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Mayo Clinic CEO: Expansion funding ‘the right thing for Minnesota’

Courtesy of the Mayo Clinic
“We told the state we want to grow, we know Mayo Clinic will continue to grow, we want to grow in Minnesota,” said Mayo CEO Dr. John Noseworthy.

WASHINGTON — A major state investment in a Mayo Clinic expansion plan would be “the right thing for Minnesota,” Mayo CEO Dr. John Noseworthy said here Tuesday, though he hedged on whether such a request will pass the state Legislature.

Noseworthy, asked about a $3 billion expansion proposal at a Tuesday speech at the National Press Club, made his pitch: Mayo is the biggest private employer in Minnesota and accounts for $9.6 billion in revenue for the state, so it’s only fair for the state to make a $500 million investment is Rochester infrastructure upgrades related to the clinic’s expansion.

“We told the state we want to grow, we know Mayo Clinic will continue to grow, we want to grow in Minnesota,” he said. “We have to decide where we’re going to invest. If we’re going to invest $3 billion over the next 20 years we just have to know that we’re going to invest it in a place that will allow us to grow.”

Mayo announced its expansion plan in January, saying it expects to create 45,000 jobs in the process. But Rochester is too small to pay for the infrastructure improvements associated with the project, Noseworthy said, so it’s asking the state for about $500 million upfront to fill the gap.

Mayo has support from a bipartisan group of state lawmakers and from Gov. Mark Dayton. As to whether the funding will come through, Noseworthy started to say he expected so, but walked that back.

“It should pass — it’s the right thing for Minnesota,” he said. “All boats will rise.”

Lobbying for new health care initiatives

Noseworthy’s wish list for the federal government is perhaps an even harder lift.

Noseworthy is meeting with lawmakers during his D.C. trip and used his Tuesday speech to outline his vision to “transform health care in America.” Much of his address looked at what Mayo has done toward that goal, but he brought a few long-held requests with him:

• First, the government should invest more in federal scientific research through the National Institutes of Health. NIH spent about $30 billion on medical research last year, and Noseworthy said about $220 million of that went to Mayo.

Complicating things is sequestration, which cut the NIH budget by about 5 percent this year. Since about 70 percent of NIH’s budget goes toward research grants, those are likely to be trimmed over time.

In total, sequestration costs Mayo about $47 million a year, Noseworthy said, split between patient care and research.

“It’s not a time to restrain racehorses in America,” he said.

• Next, Congress should reform the Medicare reimbursement system, starting by repealing what has long been a thorn in physicians’ sides, a 1997 law meant to rein in Medicare costs at the expense of lower reimbursement payments from the federal government.

After the law took effect, health care costs continued to rise, and Congress has been forced to defer the associated Medicare cuts every year since 2003, most recently in January during the fiscal cliff debate.

Noseworthy suggested Congress repeal the law altogether rather than passing such piecemeal solutions year after the year (the next of which is due in January, when doctors are looking at a 30 percent cut to Medicare reimbursements. Noseworthy said Mayo stands to lose $128 million if such cuts come to pass).

One problem: Doing so would cost $245 billion over 10 years, a sum unlikely to find much support among the ranks of deficit foes on Capitol Hill. The Senate voted on repealing the law while debating the Affordable Care Act in 2009, but fell well short of doing actually so.

• Finally, Noseworthy suggested the government should focus on “data-driven” health care financing, combining both clinical and insurance data to discover how to both improve health care and lower costs.

He pointed to a new Mayo partnership with UnitedHealth as a model — the two organizations are pooling more than 100 million (anonymous) patient records gathered over the last 20 years and analyzing the data to find the best and least-costly forms of health care delivery (More info on the venture is here).

“The very best should show the others how to do it better and you need you have that competitive marketplace,” he said. “And we can do that now with data, and I’m very excited about that.”

Devin Henry can be reached at dhenry@minnpost.com.

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Comments (6)

  1. Submitted by Steve Titterud on 04/09/2013 - 05:22 pm.

    Now THIS is how the state should invest,…

    …rather than in sports palaces for billionaires..

    The FAR smaller number of new jobs the Vikings stadium will produce, and those persisting for only the construction phase of a few years, is SUCH A PALTRY VALUE compared with the Mayo proposal, which will produce far more jobs – and long term jobs.

    Furthermore, is there any question about the broad public benefit of supporting Mayo’s mission?

    It’s amazing to me that some state legislators now suggest it’s time to apply the brakes and short change the project.

    If common sense still has a role in St. Paul, this one should fly through the legislature.

  2. Submitted by Robert Gauthier on 04/09/2013 - 09:01 pm.

    Reasonable

    500 M for 45K jobs is an investment of 11,111 per eventual job. Given hat most of these jobs are reasonable salaries, likely a good deal. However, this will not create much wealth outside of nice middle class jobs. Kind of like a good factory job.

    How about a long term commitment to he U as well, say 200 M next session for research facility and technology upgrades for the Medical School?. The U creates more weath than Mayo does, as is inventions tend to be new company based. Both institutions have their roles and both need each other.

  3. Submitted by Neal Rovick on 04/10/2013 - 08:01 am.

    …..sequestration costs Mayo about $47 million a year, Noseworthy said, split between patient care and research.

    “It’s not a time to restrain racehorses in America,” he said…..

    Really?

    Look up the phrase “white elephant”—it’s more apt given that the present health-care system is financially breaking the US. Pretending that the present growth rate can continue indefinitely into the future is absurd. Giant edifices, pampered and wooed employees, with even more expensive and out-of-reach treatments–is that the racehorse of the future?

    • Submitted by Susan McNerney on 04/10/2013 - 09:09 am.

      Mayo is one of the most cost-effective

      health care systems in america. Rochester has among the lowest per capita health care costs in the US. If you’re complaining about expensive treatments, you’re complaining about the wrong system.

      The hospitals that rack up the biggest bills are in places like texas, where doctors use their patients as personal ATMs.

      • Submitted by Steve Titterud on 04/10/2013 - 10:28 am.

        Personal experience of health care costs underscores your point

        In my experience, and for the SAME procedures, Mayo’s top-line billing (before adjustment by insurer contracts in claims) is significantly less than the well-known provider organizations right here in the Twin Cities.

        Besides this, and besides their well-documented quality of care, there is another thing to consider: Mayo’s value system. See http://www.mayoclinic.org/governance/, where you will find,

        “The best interest of the patient is the ONLY interest to be considered.” (My emphasis in caps)

        Again, based on personal experience, I don’t think ANY of the local provider organizations can say this with a straight face. There is a widespread ethical challenge of business interest vs patient interest, which these organizations fail. I don’t mean to disparage the fine employees of these organizations, as they are not the problem source – it is their masters in the business organizations whose value systems fail the challenge posed by Mayo’s mission statement.

        The values expressed in Mayo’s mission statement, and the high quality of care, is what draws fine practitioners from all over the world to practice at Mayo – and, they tell me, they go to Mayo for less pay than they could obtain elsewhere.

  4. Submitted by David Frenkel on 04/10/2013 - 11:13 am.

    Corporate welfare

    Nobody doubts the value of Mayo but it is estimated local and state governments across the US give over $3 trillion dollars in various incentives, i.e. corporate welfare. It was announced today that the State of South Carolina is giving Boeing $120 tax incentives for investing $1B in a new production plant. If Seattle is such a bad place to do business why does Boeing need incentives to move? Noseworthy mentioned in his speech that 49 states want Mayo, what hat did he pull this out fact out of? Does he really want to move to Boise, Vegas, or Rapid City?
    There needs to be a detailed assessment of what Mayo wants to use this proposed money for, currently they say it is for sewers and sidewalks. $500 million buys a lot of sidewalks.

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