Southern Minnesota could be poised for economic transformation

Fueled by Mayo Clinic's dramatic expansion plans in Rochester, southeast Minnesota is poised to become a linchpin in the state's efforts to revitalize its medical economy.

Billions of dollars in new development in Rochester — along with the doubling of a cancer research center in Austin — has Gov. Mark Dayton's administration eyeing a dramatic transformation of the area, creating an even tighter link between Mayo, the Twin Cities' medical and research facilities and the private sector. The plan could, at some point, include high-speed rail between the Twin Cities and Rochester and a host of other amenities.

Taken together, such changes "will be a cornerstone of Minnesota's future economy," Gov. Mark Dayton said in an interview with the Star Tribune.

The Rochester project alone is massive. Mayo and the city are on the brink of a $6 billion building boom to transform the clinic and community into what they call Destination Medical Center, a world-class facility designed to be on par with Johns Hopkins in Baltimore and Ohio's Cleveland Clinic. It will be the development equivalent of dropping six new Vikings Stadiums or nine Malls of America into a city a third the size of Minneapolis, and everyone is waiting to see what effect it will have on the economy, not just of the region but of the whole state.

Down the road in Austin, the University of Minnesota's Hormel Institute is launching its own massive expansion to become a leading biomedical research facility, starting with a $23 million campaign to draw the world's best cancer researchers to southern Minnesota.

Back in the Twin Cities, Dayton and U President Eric Kaler are working on an initiative, to be unveiled this fall, that would restore the U's medical school to pre-eminence.

Ultimately, Dayton said, "The way Silicon Valley is for technology, Minnesota should become the premier site in this country and the world for medical care and medical technology."

Today, health care drives 12 percent of the state's economy and medical devices and technology are another 1.5 percent, according to the Minnesota Department of Employment and Economic Development.

Mayo Clinic is now the largest private employer in Minnesota, and the closer you get to Rochester, the bigger its economic footprint. By the state's count, one of every four jobs in the 11-county radius around Rochester is in the health field. Mayo predicts 35,000 to 45,000 jobs from its new development project, along with significant new tax revenue.

None of this is happening without state assistance. Mayo and Rochester will get a half-billion from the state for its development, mostly in improvements to the city and surrounding infrastructure. The Hormel Institute has gotten $13.5 million from the state to double its research facilities and will double that amount, giving the institute enough to begin building 20 state-of-the-art research labs next year.

Hormel Foundation Chairman Gary Ray said the Institute has had no trouble attracting the interest of cancer researchers. It collaborates closely with Mayo and Rochester-based IBM, which equipped the facility with two of the world's fastest supercomputers.

"We've got over 100 applicants — scientists and Ph.D.s" Ray said. "It's just unbelievable the amount of applications we've received for some of these positions," he said. "We're recruiting ones who are fully funded. They're looking at the opportunities to work in a smaller environment."

"The governor has expressed his interest in developing a proposal for the Legislature that would … help the university up its game," said Aaron Friedman, dean of the University of Minnesota Medical School. The specifics of that proposal are still being hammered out but could involve bonding to fund new infrastructure investments at the medical school.

One collaboration between the U and Mayo has already borne fruit. Since its creation a decade ago, the Minnesota Partnership for Biotechnology and Medical Genomics has leveraged $90 million from the state into an additional $100 million in outside funding that it has used for research into everything from Alzheimer's to cancer to heart disease. Right now, the university's mechanical engineers are working with Mayo clinicians to build a better insulin delivery device, more effective than shots or a pump.

"This has been just an extraordinary scientific success," said Tucker LeBien, vice president for research at the university's Academic Health Center. That research success, he said, has a multiplier effect on the whole community — by some estimates, every $1 million of grant support creates or preserves an estimated 20 to 40 new jobs.

The researchers, who operate out of the Mayo Memorial Building on campus, are watching with interest to see how Mayo's expansion affects their partnership. Right now, Mayo doctors work with the med school's doctors, students and trainees, who rotate between the campus and Mayo Clinic while researchers teleconference between laboratories 100 miles apart.

"We are not only talking about jobs created while the research is going on, we're also talking about translative benefit to patient care," Friedman said.

Dayton said he wants to do everything the state can to maximize the synergy between Mayo, the U's medical school and the medical technology industry, which he says will become an increasingly strong spine in the state's economy.

"There's probably going to be more to be a lot more than I can foresee," he said. Dayton envisions a stronger Mayo Clinic and a stronger U helping all medical facilities in the state, such as the Fairview system, Allina and Regions.

But it's a long way from rhetoric to reality. Destination Medical Center is still in the planning stage. An enhanced U medical school has yet to come into view and funding for high-speed rail to connect it all would be another major lift.

As chief research officer for the California-based Milken Institute, which studies the effect of technology, investment and public policy on regional economies, Ross DeVol has heard the Silicon Valley analogy countless times.

In fact, he says, if he wrote down every time he's heard an elected official announce that a new development was going to make them "the next Silicon Valley of X," he says "I couldn't probably fit it all in my office."

Minneapolis is already one of those hubs, ranked among the top 10 in the nation by Milken a few years ago. It's home to booming biotech companies like Medtronic, surrounded by one of the nation's premiere medical device clusters and home to leading research universities.

"If you really want to be bigger and better, if you want to have a broader economic impact, you look at the leading places with medical research, medical care facilities," Milken said. "They all have the industries that are affiliated around them, for close interaction: pharmaceutical, biotech companies, medical devices."

The communities that ring Rochester are watching eagerly to see how many of those spinoff jobs might spin their way.

"We're monitoring it, we're looking for our opportunities," said Dan Dorman, executive director of the Albert Lea Economic Development Agency and executive director of the Greater Minnesota Economic Development Partnership. "We anticipate that we will see opportunities from the Destination Medical Center."

Tapping into the Mayo magic isn't always easy. North of Rochester, the town of Pine Island, pop. 3,200, has labored for years to launch a 200-acre business park in hopes attracting biotechnology companies and start-ups.

Other major medical centers, like the Cleveland Clinic, have become hubs of major biotechnology corridors. Mayo's neighbors hope for the same thing.

"I think some of those spinoff jobs will end up in cities like Austin, Albert Lea, Owatonna, Faribault, I think even the metro area will capitalize on some of the technology and advances they make in Rochester," Dorman said. "We want to make sure we keep as many of those … in Minnesota as possible."

The wish list is not limited to jobs and medical innovation.

Rochester hopes to transform itself into a cool, edgy, urban oasis — the kind of place where top-flight surgeons and researchers and their families would want to live, weather notwithstanding.

On the streets of Rochester, residents have offered suggestions on "visioning boards" the Mayo team posted around town — better transit, a nice wine bar, more bike paths, a zoo. Mayo also set up a Pinterest board, where visitors could pin city features from around the globe — rooftop gardens in Greece, night-life scenes in Minneapolis, outdoor meeting spaces in New York City.

Baird Helgeson • 651-925-5044 Jennifer Brooks • 651-925-5049