Item Coversheet

Board Action Request

Item Description:
Allocate $44,000,000 of CARES Act Funds to Hennepin Healthcare Systems, Inc., to reimburse COVID-19 related expenses incurred 03/01/20–07/31/20, that satisfy CARES Act criteria; delegation to County Administrator to determine eligibility

BE IT RESOLVED, that the Hennepin County Board of Commissioners hereby allocates up to $44,000,000 of its federal funding from the Coronavirus Relief Fund available under section 601(a) of the Social Security Act, as added by section 5001 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to reimburse Hennepin Healthcare Systems, Inc., for COVID-19 related expenses incurred between March 1 and July 31, 2020, that satisfy the Fund’s eligibility criteria, and that the Controller be authorized to accept, disburse, and transfer funds as directed; and


BE IT FURTHER RESOLVED, that the Hennepin County Administrator be authorized to determine the amount of Hennepin Healthcare Systems, Inc.’s COVID-19 related expenses from March 1 to July 31, 2020 which satisfy the Fund’s eligibility criteria; and


BE IT FURTHER RESOLVED, that any funding amounts not utilized will be returned to Hennepin County for future distribution.


History: Section 601(a) of the Social Security Act, as added by section 5001 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), established the Coronavirus Relief Fund (Fund) and appropriated $150 billion to the Fund. Under the CARES Act, the Fund is to be used to make payments for specified uses to States and certain local governments; the District of Columbia and U.S. Territories; and Tribal governments. Hennepin County received a direct payment out of the Fund from the U.S. Treasury.


The CARES Act provides that money from the Fund may only be used to cover costs that:

  1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19);

  2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and

  3. were incurred during the period that begins on March 1, 2020 and ends on December 30, 2020.


    Allowable expenditures include but are not limited to:

  • Medical expenses such as:

    • COVID-19-related expenses of public hospitals, clinics, and similar facilities.

    • Expenses of establishing temporary public medical facilities and other measures to increase COVID-19 treatment capacity, including related construction costs.

    • Costs of providing COVID-19 testing, including serological testing.

    • Emergency medical response expenses, including emergency medical transportation, related to COVID-19.

    • Expenses for establishing and operating public telemedicine capabilities for COVID-19- related treatment.

  • Public health expenses such as:

    • Expenses for acquisition and distribution of medical and protective supplies, including sanitizing products and personal protective equipment, for medical personnel.

    • Expenses for disinfection of public areas and other facilities, in response to the COVID-19 public health emergency.

  • Payroll expenses for health care employees and other public employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency, including costs of personnel that have been diverted to substantially different functions due to the COVID-19 public health emergency.

  • Any other COVID-19-related expenses reasonably necessary to the function of government that satisfy the Fund’s eligibility criteria


For the period beginning March 1 through July 31, Hennepin Healthcare Systems incurred several categories of expenses related to the COVID-19 pandemic, including:  

  1. establishment of viral screening testing clinics on and off campus tents,

  2. creation of capabilities for telemedicine clinic visits,

  3. buildout of intensive care units,

  4. establishment of facility security and sanitation protocols,

  5. bulk purchases of Personal Protective Equipment (PPE),

  6. additional bed rentals,

  7. repurposed clinical, cafeteria, hospital spaces to accommodate additional isolation units of COVID-19 patients,

  8. required COVID lab equipment and reagent supplies,

  9. bulk IT equipment and licenses to facilitate immediate work-from-home isolations,

  10. hotel costs to isolate at-risk employees,

  11. environmental service enhancement to turnover beds and sanitize public spaces,

  12. establishment of entrance screeners with associated equipment per guidelines,

  13. increased laundry turnover and isolation,

  14. facility costs to maintain COVID spaces,

  15. establishment of new billing procedures,

  16. grant administration,

  17. drug and supply shortage additional costs,

  18. added ventilators, and

  19. staff training of donning, doffing, and isolation procedures.


HHS has also incurred significant personnel-related expenses as a result of the COVID-19 pandemic, including payroll expenses for its healthcare employees who are substantially dedicated to responding to or mitigating the pandemic; activation of an Incident Command Center to manage emergent response decision-making across the organization; employee leave expenses for isolation, quarantine, and other paid leaves authorized by the Families First Coronavirus Response Act; and unemployment insurance costs related to the public health emergency.


As additional background on Hennepin Healthcare’s pandemic response, from January to April, HHS engaged in a “Preparation” phase to ensure COVID-19 preparation, readiness, and crisis standards of care across the hospital. HHS anticipated and prepared for capacity of outpatient facilities, emergency department, hospital operations, and intensive care units based on the dramatic impacts of the pandemic in places like Italy and New York. Hospital preparations anticipated critical shortages of staff, space, and supplies with critical implications to all patient outcomes, with potential disruption to operations for all of 2020.


On March 18, the Centers for Medicare & Medicaid Services (CMS) recommended that most elective surgeries and non-essential medical, surgical, and dental procedures be canceled or delayed during the COVID-19 outbreak. To increase hospital capacity and conserve PPE, hospitals across the state moved to cancel non-emergency procedures. In Emergency Executive Order 20-09 (March 19, 2020), Governor Walz codified these actions by mandating that all non-essential or elective surgeries and procedures that utilize PPE or ventilators must be postponed indefinitely, beginning March 23, 2020. In late March and April, in accordance with the directive from the US Surgeon General and Governor Walz’s executive orders, HHS entered a “Ramp Down” phase, reducing operating room activity down 70% and outpatient clinic activity down 75%, and inpatient volume operated at 80% of originally scheduled capacity. 


Despite the “Ramp Down,” HHS maintained its entire workforce in preparation for the COVID-19 outbreak “Treatment” phase, which was expected to run 14 weeks from June to August, based on the Minnesota pandemic planning model. Essentially, all staff in the hospital operations were dedicated to pandemic response work. HHS prepared to surge from operating 492 beds to operating 655 beds for a patient population that would be much sicker than average. What was expected to be different in the Treatment phase was the heavy concentration of patients infected with COVID-19 or experiencing acute respiratory distress syndrome.  


In Emergency Executive Order 20-51 (May 5, 2020), Governor Walz permitted healthcare facilities to restart procedures that utilize PPE or ventilators beginning May 10, 2020, subject to a requirement that the facilities comply with applicable guidance from the Minnesota Department of Health. HHS has since entered a “Ramp Up” phase, in which the hospital has resumed scheduling and performing elective procedures and caring for non-emergent patients. In addition, HHS has begun the process of preparing the hospital to enter a “Recovery” phase, for the remainder of fiscal year 2020 and extending well into fiscal year 2021, as HHS moves into a post-COVID-19 environment designed to keep our patients and employees safe.


Current Request: The recommendation is that up to $44 million in the Federal CARES funding be allocated to reimburse Hennepin Healthcare Systems, Inc., for its COVID-19 expenses from March 1 to July 31, 2020, and that the County Administrator be delegated to determine which expenses satisfy the statutory criteria.

Recommendation from County Administrator: Recommend Approval