Item Description:
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County Board oversight of Hennepin Healthcare System, Inc.; establishes meetings - offered by Commissioner Fernando
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WHEREAS:
WHEREAS Hennepin Healthcare System, Inc. (HHS), is an integrated system of care that serves as a critically important safety net and teaching hospital for residents of Hennepin County and the State of Minnesota; with a nationally recognized Level I Adult and Pediatric Trauma Center; an acute care hospital; a clinic system; an outpatient Clinic & Specialty Center; an Emergency Medical Services fleet; and more; and
WHEREAS under Minnesota Statutes § 383B.901, HHS is a public corporation, operating as a subsidiary of Hennepin County; and
WHEREAS under Minnesota Statutes § 383B.908, the Hennepin County Board of Commissioners has reserved powers over HHS, including but not limited to specific controls over HHS’s mission, finances, and governance; and
WHEREAS the Hennepin County Board is the sole “Governing Member” of the HHS Corporation; and the current HHS bylaws require the HHS leadership to brief the County Board “at least quarterly” (HHS Bylaws Sections 3.1-3.2 and 3.5, full text in Background below); and
WHEREAS on December 12, 2023, the Hennepin County Board adopted two Resolutions, 23-0441 related to the HHS 2024 Financial Plan and 23-0512 related to County Board oversight of HHS, which directed several due diligence actions to the County Administrator, including monthly progress reports to commissioners; and
WHEREAS the County Administrator has accordingly delivered progress reports to commissioners on the following 2024 dates: February 1, March 1, and April 1; and the County Administrator delivered reports and analysis from the County’s financial consultant PFM on April 11, which recommended that the County Board receive “a monthly/quarterly report focused on real time drivers of performance [at HHS], with a comparison to prior year and budget” (PFM report, p. 12); and
WHEREAS commissioners are receiving pronounced communications (feedback, concerns, information, questions, and suggestions), from a wide-range of stakeholders regarding a wide-range of topics related to HHS, with particular attention to HHS governance and the County Board’s reserved powers; and
WHEREAS the health, stability, and certainty of the county’s safety-net hospital is integral to Hennepin County’s delivery of services (health care and otherwise) to the most vulnerable; is a key regional asset; and benefits from the dedication of all its workers, providers, and allied health professionals, to a shared mission of community health; and
WHEREAS the County Board’s oversight of HHS will continue to incorporate deliberation and due diligence; and
WHEREAS the County Board’s oversight work remains ongoing, with a goal of HHS maintaining and growing its role as a key provider in the community.
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Resolution:
BE IT RESOLVED, that in addition to the previously scheduled briefing on May 2, 2024, the Hennepin County Board of Commissioners establishes additional 2024 dates for HHS briefings of the County Board: June 4, June 25, and July 9; and
BE IT FURTHER RESOLVED that the Hennepin County Board of Commissioners directs the County Administrator to deliver a report by July 1, 2024, which meets the following objectives:
• collect Resolutions, statues, reports, and other relevant materials related to governance, public discourse, deliberations, and establishment of HHS
• overview of HHS’ current advisory boards, community boards, or task forces related to health outcomes; and
BE IT FURTHER RESOLVED that the Hennepin County Administrator is authorized to identify and engage consultant(s) or research partner(s), as needed in order to give effect to the above resolving clauses.
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Background:
Key Q2 2024 meeting dates (proposed meetings in italics):
• Wednesday April 24 - HHS Board
• Tuesday April 30 - County Board
• Thursday May 2 - HHS Quarterly
• Tuesday May 7 - County Committees
• Tuesday May 14 - County Board
• Tuesday May 21 - County Committees
• Tuesday June 4 - County Board (and proposed HHS briefing)
• Tuesday June 11 - County Committees
• Tuesday June 25 - County Board (and proposed HHS briefing)
• Wednesday June 26 - HHS Board
• Tuesday July 9 - County Committees (and proposed HHS briefing)
Full text from referenced HHS Bylaws:
Section 3.1 Member. The Corporation shall have one (1) class of members: a Governing Member (as defined in Section 3.2).
Section 3.2 Governing Member. The Governing Member of the Corporation is the County of Hennepin, Minnesota (the “County”), as represented by the Hennepin County Board of Commissioners (collectively, the “County Board” and individually, “Commissioner(s)”). The County has all the rights, duties and privileges as to all matters specified under the Act and these Bylaws. The Board of Directors of the Corporation shall be empowered to carry out rights, duties and privileges of the Corporation to the extent specified in Sections 4.1 and 4.2 of these Bylaws, and subject to the Reserved Powers of the County specified herein.
Section 3.5 Meetings. At least quarterly, the Chair of the Board of Directors or the Chief Executive Officer or their designee shall brief the County Board on matters concerning the Corporation. Notice of the meeting shall be provided according to the procedures established by the County Board.
Background from Dec 12, 2024 Board Action:
Hennepin Healthcare System, Inc. (HHS), is a public corporation and a subsidiary of the County, which operates the Hennepin County Medical Center (HCMC) and related clinic system. Pursuant to Minnesota law, the County Board has significant reserved powers over HHS - in particular, the authority to approve the HHS budget, to approve the appointment of HHS board members, and to appoint two county commissioners to the HHS board. The County Board also has the statutory authority to resume management of the HCMC upon a two-thirds vote of the County Board, for example by dissolving the corporation, reorganizing the corporation, or removing the entire HHS board. In light of recent concerns and issues regarding the financial condition of HHS; the recruitment, retention and wellness of the HHS workforce; and challenging trends in the health care industry; this board action proposes several concrete steps to enhance and strengthen the County Board’s oversight and control of HHS, in an effort to assess, promote, and manage the long-term financial vitality and effectiveness of HCMC.
As additional historical reference, prior to 2005, HCMC was an operating department of Hennepin County. In this model, the hospital system was directly operated by the Hennepin County Board. Over time, this structure created some unique competitive disadvantages for HCMC, compared to other local health care providers. As a result, around 2002, the County Board developed a strategic plan for HCMC and began to evaluate the hospital governance model. In April 2003 (Resolution 03-4-132R1), the County Board voted to create a fourteen-member HCMC Governance Task Force (Task Force) to evaluate whether a different governance structure could maximize HCMC’s operations and preserve its long-term financial viability while still maintaining its public mission. The Task Force recommended that Hennepin County create a not-for-profit corporation, accelerate capital expenditures, and enter into a formula-based payment arrangement with Hennepin County for uncompensated and undercompensated care.
In June 2004 (Resolution 04-6-293R2), the County Board voted to create a smaller five-member HCMC Governance Transition Committee (Transition Committee) to further explore the Task Force’s recommendations and to provide specific information that would allow the County Board to define, develop, and pursue enabling legislation from the Minnesota Legislature for creation of a new public subsidiary corporation. The Transition Committee recommended that the County ask the Legislature to create a public benefit corporation, Hennepin Healthcare System, Inc., to operate the hospital as a subsidiary of the County, in order to create flexibility while maintaining public accountability. The Transition Committee also recommended that the new entity (HHS) would have a board with special expertise whose sole purpose would be to provide strategic and managerial oversight to the hospital.
In December of 2004 (Resolution 04-12-680 R1), the County Board voted to adopt the report of the Transition Committee, and to authorize county staff to seek legislation to implement the findings of the Transition Committee. In 2005, the Legislature enacted enabling legislation to create HHS as a public corporation and subsidiary of Hennepin County. See 2005 Minn. Laws, ch. 125 (H.F. No. 2187) (enacting Minn. Stat. §§ 383B.901-.928). Effective January 1, 2007, the County exercised its powers to create HHS and to grant it the authority to operate the hospital and deliver health care services.
Over the past 15 years, the County Board has maintained its critical oversight role over HHS, with two county commissioners serving on the HHS Board, and with the County Board exercising its reserved powers to approve the HHS budget, the HHS Board appointees, and more. This board action proposes several steps to enhance and strengthen the County Board’s oversight and control, to preserve HHS as a critical resource for the residents of Hennepin County and the State of Minnesota.
recommendation
Recommendation from County Administrator: Recommend Approval