The High Cost of Compassion: Minnesota’s Nonprofit Hospitals Under Scrutiny for Charity Care Practices

For many Minnesotans, the white coat and the “nonprofit” designation on a hospital’s letterhead have long served as symbols of a moral covenant: in exchange for massive tax exemptions, these institutions provide a safety net for the vulnerable. However, a sweeping investigation by the Minnesota Star Tribune and KFF Health News reveals a widening chasm between that ideal and the reality of modern hospital billing.

Across the state, nonprofit health systems are increasingly relying on aggressive collection tactics while dedicating a shrinking fraction of their operating budgets to charity care. The result is a system where the burden of medical debt falls hardest on those least equipped to manage it, turning recovery from illness into a long-term financial catastrophe.

The Human Cost: A Case Study in Medical Debt

Four years ago, Cori Roberts was a recently divorced, former stay-at-home mother in St. Cloud, Minnesota, navigating the terrifying reality of an early-stage cervical cancer diagnosis. Despite working a full-time human resources job with an annual salary of $41,000, the weight of her medical bills proved insurmountable.

“I had my car and a basket of clothes,” Roberts recalled. “Medical bills were not something I could have afforded.”

Roberts turned to CentraCare, a prominent St. Cloud-based nonprofit health system that benefits from millions of dollars in federal, state, and local tax breaks. Such institutions are legally and ethically obligated to offer charity care to patients who cannot afford their bills. Yet, when Roberts reached out, she was told she earned too much to qualify.

For two years, Roberts sacrificed basic needs—scrimping on groceries and skipping holiday gifts for her children—to pay off over $6,000 of her debt. It wasn’t enough. Last year, CentraCare filed a lawsuit against her for the remaining balance. “They’re supposed to be a nonprofit,” she said, reflecting on the experience. “It’s like, ‘Come on!’”

Roberts’ story is not an outlier. It is a symptom of a systemic failure within the Minnesota healthcare landscape.

A State-Wide Trend: Minnesota’s Low Charity Rankings

The investigation found that Minnesota’s hospitals and health systems are among the least charitable in the United States. When analyzed as a percentage of their total operating budgets, Minnesota hospitals provide less financial aid to patients than their counterparts in almost every other state, including Texas, Iowa, Nevada, and Illinois.

Nationally, hospitals dedicate an average of 2.4% of their operating budgets to charity care. Minnesota hospitals, on average, spend roughly one-third of that figure. The disparity is even more stark at the facility level: of the state’s 123 general hospitals, 62 devoted less than 0.5% of their operating budgets to financial aid between 2020 and 2024. CentraCare’s flagship St. Cloud Hospital spent less than 0.25%—amounting to a mere $25 in patient aid for every $10,000 spent on operations.

“The system is not working,” said Erin Hartung, director of legal services at Cancer Legal Care, a nonprofit that assists patients in navigating medical debt. “The burden is falling hardest on the people who are least able to bear it.”

Chronology of a Financial Crisis

The crisis is not new, but it is intensifying. As Minnesota’s uninsured rate hit its highest level since 2017 last year, the necessity for a robust charity care system has never been greater.

• 2023: The Minnesota legislature passed a law requiring hospitals to post their financial aid policies online. However, compliance has been spotty, with many institutions only updating their websites after being contacted by investigative reporters.
• 2024: State lawmakers banned hospitals from denying necessary care to patients based on outstanding debt, a landmark move aimed at curbing the most predatory collection practices.
• 2025: Following an investigation by Attorney General Keith Ellison, the Mayo Clinic—one of the world’s most prestigious health systems—agreed to overhaul its charity care program. The intervention proved effective; Mayo’s charity care spending nearly doubled, reaching 1.5% of operating expenses by the end of the year.

Despite these legislative efforts, the path to reform remains obstructed by inconsistent standards and a lack of transparency.

Official Responses and Hospital Defenses

Hospital executives push back against the characterization that they are hoarding wealth. They argue that they are operating on razor-thin margins, burdened by rising labor costs and the chronic underpayment of Medicare and Medicaid—the latter of which accounts for over 80% of the patient volume at some rural facilities.

“Rural hospitals like ours are often portrayed as though we are sitting on piles of cash and simply choosing not to spend it on charity care,” said Robert Pastor, CEO of Rainy Lake Medical Center. “That is far from the reality. We are the second- or third-largest employer in town, running on razor-thin margins.”

Patti Banks, head of Ely-Bloomenson Community Hospital, added, “I feel like I’m put in the position, being the hospital, where we have to defend being paid.”

While smaller, rural hospitals face genuine financial peril, larger systems such as the Mayo Clinic, Essentia Health, and Sanford Health maintain strong financial foundations. Data shows that even within CentraCare, operating margins exceeded 10% in 2024. Attorney General Keith Ellison argues that these margins, combined with tax-exempt status, demand greater accountability.

“There is a benefit you get from being a nonprofit hospital in the state of Minnesota,” Ellison said. “But do the people get the benefit?”

The Complexity Barrier: A Maze of Standards

Perhaps the most effective tool hospitals use to limit charity care is bureaucratic complexity. Unlike states like New York or Maryland, which have standardized charity care, Minnesota allows each hospital to set its own eligibility criteria.

This has created a "dizzying array" of standards. Some hospitals provide free care to individuals making $47,000 annually, while others cut off eligibility at $15,000. Many institutions require applicants to disclose extensive personal financial details, including the value of their retirement accounts, livestock, farm equipment, and even their vehicles.

“Hospitals have optimized to get payment,” noted Jared Walker, founder of the nonprofit Dollar For. “If you want to get on a payment plan, it’s so easy. But the drop-off rates for financial aid are much higher the more questions you ask and the more documentation you require.”

Patients often report being entirely unaware that charity care is an option. When families are in the "cancer fog" or recovering from traumatic accidents, the burden of navigating a 53-question financial application is frequently too high.

Implications for the Future

The long-term implications for Minnesota residents are dire. Medical debt is linked to increased stress, delayed future medical treatment, and, in some cases, premature death. When patients are forced to drain retirement accounts or sell family assets to pay hospital bills, the long-term economic stability of the entire community suffers.

State Sen. Liz Boldon and Attorney General Ellison are now advocating for a unified, state-wide approach. Their proposed reforms include:

1. Common Eligibility Standards: A universal income threshold for charity care.
2. Standardized Application: Removing the "maze" of varying paperwork.
3. Automatic Screening: Requiring hospitals to use software to identify low-income patients who qualify for aid without requiring a formal application.

While the Minnesota Hospital Association argues that such mandates would increase bureaucracy and hamper local control, the success of screening software at systems like Sanford Health—which has helped elevate their charity care spending above the state average—suggests that the tools for change are readily available.

For Cori Roberts, now remarried and living in a home filled with signs of "Faith, Family, and Friends," the resolution came only after she borrowed against her retirement plan to settle her debt. CentraCare eventually dropped the lawsuit, but the damage to her financial security remains.

As she looks out at the sprawling, multi-million-dollar expansions of the health systems that once sued her, her question remains for the entire state to answer: “They have all the money, but they can’t grant a good person some grace?”

As Minnesota enters a new legislative session, the debate over whether hospitals are serving their patients or their portfolios will likely take center stage, forcing a reckoning with the definition of "nonprofit" in the modern age.