Minnesota's Mayo Clinic wants to secure its position as a leader in the health care industry. The clinic is consistently ranked as one of the nation's top medical facilities, with clinical and research activities and a large philanthropic base.
But Mayo's competitors are also growing. And that's one reason the Rochester-based clinic is proposing a $5 billion expansion plan over the next two decades -- to stay ahead in the race to be a global medical leader.
While Rochester is already a destination city for tens of thousands of Mayo patients and visitors each year, competition among several well-funded, global medical centers is part of the reason the clinic needs to build for the future.
The Cleveland Clinic is one of those competitors. A big-ticket medical complex is under construction right now in downtown Cleveland. Called the Cleveland Medical Mart, the $465 million facility is scheduled to open in July.
The center, officially the Global Center for Health Innovation and Cleveland Convention Center, is publically financed through a quarter- cent local sales tax passed in 2007. The one-million-square-foot campus will house big-name health manufacturers and service providers like GE Healthcare and the Cleveland Clinic.
The project is expected to bring tens of thousands of visitors each year to northeast Ohio, a region with more than 600 biomedical businesses and steady growth in the health care and bioscience industries, according to the Greater Cleveland Partnership.
"This is really becoming a sigificant region for not only health care product creation, but also health care delivery," said Dave Johnson, director of public relations for Merchandise Mart Properties at Cleveland's Global Center for Innovation. "Not only in terms of the amount of funding that is coming in to start up medical companies, but also in terms of the number of health care related companies."
In Minnesota, Rochester voters approved a half-cent sales tax increase in November 2012 that will raise $20 million to support Mayo's proposed expansion to become a medical destination.
Rochester officials are also asking the Legislature for $37 million in state bonding to upgrade the city's civic center. Mayo has asked the state for $500 million to pay for new roads, ramps and bridges.
HOW MAYO COMPARES
|Employer||Annual Revenue*||Total Employees|
|Mayo Clinic (2012)||$8.8 billion||61,125|
|Cleveland Clinic (2011)||$6.18 billion||41,100|
|Johns Hopkins (2011)||$1.8 billion||13,000|
|MD Anderson Cancer Center (2012)||$3.7 billion||19,000|
*Revenue figure for Johns Hopkins came from its IRS Form 990. All others came from their annual reports.
Cleveland Clinic reported more than four million clinic visits in 2011, while Mayo reported that it treated 1.5 million patients systemwide.
Some of Mayo's rivals are expanding their local footprint and others are following Mayo's lead and building facilities abroad. That's part of the reason Mayo officials say they need to move quickly to stay competitive.
The Cleveland Clinic has had several multi-million-dollar expansions around Ohio in recent years, and is set to open a new medical facility in Abu Dhabi this year. Clinic officials say none of those projects received public dollars.
In Baltimore, Johns Hopkins built a new, $1 billion hospital last year. The state of Maryland contributed $100 million. Meanwhile, Mayo is pumping millions of dollars to expand the emergency room and parts of its flagship Saint Marys Hospital in Rochester.
Another Mayo competitor, the MD Anderson Cancer Center in Houston, has added several new buildings to its main campus and is building a cancer care center.
Mayo is also building a state-of-the art proton cancer therapy center in downtown Rochester and another one in Arizona.
Mayo's plan is unique among all of these project because none of the requested public investment would go toward a Mayo facility, according to Martin Arrick, managing editor at Standard & Poor's.
"It seems like a broader economic question. It almost doesn't seem like a health care question to me," he said.
From a public investment standpoint, Mayo's request from the state might be more palatable because it's paying for infrastructure that will benefit the public, Arrick said. He adds these improvements can help shape how Mayo helps Rochester grow.
"If you have a broader vision of what the neighborhood should look like or the kinds of amenities that you want -- and they're not exactly health care, I think you'd rather have somebody else fund that and save your capital dollars for health care," said Arrick.
That's what the Mayo Clinic is trying to do. While Mayo looks to expand its physical footprint in Rochester, it's also expanding its brand by strengthening the clinic's affiliate care network.
The national network lets independent medical facilities in Minnesota and elsewhere tap into Mayo for second opinions and advice, while allowing Mayo to expand its reach into those health care markets. The clinic added 14 members to the network last year and expects to add 10 more this year.
The network expansion strategy sets Mayo apart from its rivals that are growing with huge investments in brick-and-mortar projects, according to Mayo CEO Dr. John Noseworthy.
"We feel that we are in a much better position to ... use our knowledge to scale, to reach more people in their communities," Noseworthy said. "It's, we believe, a much more humanitarian outreach of Mayo Clinic's knowledge, as we've demonstrated. And yet, build our brand strength and ultimately our referral network when patients truly have to come to us."
If the Minnesota Legislature approves Mayo's request for $500 million, Mayo promises to spend $3 billion of its own money for capital expansion projects over the next 20 years.