Mankato Clinic lays off 100 workers, keeps clinics open

Almost 100 employees of the physician-owned Mankato clinic were laid off on Tuesday, and the layoffs were effective immediately.

None of the 12 Mankato Clinic locations will close, and none of its 200 physicians are being laid off. But the cuts affected most departments, including management and ancillary support staff like front desk receptionists and imaging staff. Mankato Clinic employed about 950 employees across all of its locations and departments prior to the layoffs.

“They were difficult decisions to make,” said Aaron Johnson, 43, Mankato Clinic CEO. “But we made them with the expectation that Mankato Clinic will remain an independent physician-owned practice for decades to come.”

Johnson, who just took the helm of the health care provider in January, said that conversations about the financial health of the organization and the possibility of layoffs were underway before he started in his new role about six months ago.

“Unfortunately, like many healthcare organizations nationally but specifically in the state of Minnesota, we’ve been facing significant financial and operational pressures,” Johnson told MPR News. “We aren’t immune to those here in Mankato.”

Johnson attributed the financial challenges to the state’s economy, increasing operating expenses and decreasing reimbursement rates from commercial health insurance plans. He also referenced The Medical Debt Fairness Act, which took effect in 2024 and significantly increased the number of unpaid medical bills and bad debt expenses.

The layoffs come as other health care providers in southern Minnesota, including Mayo Clinic, have been closing hospitals and clinics and consolidating rural health care services.

Johnson said that he did not expect the layoffs to affect the level of patient care, adding that there may be some minimal disruptions for patients as staff adjust to the changes.

“The decision to make the reductions that we did was absolutely a last resort for us,” Johnson said. “Our employees are incredibly important to us, they’re the lifeblood of the organization.”

“We are still here for our patients, and we want to make sure that folks know that,” Johnson added. “But while the decisions were difficult emotionally for folks, they were necessary and needed to be made if we wanted to continue to support the patients that we take care of.”

Johnson said he believes that the staffing cuts will help sustain what Mankato Clinic has and will keep it viable in the future. He’s also aware of the criticism of the timing for hiring new chief financial officer Brandon Janike just a week before the layoffs.

“I’m completely sensitive to and aware of just the timing of bringing on a new CFO,” he said. “[Brandon’s] going to be part of the team, and be instrumental in the work to ensure that we are going to be here for decades to come. I certainly understand not only the perception of folks externally, but also internally … we need a strong CFO to help course correct and advance the organization forward.”