The Mayo Clinic's Gonda Building in downtown Rochester.

Glen Stubbe, Star Tribune

Feb. 24: Mayo to put $700M a year into new projects

  • Article by: JACKIE CROSBY
  • Star Tribune
  • February 24, 2012 - 10:15 AM

The Mayo Clinic said Thursday that it will invest $700 million a year in capital projects over the next five years, ramping up spending after cutting back when the financial crisis hit.

More than half the money will go toward projects the Rochester-based health system already has in the works, such as jump-starting a proton beam therapy program for cancer patients.

But executives said they're ready to put hundreds of millions of additional dollars into new projects, many aimed at finding ways to put promising medical breakthroughs on a fast track by channeling more people, equipment, research or technology toward the effort.

"We want to make sure we're focusing on the outputs that are most likely to transform the way health care is delivered," said Dr. John Noseworthy, Mayo's chief executive.

While $700 million is not an unprecedented amount for Mayo, a spokesman said it represents a noticeable increase over recent years, without providing precise figures.

This year, Mayo will launch $600 million in capital projects and plans to maintain annual spending levels of about $700 million through 2017.

The announcement came as Mayo posted financial results for 2011 that included an 18 percent increase in operating income, to $610.2 million. Revenue grew 7 percent to $8.5 billion.

Noseworthy said the capital investments may not go toward traditional projects such as ones Mayo has done in the past. Much of the future spending will be directed toward three new centers behind Mayo's strategy to get treatments into the hands of doctors faster.

The Center for the Science of Health Care Delivery will focus on ways to lower costs and improve treatment of diseases such as heart failure, diabetes and lung disease. The Center for Individualized Medicine will use genomics to predict, diagnose and treat diseases. The Center for Regenerative Medicine aims to find ways to reduce the need for transplants by focusing on healing damaged tissues and organs.

Mayo reported a stronger-than-average net income last year, driven by record fundraising and increases in the number of patients arriving for complex treatments. Operating margins at the non-profit typically are in the 4 to 6 percent range, according to officials, but were a little over 7 percent last year.

The organization said it treated 1 million patients from more than 135 countries at its network of hospitals and clinics, including 70 communities in Minnesota, Iowa and Wisconsin.

A $100 million donation, given in a lump sum, boosted revenue significantly. The gift by Richard Jacobson went to jump-start Mayo's proton beam therapy program, a type of cancer treatment that pinpoints radiation treatment, resulting in shorter treatments and fewer side effects.

Construction began last year on a $188 million proton beam facility in Rochester and a $182 million facility in Phoenix. The centers are expected to open in 2015 and 2016.

Other ongoing projects include a four-story expansion of Mayo's wellness center in Rochester, expanding and renovating the emergency department at St. Marys Hospital in Rochester, and improving clinic sites in Austin, Minn., and Barron, Wis.

Jackie Crosby • 612-673-7335

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