Mayo Clinic CEO: Expansion Funding “The Right Thing for Minnesota”

“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.

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 Governor 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).

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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.”