Revenue at the Mayo Clinic grew almost 10 percent in 2007, to $6.9 billion.

Mayo -- which has its headquarters in Rochester and facilities in Jacksonville, Fla., and Scottsdale, Ariz. -- said that income from current activities was $198 million, a profit margin of 2.9 percent.

"The 2007 financial performance was in line with long-term targets," Chief Financial Officer Jeff Bolton said.

Mayo officials say that the clinic faces significant challenges in the next few years, including falling Medicare payments, an upsurge of aging baby boomers and a shortage of health care workers.

In 2007, income from patient care went up by 5 percent, to $294 million. Patient numbers were flat, at 520,000.

As a not-for-profit organization, the famous clinic plows profit back into its practice, education and research.

Mayo officials have complained in the past that Medicare has cut payments across the board without taking quality into account. Through its new health policy center, Mayo is proposing a formula for Medicare payments that weighs outcomes and cost over time, two measures that Mayo scores particularly well on nationally.

The clinic's leaders continue to warn of a looming crisis if the government doesn't step in to shore up Medicare, which is spending itself into insolvency.

"The future remains unclear. From 2010, or 2011 or, if we're lucky, 2012, there will be significant problems in this country with financing health care. If things aren't improved, it will hit every state and every provider in this country," Mayo Chief Executive Denis Cortese said. "As the largest provider of Medicare services in this country, we are on that cliff."

As the biggest employer in the state, Mayo is also grappling with pension obligations. Last year, Mayo contributed $253 million to employee pension funds.

Benefactors gave the clinic more than $373 million in 2007. That helped fund projects that included its health policy efforts, cancer research and a pediatric outpatient center in Rochester, a new hospital in Jacksonville plus research into Parkinson's, Alzheimer's and other neurological diseases in Scottsdale.

Chen May Yee • 612-673-7434