strengthen and expand rural hospitals in minnesota

 

The purpose of this bill is to prevent the ongoing closures and underfunding of rural hospitals in Minnesota by creating

a statewide funding program to support critical infrastructure upgrades, staff recruitment, and essential medical

services in rural communities.

 

Twenty-nine percent of Minnesotans live in rural areas, yet many rural hospitals operate on extremely thin financial

margins. According to the Minnesota Hospital Association, over 70% of rural hospitals reported negative operating

margins in the last two years. Minnesota has 11 rural hospitals at risk of closure, especially in northern and

southwestern counties. Rural hospital closures reduce access to emergency care, maternity services, mental-health

treatment, and chronic disease management, often forcing residents to travel over 30–60 minutes for essential care.

Investing in rural hospitals boosts local economies, protects public health, and reduces long-term healthcare costs for

the state.

 

A rural hospital is any licensed hospital located in a Minnesota county with a population density under 100 persons per

square mile or classified as rural by the Minnesota Department of Health. Critical Services are defined as emergency

care, inpatient care, maternity/OB services, mental-health treatment, and telehealth infrastructure.

 

 

This bill requires 120 million dollars of funding annually for five years, approximately $600 million by the end of the

5 years. Funding will be sourced from the Health Care Access Fund surplus, states existing provider tax revenue, and

federal matching via the Medicaid Rural Health Initiative.

 

Any hospital that illegally diverts, misuses, or mismanages grant money must repay 150% of the misused amount and lose

eligibility for funding for three fiscal years. Executive officers responsible may face civil penalties up to $50,000

per violation. If a hospital accepts funds but intentionally closes or eliminates a critical service without MDH

approval, it must return all funds received in the last two years, it becomes ineligible for grants for five years. MDH

may assign an emergency management team to oversee hospital operations temporarily. Failure to submit required annual

audits results in an automatic 25% reduction in the next year’s funding. Failure to submit two consecutive audits

results in full suspension of funding until compliance is restored.

 

This bill will take effect on January 2 2027