Mayo Clinic officials on Thursday asked Minnesota to spend as much as $585 million over 20 years to make sure that the famed physician-run health system keeps its global headquarters in the southern city of Rochester.
Mayo officials say that patients who travel to Rochester and physicians being recruited to work there have reported that lodging, entertainment and housing options in the city of 100,000 people don't live up to their expectations—despite the fact that Mayo is spending $3.5 billion over 20 years to improve its campus in the city.
In addition to the public funding, the plans for the project known as “Destination Medical Center”
also call for about $2 billion in “leveraged private investment” that would come from private sources and support Mayo's 20-year expansion plan, which was announced by the system last year.
“While Mayo Clinic is also evaluating plans for additional expansion outside Minnesota in future years, we believe Rochester can and should remain Mayo's global headquarters and a premier destination for medical care well into the future, assuming we can attract the additional private business investments and finance the necessary public infrastructure needed to support an expansion of this scale,” Mayo President and CEO Dr. John Noseworthy said in a written statement.
Asked whether the system would actually move its headquarters out of the city where Dr. William Worrall Mayo first established his medical practice in 1863, Mayo spokesman Karl Oestreich acknowledged that such a move would be difficult. But he said a failure by the state to approve borrowing would indeed affect the system's long-term expansion plans in the city.
“It could limit the growth in Rochester 10 or 15 years from now if it doesn't happen, but we are confident that this will go forward successfully,” he said. “The public infrastructure needs to keep up with the private investment so that we can continue to grow.”
In 2011, the most recent year for which financial disclosures were available, Mayo Clinic Health System's hospitals reported a combined $515 million income on $8 billion in operating revenue. Mayo had the equivalent of about 52,000 full-time employees that year, including 32,000 in Minnesota, making it the state's largest private employer.
The proposal announced by Mayo on Wednesday states the Legislature will have to approve more than $500 million in bonds to support new infrastructure in a “DMC special services district” in Rochester, including parking and transit options, site-preparation work, streetscape improvements, skyways and bridges.
Gov. Mark Dayton was scheduled to announce the proposal during a news conference in the St. Paul Capitol on Wednesday, but spokespeople from his office were not immediately available for comment. Oestreich said the governor has expressed “full support” of the plan.
The system also announced private business funding from undisclosed sources other than the health system that would address “significant gaps in patient/visitor satisfaction between their experiences on the Mayo campus (which they rated very high) versus the non-Mayo time they spend in Rochester during their visits,” according to the Mayo announcement.
Those private investments in hospitality, entertainment and tourist amenities would total about $2.1 billion and come in addition to the previously announced $3.5 billion capital expansions.
The tax-exempt health system estimated that the DMC project as a whole would create at least $2.5 billion in new personal income and sales taxes and other state fees over 20 years. Under a tax-increment financing proposal, the state bonds would be paid down with part of the new taxes.