MANKATO — Nearly 10% of Mankato Clinic’s workforce was laid off Tuesday as the organization grappled with rising costs and what CEO Aaron Johnson called the unintended consequences of state legislation.
Johnson said fewer than 100 employees were affected by the work force reduction, which impacted workers across nearly every department of the clinic.
“It was under 100 employees, but about 10% of our total labor force that were impacted today,” Johnson said.
The layoffs primarily involved ancillary and support staff, though some leadership and management positions also were eliminated. Johnson said physicians, nurse practitioners and physician assistants largely were spared from the cuts.
“Our expectation is that patient care will remain unchanged,” he said. “We are not closing any sites, we’re not eliminating any services.”
Johnson said the decision followed months of discussions involving clinic leadership, its board of directors and physician shareholders.
“It wasn’t made lightly, not made in haste,” he said. “It’s been a discussion with the leadership team, the board, the physicians for a matter of months now.”
The CEO attributed the layoffs to a combination of rising operating costs and reimbursement rates that have failed to keep pace.
“The cost of labor, supplies, technology, facilities — all of those things continue to increase at a rate that’s outpacing what we’re actually getting paid,” he said.
Johnson also pointed to Minnesota’s Medical Debt Fairness Act, which took effect in late 2024. He testified before state lawmakers against the legislation, arguing it would have unintended consequences for healthcare providers.
“We’ve seen increases in bad debt,” he said. “That bill has had a significant impact on our collections, and in turn our expense structure.”
Employees affected by the layoffs were informed individually Tuesday by members of the clinic’s leadership team, Johnson said. The clinic also plans to hold town hall meetings with employees Wednesday. Those whose positions were eliminated will receive severance packages and transition assistance.
Johnson acknowledged the emotional toll the layoffs have taken on employees and leadership alike.
“These folks did nothing wrong,” he said. “They did everything we’ve asked them to do. They’re a part of the Mankato Clinic family.”
Despite the workforce reduction, Johnson said the clinic remains committed to serving southern Minnesota communities.
“We’re making these decisions because we are here to stay,” he said. “We expect that we will continue to provide the same high level of service that we have in the past going forward, just with a different composition of our employee base.”
You can reach Robb Murray at (507) 344-6382, or rmurray@mankatofreepress.com.