2006 Financial Performance Helps Mayo Clinic Advance Mission

Friday, March 16, 2007

ROCHESTER, Minn. — Mayo Clinic's 2006 accomplishments included many advancements in its mission of patient care, education and research, which were supported by the organization's financial performance. (See attached list of highlights.)

"We will build on these accomplishments in 2007," says Denis Cortese, M.D., president and chief executive officer of Mayo Clinic. "We're confident that Mayo Clinic is on solid footing and will continue to make important contributions to the field of medicine."

Examples of 2006 advances include identifying an effective test to determine treatment for chronic cough; finding that the osteoporosis drug raloxifene is as effective as tamoxifen in preventing invasive breast cancer; and educating more than 4,600 students in the fields of medicine, research and health sciences.

Mayo Clinic also reached its financial goals in 2006. Sites and activities achieved $117 million in Income from Current Activities (ICA), the best measure of overall financial performance, on total revenues of $6.3 billion. This represents a 1.9 percent margin.

In 2006, Mayo Clinic contributed $233 million to employee pension funds, a key priority for an organization that is committed to providing retirement benefits to employees. In addition, Mayo Clinic's endowment grew by $260 million, to nearly $1.3 billion. Over the next decade, Mayo leaders hope to grow the endowment to a level that will help sustain research and education programs.

"We achieved our minimum long-term financial target for the year," says Robert Smoldt, who rotated from his position as chief administrative officer in February. "Net operating income is reinvested into programs that support practice, education and research."

Shirley Weis, Mayo Clinic's new chief administrative officer, notes that total revenues grew by 8 percent in 2006, while expenses grew nearly 10 percent, reflecting important investments in patient care and research activities, and information technology infrastructure.

"Going forward, we will focus more specifically on managing our expenses in order to continue to fund Mayo Clinic's mission," says Weis. "Our 2006 financial results show that Mayo operates on slim margins. Small changes in revenue or expense make a big impact on our overall financial health."

Weis says that Mayo Clinic must continue its strong financial performance for the next several years to restore financial resources, meet increased pension payment obligations and prepare for other significant financial challenges — including the aging baby boomers, Medicare reimbursement pressures and a shortage of skilled health care workers.

Fulfilling the mission

As a not-for-profit, Mayo Clinic reinvests its net operating income to advance medical research and teach the next generation of health care professionals. Mayo Clinic spent $315 million of internal funds on these activities in 2006.

"But excess funds from operations alone will not completely fund these critical parts of our mission," Smoldt says. "We continue to partner with other groups and individuals to accomplish mutual aims."

In 2006, benefactors contributed more than $230 million and helped fund several important projects, including:

* new multidisciplinary efforts to translate research discoveries into patient care practices.

* a new hospital building in Jacksonville, Fla.

* a new outpatient building on the Phoenix, Ariz., campus. * cancer research that includes new facilities on one floor of the Gonda Building cancer center on the Rochester campus.

* Mayo Clinic Health Policy Center efforts to reform health care.

"Because federal funding for research has been constrained while competition for those dollars is growing, partnerships with both benefactors and industry have become increasingly important for Mayo Clinic to meet its goals," says Dr. Cortese.

In the past several years, Mayo Clinic physicians and researchers have joined with colleagues and supporters across the nation and world to advance clinical practice, research and education. At Mayo's three campuses, examples from 2006 include:

Rochester

* Started in 2003, the Minnesota Partnership for Biotechnology and Medical Genomics is an initiative that leverages the scientific leadership of Mayo Clinic and the University of Minnesota into powerful research collaborations. In April 2005, Gov. Tim Pawlenty signed a bipartisan bonding bill that included $21.7 million for the medical genomics research addition to Mayo Clinic's Stabile Building in Rochester. Constructed throughout 2006, the addition will house more researchers and provide greater opportunity for the Partnership to seek new treatments and technologies to fight diseases and improve health. The space was dedicated in early 2007. Thus far the Minnesota Legislature has also provided $32 million in research and operational funding for the Partnership, $15 million of that in 2006. Partnership teams also have published 44 papers, filed three patent applications and leveraged more than $20 million in additional income from benefactors and the National Institutes of Health (NIH).

* Mayo Clinic and the Department of Health and Human Services, on behalf of the Indian Health Service, signed a Memorandum of Understanding pledging to work together to seek ways to reduce the burden of cancer and other diseases in American Indian and Alaska Native communities.

* Mayo Health System, the group of Mayo Clinic affiliated hospitals and clinics in southern Minnesota, western Wisconsin and northern Iowa, launched a five-year, $56.9 million electronic medical record project. This project will revolutionize health care by improving quality and safety of care, outcomes management abilities and operational efficiencies. When completed, Mayo Health System will be one of the most integrated health systems in the country.

Arizona

* The Mayo Clinic Specialty Building (MCSB), a 172,775 square foot outpatient clinic funded primarily by Mayo Clinic benefactors, opened on the Phoenix, Ariz., campus. Located adjacent to the Mayo Clinic Hospital, the MCSB increases treatment capacity, and enhances patient safety and convenience.

* Mayo Clinic signed a multiyear research agreement with Colorado State University in Fort Collins, Colo., to collaborate on the development of oncology and infectious disease therapeutics. The collaboration will allow Mayo Clinic and Colorado State to combine expertise in comparative oncology and new treatments for disease.

* InNexus Biotechnology, a publicly held company based in Vancouver, British Columbia, moved into its newest U.S. facilities on the campus of Mayo Clinic in Arizona on Oct. 1, 2006. The drug development firm occupies space in the Mayo Clinic Collaborative Research Building, a first-of-its-kind facility that joins multiple strategic partners under one roof to focus on developing and supporting medical research and education.

* Mr. and Mrs. Charles M. Heers, Las Vegas, pledged $1 million to Mayo Clinic, designated to the MCSB.

* Raymond and Roma Wittcoff, Scottsdale, Ariz., made a joint $200,000 gift to support the Mayo Clinic Health Policy Center.

Jacksonville

* In October 2006, Mayo Clinic celebrated the topping out of its new 214-bed hospital. When it opens in April 2008 the hospital will allow Mayo Clinic to integrate inpatient and outpatient services and bring teams together in one place to treat patients. Patients will benefit not only from a state-of-the-art facility but also from the convenience, time savings, expanded resources and increased access to physicians that come with combining hospital and clinic services on one campus. Proceeds from the sale of Mayo's St. Luke's Hospital and more than $80 million in contributions from benefactors and staff paved the way for building the $255 million, six-floor facility.

* Through a partnership with the University of North Florida, Mayo Clinic in Jacksonville hosted the Minorities in Medicine Symposium for 10th grade students from area schools.

Mayo Clinic leaders emphasize that these initiatives — made possible through partnership and collaboration —help Mayo Clinic fulfill its mission of providing the best care to every patient every day through integrated clinical practice, education and research.

Through its mission, Smoldt says, Mayo Clinic enriches the communities in which it operates as well as the broader community — improving medicine through research, educating physicians and other health care providers, and providing care and support to people in need.

In 2006, the total estimated cost of these quantifiable community benefits — including medical research and education, charity care costs, unpaid portions of indigent care programs and in-kind donations for relief efforts — was more than a half billion dollars.

Click here for the financial highlights

Click here for the 2006 accomplishments

###

###

To obtain the latest news releases from Mayo Clinic, go to www.mayoclinic.org/news. MayoClinic.com is available as a resource for your health stories.