Inside the big $6B bet on Mayo Clinic's future

Officials are requesting $585M in public funding to boost infrastructure

Mayo Clinic on Wednesday announced a $6 billion plan to invest in its Rochester, Minn., campus and nearby businesses in order to "protect its current status" as one of the world's leading health systems.

The "Destination Medical Center" (DMC) plan is the result of a three-year study conducted by Mayo Clinic to determine its future business strategy. "This bold economic development initiative is driven on the proof of growth in the private sector and not the promise of growth," Mayo Clinic President and CEO John Noseworthy said in a statement.

"Ten years from now, there will emerge just a few medical centers with the reputation for health care excellence and patient-focused outcomes that will attract patients from all over the world to their flagship medical center," said Noseworthy, who added that the plan will "significantly expand our highly-effective practice model and medical assets to be clearly recognized as a global destination medical center for decades to come."

  • In recent years, Mayo Clinic has expanded its reach through a national "affiliation" network. Learn more about the network and its latest additions.

How the plan works

The DMC plan will be the largest economic development effort in Minnesota, where Mayo Clinic is the largest private employer. Over the next 20 years, the plan would be funded using:

  • $3.5 billion in Mayo-financed capital investments;
  • $2.1 billion in additional private investments;
  • $500 million in state funding; and
  • $85 million in funding from the city of Rochester. 

Using that funding, the three-pronged plan would:

  • Improve facilities and expand services: As announced in 2012, Mayo Clinic will invest nearly $3.5 billion in capital improvements over the next 20 years.
  • Expand nearby businesses: The system's research showed a major "satisfaction gap" between patients' experiences on the Mayo Clinic campus and their experiences in Rochester. The DMC plan aims to invest in new lodging and hospitality venues, entertainment, retail, and visitor attractions.
  • Enhance public infrastructure: To support new investments in the city and on the Mayo campus that could bring thousands of new visitors to Rochester each year, the city will need to invest in additional public infrastructure, such as public parking, transportation, utilities, skyways, bridges, public meeting spaces, and more.

How the plan could benefit Minnesota

According to the Mayo Clinic, the DMC plan would have a major, positive impact on the state economy. Specifically, the medical center says the economic impact over the next 20 years would exceed $45 billion and:

  • Add 35,000 to 45,000 new jobs in Minnesota;
  • Generate $2.5 billion to $3 billion in additional state tax revenue; and
  • Generate $300 million in local and other tax revenues.

How the proposal could become reality

Mayo Clinic will submit its DMC financing plan to the 2013 Minnesota Legislature for its consideration, according to a Mayo Clinic release.

Republican state Sen. Dave Senjem—a long-time employee at Mayo Clinic—has pledged to carry the legislation, but Senate Majority Leader Tom Bakk (DFL) says the legislature may need time to consider the proposal. "That's a pretty big new precedent that will require significant discussion and deliberation at the Legislature," he told the Associated Press, adding that a special working group may be created to consider the issue.

Although Gov. Mark Dayton (D) praised the plan's goals, he said at Mayo Clinic's news conference on Wednesday, "I don't know if this is exactly the right financing mechanism." Some state lawmakers have suggested that local and county funding sources should contribute more to the plan.

At the Wednesday news conference, Noseworthy explained that the DMC plan would keep the clinic's global headquarters in Rochester. He clarified the public funding request, saying, "We're not asking for support for the Mayo Clinic medical facilities. We are asking for support for the public infrastructure that will be necessary for us to invest between $3 billion and $6 billion of private money in the state" (Mayo release, 1/30; Snowbeck, St. Paul Pioneer Press, 1/30; Grayson, Minneapolis/St. Paul Business Journal, 1/30; Bakst, AP/Bloomberg Businessweek, 1/30; Baier, MPR News, 1/31; Carlson, Modern Healthcare, 1/30 [subscription required]).

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