Could North Memorial close? Hospital issues a warning, a glimpse of what’s at stake.

Spencer Kallestad was panicked and panting when North Memorial Health flight medics landed a helicopter at a parking lot in Morristown, Minn., and assessed his condition.

The 28-year-old needed trauma care at North Memorial’s hospital in Robbinsdale, 60 miles away, but posed a risk of a brain injury or breathing problem worsening midflight. Flight medic Keith Witte encouraged him to “think about your happy place” before sedating him and then threading a tube down his throat to control his breathing until he could reach the hospital.

North Memorial Health leaders say this type of emergency care is in jeopardy. They hope state lawmakers pass a bill this legislative session to secure additional federal Medicaid funding through a mechanism called directed payments. But Congress could also block new state directed-payment programs as part of a budget-cutting mandate from the Trump administration.

North Memorial Health CEO Trevor Sawallish repeatedly said in public testimony this spring that his health system could be forced to cut emergency medical services or reduce trauma care at its Robbinsdale hospital — or even close the hospital. He doubled down on those warnings in an interview Wednesday.

“When I say that publicly, I know it has ripple effects on the people that are providing the care. It has ripple effects in our community,” he said. “So I don’t say that lightly. But the math just stops working, you know? The hole is just getting deeper.”

The emergency care that Kallestad received is the bread and butter of North Memorial Health, which operates the nation’s largest hospital-based ambulance service and one of three high-level trauma centers in the Twin Cities. The health system treats more than 3,000 major trauma cases each year, mostly at Robbinsdale but also at North Memorial’s Maple Grove Hospital. More than 1,000 people are transported from outside the Twin Cities.

North Memorial’s Robbinsdale hospital opened its doors to the Minnesota Star Tribune last Wednesday as part of a campaign to persuade state lawmakers to boost support for hospitals before the session ends. Its goal: Legislative approval of a directed payment scheme, which assesses special state taxes on hospitals in a way that triggers larger federal Medicaid payouts back to them.

The program would still need federal approval, which could be a problem because the Republican-led Congress has proposed a freeze on new directed-payment programs as part of its effort to cut $880 billion in spending. State hospital leaders are hopeful that a Minnesota option can be assembled ahead of that freeze.

The lobbying by North Memorial Health echoes the strategy in 2023 of Mayo Clinic, which threatened to pull billions in state investments over legislation it opposed. North Memorial leaders said they simply want the public to understand what’s at stake.

Already, small Minnesota hospitals struggle to transfer patients with complex needs to large hospitals such as North Memorial’s Robbinsdale facility. Often they don’t have enough staffed beds available to meet demand, or they get stuck with patients until space opens up in step-down nursing homes or rehab units.

“We try to be the place that says yes,” said Dr. Chris Palmer, medical director of North Memorial’s ER. But it can be a challenge.

About 20 patients were sitting in the waiting room outside North Memorial’s ER in Robbinsdale on Wednesday morning. The average wait was nearing three hours, but it can increase to seven or more hours at peak times.

The hospital’s role in trauma care was apparent as doctors, nurses and other clinicians made rounds on a fifth-floor intensive care unit that specializes in complex injuries. A motorcyclist in one room was dealing with road rash and other injuries suffered in a crash, and a young woman in the next room was in pain after falling off her bicycle.

“As it gets warmer, it gets busier,” said Dr. Joseph Farhat, the ICU’s supervising physician.

The medical team moved on to review the treatment and medication needs of two more motorcyclists, a woman ejected from a car and the victim of a scooter accident.

Second to last came Kallestad. His brother had found him Tuesday, incoherent and collapsed from an apparent seizure, at the base of a staircase at their family home in Warsaw, Minn. His breathing tube was removed shortly after he was wheeled into the ER, and he was eventually transferred to the ICU. His collapse remained a mystery.

Had a seizure caused his fall or had injuries from his fall triggered a seizure? Kallestad had cut out alcohol, so it was possible that the episode was a severe withdrawal symptom. He received medication to manage such symptoms, just in case.

“He’s a little confused, disoriented,” said his nurse, Claire Anderson, while her patient waved his arms rhythmically like a conductor.

Kallestad mumbled to the treatment team before it moved on to the next patient. His mother, Kristy Kiekenapp, was on hand to interpret. He was getting hungry, she told the group. “He says he wants a root beer float.”

Directed payments could help maintain North Memorial’s trauma care, Sawallish said. The state House and Senate have each approved health budget bills that would bring Minnesota in line with 40 other states that broadly use directed-payment programs to maximize federal revenues for hospitals.

Minnesota already uses this method to boost federal payments to Hennepin Healthcare, a trauma center in Minneapolis, and lawmakers last year sought to use it to increase payments to hospitals for the costs of training the next generation of doctors. The Minnesota Hospital Association estimates that broader usage of directed payments could unlock $1 billion in federal support each year.

A comparative state database showed North Memorial in Robbinsdale posted a 2% operating margin on hospital operations in 2023 when 45 other Minnesota hospitals lost money. And North Memorial’s losses in Robbinsdale were offset by Maple Grove Hospital, which is posting 10% operating gains every year and is the state’s busiest childbirth center.

Yet North Memorial’s audited financial statement reveals an operating loss that year, and its leaders said the Robbinsdale hospital has challenges that others don’t face. Almost one-fourth of the patients admitted to the 350-bed hospital are covered by Medicaid (known primarily as Medical Assistance in Minnesota), an increase from previous years that is above the state average. Medicaid’s reimbursement is lower than the cost of care, so the hospital tends to lose money on each case.

North Memorial Health used to paper over such losses by collecting more money for privately insured patients. But Sawallish said that doesn’t really work anymore. Three-fourths of North Memorial’s patients are either uninsured or covered by Medicaid or the federal Medicare program for seniors.

The system hasn’t benefited from as much public support as others facing financial challenges, he said. North Memorial Health already eliminated 103 jobs last year and halted outpatient mental health services in Robbinsdale.

Hennepin County last year cut short a $48 million plan to help North Memorial care for low-income patients. Hennepin Healthcare and North Memorial Health have failed to persuade lawmakers to divert sales tax revenues that previously financed the construction of Target Field for the Minnesota Twins to their health-care operations.

“We are unique in that we are a safety net hospital that really gets no addition safety net support,” Sawallish said, “and that is leaving us uniquely vulnerable.”

Failing that extra support, Sawallish said closing the Robbinsdale hospital is one possibility. Cutting services is another, including those Kallestad needed.

He was recovering Wednesday afternoon but still confused as occupational therapists walked him around the ICU to test his balance and strength.

“I want to take the test,” he yelled.

“This is the test,” a therapist replied.

Technicians arrived later to connect electrodes to Kallestad’s scalp to perform an electroencephalogram, or EEG, to analyze his brain waves and assess any damage.

Kallestad closed his eyes, per instruction, but scowled at lights that flickered periodically during the test.

“What’s the purpose of this?” he whimpered.

“Just to see how fast your brain reacts,” replied EEG technician Nyaware Puoch. “We’ve only got one more left, OK? Last one.”

As night fell, the ER grew busier. Wait times rose above three hours for patients who didn’t have pressing needs.

More than 150 patients came to the ER on Wednesday, including one transferred from Mora, Minn., and another from Shakopee. Ten patients were admitted to the hospital for traumatic injuries and emergency surgeries.

Still, that made it a light day. North Memorial expects trauma cases to increase by 50% this summer.