One Big Beautiful Bill Act, a federal budget law that reshapes Medicaid and other coverage programs. Leaders said the law could reduce support for providers serving high volumes of Medicaid patients, adding further financial strain.
In addition to internal efforts, Hennepin Healthcare is pursuing legislative solutions to secure additional funding, such as a dedicated tax mechanism, although those measures will take time.
Hennepin Healthcare — Minnesota’s largest safety-net hospital — includes Hennepin County Medical Center, a 484-bed academic medical center, and a network of clinics, according to its website. The Minnesota Star Tribune reported the system has lost money over most of the past eight years and noted job cuts and service reductions are likely amid ongoing instability.
Thomas Klemond, MD, stepped down Jan. 13 as interim CEO. Dr. Croston, former CEO of North Memorial Health, and Mr. Hough, a former county administrator, are serving as co-interim administrators. A permanent CEO search is expected later in 2026.
In a Jan. 20 statement shared with Becker’s, Hennepin Healthcare said it is committed to delivering excellent care but emphasized that “difficult but necessary decisions” are ahead to stabilize operations.
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