Minneapolis-based Hennepin Healthcare is taking more cost-cutting measures as it looks to save at least $50 million by the end of the first quarter.
On Feb. 11, the health system said it is cutting 100 inpatient beds, which will reduce its total bed capacity to 390.
“This adjustment is part of a broader effort to align resources with current demand and improve staff utilization,” Hennepin Healthcare said in a statement shared with Becker’s.
Officials told The Minnesota Star Tribune that around 435 out of 490 total beds are currently in use and that the bed reductions will happen as patients are discharged.
The health system is also pausing $24 million in new capital projects, freezing contributions to retirement plans for some workers and suspending business travel and conference registrations, according to an internal message administrators sent to employees Feb. 11. TheStar Tribune obtained a copy of the message.
Hennepin Healthcare confirmed in its statement to Becker’s it is freezing “a range of discretionary spending” and pausing certain employee benefits.
“These actions are focused on sustaining critical patient services and ensuring we continue to prioritize patient care,” the health system said. “We deeply value our employees and the community we serve, and we will continue to communicate transparently as we work toward long-term sustainability.”
The latest actions build on a series of recent cost-reduction efforts Hennepin Healthcare has taken to navigate what leaders have described as a “dire” cash flow crisis. In January, the safety-net system detailed service line changes that will result in the elimination of 100 jobs. The changes include closing or integrating several clinics and services, including chiropractic, acupuncture and sleep medicine.
On Feb. 12, co-interim administrators J. Kevin Croston, MD, and David Hough said the organization must identify at least $150 million in savings by the end of the third quarter, the Star Tribune reported.
Hennepin Healthcare has faced mounting financial strain the past eight years, driven in part by a high share of Medicare and Medicaid patients. In January, leaders told employees the system’s cash position had fallen below zero, requiring use of a county line of credit to meet payroll and prompting warnings that reliance on county support is not sustainable.
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