Minnesota’s Largest Nonprofit Groups Focus on Health Care: A Review

Minnesota’s Largest Nonprofit Health Groups See Profits Amid Challenges

In a recent annual review conducted by the Star Tribune, it was found that Minnesota’s largest nonprofit groups are once again focused on health care. The review highlighted that eight of these nonprofits are primarily health systems that operate hospitals and clinics, while three are health insurers. One organization straddles both sides of the healthcare industry.

Despite facing significant challenges, it was the health insurers that experienced a three-year period of annual profits leading up to 2022. The analysis of financial performance and executive compensation at Minnesota’s major nonprofits revealed that the large nonprofit insurers, including Blue Cross and Blue Shield of Minnesota, HealthPartners, Medica, and UCare, benefited from lower medical claims during the early stages of the COVID-19 pandemic. Additionally, their balance sheets were bolstered by record-setting income from the state’s Medicaid program.

However, these health insurers are now preparing for rising healthcare costs and potential changes at the state Capitol that could impact their income. A bill passed by Minnesota DFL lawmakers last year could eventually prevent the largest nonprofit and for-profit health plans from managing patient care in Medicaid and related programs for lower-income residents by January 2026.

Critics have raised concerns about the profitability of insurers from state Medicaid programs, particularly pre-paid Medical Assistance. Rep. Tina Liebling, DFL-Rochester, questioned why these insurers are making significant profits while the Medical Assistance system and healthcare providers are under stress.

In response, health plans have expressed their willingness to undergo state review to demonstrate the value they provide by coordinating care for beneficiaries. Lucas Nesse, chief executive of the Minnesota Council of Health Plans, emphasized that nonprofit health plans have responsible margins around public programs and support Minnesotans with access to care.

Among the top nonprofit health insurers in Minnesota, HealthPartners ranked second in revenue, followed by Blue Cross, Medica, and UCare. Mayo Clinic remained the state’s largest nonprofit with over $16 billion in revenue from hospitals and clinics in Minnesota and other states.

The push for private insurers to manage care for Medicaid beneficiaries began in the 1980s to address escalating costs. Managed care aimed to shift incentives towards keeping people healthy and providing predictability on Medicaid expenses, which are significant costs in state budgets.

Despite the profitability of nonprofit health insurers from Medicaid, some health systems experienced annual losses between 2020 and 2022. The Minnesota Hospital Association raised concerns over financial results, citing labor shortages and supply costs. However, stock market gains have provided a financial cushion for health systems through their investments.

Overall, the landscape of nonprofit health groups in Minnesota reflects a complex interplay of financial success, challenges, and ongoing debates about the future of healthcare management for lower-income residents.