7 Minnesota Hospitals Face Closure Risk After Sweeping Federal Medicaid Cuts

MINNEAPOLIS, MN — Seven hospitals in Minnesota are among 446 across 44 states and Washington, D.C., facing a heightened risk of closing, cutting services or laying off workers due to federal Medicaid funding changes, according to a new report.

The cuts were included in a sweeping federal budget package signed by Donald Trump on July 4, 2025.

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The report, from Public Citizen, says the law will significantly reduce federal spending on Medicaid and related programs over the next decade, citing estimates from the Congressional Budget Office.

Researchers identified hospitals as at risk if they had a Medicaid and low-income payer mix of at least 20 percent on average from 2022 through 2024 and negative profit margins over that same period.

Hospitals At Risk

In Minnesota, the report identified these hospitals as facing a higher risk of closing, cutting services or laying off workers:

• Hennepin Healthcare, Minneapolis
• Range Regional Health Services, Hibbing
• Lakewood Health System, Staples
• Mayo Clinic Health System (Albert Lea/Austin), Austin
• St. Gabriel’s Hospital, Little Falls
• Lakewood Health Center, Baudette
• Mahnomen Health Center, Mahnomen

The facilities range from a large safety-net hospital in Minneapolis to small rural providers that serve as primary care hubs in their regions.

Across the country, the report found that hospitals at risk tend to serve communities with higher shares of low-income residents, as well as larger Black and Hispanic populations.

Minnesota Impact

One of the hospitals on the list, Hennepin Healthcare, is already facing a severe financial crisis.

Hospital and county leaders have warned it is "on life support" and at risk of closing without additional funding, as rising uncompensated care, reliance on public insurance, and years of operating losses strain the system.

To prevent that, county officials are seeking state approval for a funding plan that would redirect or expand an existing local ballpark stadium sales tax to support the hospital system long-term.

Lawmakers are expected to take up the proposal this session, and officials have warned that without action, the hospital’s future could be in jeopardy.

The financial pressure is expected to grow, with hospital leaders anticipating major annual losses tied to Medicaid changes in the coming years.

The report notes that many of the hospitals identified nationwide are critical access or otherwise financially vulnerable providers that play an outsized role in their communities.

Congress included a $50 billion rural health fund in the legislation aimed at stabilizing providers, but the report says it is unclear whether that funding will be enough to prevent closures or service reductions.