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June 6, 2017

How Mayo Clinic overhauled its world-renowned care—and saved $900 million

Daily Briefing

    Editor's note: This popular story from the Daily Briefing's archives was republished on July 1, 2019.

    To tackle rising health care costs and a shifting market, Mayo Clinic decided to overhaul how it provides care—despite already operating a successful health system, Ron Winslow reports for the Wall Street Journal.

    Our 2018 interview with Mayo Clinic's CEO: Why he stepped down, Mayo's future, and more

    A new approach

    The initiative is called Mayo Clinic 2020, and according to Winslow, it started with a review conducted in 2008, about a year before John Noseworthy took the helm as CEO of the clinic.

    Noseworthy said he anticipated a decline in revenue due to growing efforts by government and private payers to rein in costs. So the year before he took over as CEO, Noseworthy launched an inquiry into the institution's readiness for the years ahead.

    The resulting report, which was presented to Mayo's board of trustees in August 2008, identified a "perfect storm of reduced revenue and increased costs" stemming from an aging population with chronic diseases combined with the emergence of "disruptive technologies" such as DNA sequencing.

    Mayo 2020

    The following year, the clinic launched Mayo Clinic 2020, an overhaul that aimed to cut costs while improving quality. So far, Mayo has launched more than 400 projects to meet the dual goals, and according to Noseworthy, dozens of those projects have together cut about $900 million in costs over the past five years.

    For instance, after streamlining care for children with complex feeding disorders, Mayo cut the average time it takes to diagnose pediatric feeding, breathing, and swallowing disorders from 210 day to just four, and the clinic has cut the use of anesthesia and the number of imaging tests in half for those patients. Meanwhile, boosting nurses' role in epilepsy care cut physicians' average time on a patient visit by 17 minutes—time they were then able to use to see more patients. And the clinic's move to add more providers to the ED during afternoon hours cut patient waiting times during the evening, when demand for care is particularly high. 

    The clinic also revamped its cardiac surgery services. According to Winslow, the department in 2009 was "ripe for overhaul," with the average cost per case running between $55,000 and about $110,000 in one procedure. Joseph Dearani, chief of cardiovascular surgery, called the range "too much variability."

    So, when the heart-surgery department asked Noseworthy in 2009 to add two more ORs to meet demand for open-heart surgery, Noseworthy said no—and he challenged the surgeons to not only redesign all aspects of cardiovascular surgery, but also to cut costs by 20 percent.

     By sharing strategies and tactics, the department was able to reduce OR turnover times by an average of 50 percent—down to about 20 to 30 minutes, Dearani said.

    Tackling the two key drivers of cost

    And over the course of the overall initiative for cardiac care, Mayo realized that the two primary drivers of cost were the patient's length of stay and the surgeons' approach toward selecting mechanical heart values.

    So to lower valve costs, the surgeons over two years winnowed down its valve selection, which according to Dearani was originally akin to a shoe store in terms of variety. As one of the country's largest heart valve users, Mayo was able to use its purchasing power to negotiate lower prices and limit surgeons to models from two vendors, Winslow reports.

    And to reduce patients' stay length, doctors started discharging out-of-town patients to a hotel one or two days before their flight, having them come in a for a follow-up visit before they depart—in the past, patients usually stayed in the hospital until just before their flights. Dearani said, "When you get out, your activity level improves and your appetite gets better."

    Scheduling has also shifted, Winslow reports. Surgeons who previously had operated every other day started to perform surgery every day, and physicians developed new protocols that empowered nurses to make post-operative care more efficient.

    While Mayo declined to disclose whether it had met the 20 percent cost reduction goal it set for the heart surgeons, Dearani said the department has reduced costs by "millions of dollars" and significantly reduced variation in the cost among surgeons for heart procedures.

    'Local control'

    But not every approach has been an unmitigated success—some, like Mayo's signature "unhurried visits" policy had to be fine-tuned through trial and error. In the earlier days of the overhaul, some doctors disliked an initiative termed "eliminate white space" that sought to optimize physicians' calendars, in part by scheduling more time for new, complex cases while scheduling shorter, 30-minute visits for existing patients. Once the administration learned the approach wasn't working, it allowed departments to come up with their own plans for boosting new patient visits.

    According to Noseworthy, the underlying concept of departmental autonomy has surfaced throughout the initiative. "Departments and divisions needed to have more local control of this work," he said.

    How Mayo's doing

    Mayo reported $11 billion in revenue in 2016, a 6 percent increase from 2015. And Noseworthy said the revamp efforts are part of an ongoing evolution, Winslow reports. Mayo is also allocating $3 billion of its own capital on a $5.6 billion project aimed at outfitting the system's headquarters in Rochester into a destination medical center.

    But despite this continued success, Noseworthy is no less circumspect about the future. Given that outside analysts have said the clinic could see reimbursement decline 5 to 20 percent over the next five years, Noseworthy said, "The storm is still coming" (Winslow, Wall Street Journal, 6/2).

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