Mayo Clinic expansion plan to be reworked at Capitol

9:22 PM, Apr 10, 2013   |    comments
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Mayo Clinic Medical Director Brad Narr

ST. PAUL, Minn. -- The author of the Mayo Clinic's Destination Medical Center bill is working on a revamped version on the legislation in hopes it will get more traction at the State Capitol.

Rep. Kim Norton, a Rochester Democrat, told members of the House Tax Committee Wednesday that the bill may feature local revenue bonds and a combination of local options taxes, which will be used by the city to help accommodate the Mayo's expansion.

"The money isn't going to the Mayo Clinic," Rep. Norton reminded her colleagues.

"It goes to build up Rochester's public infrastructure to support the Mayo's investment."

Tax Committee Chair Ann Lenczewski said she's will to work with Norton and other supporters, but at the end of the day it comes down to finding a plan that will garner a 68-vote majority in the Minnesota House.

"If people would like to tell us which taxes they will vote to increase to pay for this project I'm all ears," Rep. Lenczewski said.

"But the silence is deafening, and I think this project -- we understand -- will take money."

Dr. Brad Narr, the Mayo Clinic's medical director, spent part of his afternoon weathering criticism over comments the Mayo's CEO, Dr. John Noseworthy, made a day earlier at the National Press Club in Washington, D.C.

One of Nosworthy's quotes turned into a banner headline across the front page of the Minneapolis Star-Tribune, which read, "Mayo CEO: 49 states want us."

Rep. John Lesch of St. Paul reacted sharply to that article.

"Your CEO going out to the National Press Club in Washington D.C. and wagging a finger at the Minnesota Legislature; that's what it looks like to me," Rep. Lesch asserted.

"And I read that article and I was thoroughly disgusted. And you can't say this about your CEO, but I'll say it. That was a dumb thing to say. It was dumb, dumb, dumb!"

It was uncharacteristic of the way Mayo leadership is typically treated at the legislature.

The Mayo Clinic is the largest private employer in the state and is world renown for its care, diagnostics, research and medical innovation. It attracts patients from around the world and other nations and was often cited as a national model during the federal health reform debate.

Lesch later explained that he felt insulted by what he read in the article because it implied lawmakers don't know how companies make business decisions.

The Mayo DMC Plan

The Destination Medical Center is an effort to keep the Mayo competitive with some of the other larger research hospitals around the nation, places that attract patients from surrounding states and other nations.

The Mayo plans to invest $3.5 billion of private money into the expansion over the next 20 years, a move that does not require any action by the legislature.

Norton's bill would allow the city of Rochester to capture part of the new tax revenue that would be created by that expansion, tax revenue above what's already being collected.

That money, estimated at $583 million over the same 20-year period, would be put to use building parking ramps and updating blighted, aging areas near the Mayo campus.

The Mayo's top consultant on the plan, Robert Dunn, told lawmakers that the tax dollars diverted from the main revenue stream will in the end increase the tax base.

"Once we have job growth we know with absolute certainty there will be new taxes," Dunn explained.

"A portion of tax will be used to build the infrastructure that is needed to draw in additional private investment and additional jobs. That will further grow the tax base."

Dunn explained that sophisticated medical installations such as a proton beam facility are built at significant costs. But, at the same time, the types of jobs created in the medical sector tended to pay higher than average wages.

Dr. Narr said the Mayo must decide whether to expand at its flagship campus in Rochester, or to make those investments at the Mayo's other medical centers in Arizona and Florida.

He told lawmakers Wednesday he'd prefer to see that expansion happen here in Minnesota.

"I don't think, 'What If,' I cannot threaten this group, and say, "If this, then that.' I'm not in that business. I want the Mayo Clinic to grow in Minnesota."

He said mobile technology is changing the way providers deliver medical care and the Affordable Care Act is also going to bring about significant changes.

But any way you slice it the medical industry is under unprecedented pressure to improve care and reduce costs in the same time frame.

"We're passionate about proving what the things are that we can bring to the table for medical care, that of are value, that prolong meaningful life," Dr. Narr remarked.

Dunn pointed out that one of the Mayo's competitors, The Cleveland Clinic, is benefiting from strategic investments made by its host city to showcase innovations in technology.

"The Medical Mart is a multi-hundred million dollar project, that really about bringing the medical industry from around the world to Cleveland, sort of in partnership with the Cleveland Clinic," Dunn said.

The Destination Medical Center is much different than the traditional tax incentives offered by government to attract or retain a large employer. The Mayo is not asking for tax abatement or a direct subsidy.

It's new ground when it comes to tax policy. And that's why it's been more difficult for lawmakers to grasp exactly how it will work. And a certain segment of lawmakers hesitate to give one city or one private entity preferential treatment over others.

Rep. Norton said she'll have the "Plan B" bill ready by the week of April 15, and that it will be streamlined so that it's easier for the public and lawmakers to understand how the tax mechanisms will work.

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