Strong 2007 Financial Performance Helps Mayo Contribute to the Future of Medicine

Friday, March 14, 2008

ROCHESTER, Minn. — Mayo Clinic's 2007 accomplishments included many advancements in its mission of patient care, education and research, which were supported by the organization's strong financial performance. (See attached list of highlights.)

"We celebrate these accomplishments," 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 help create the future of medicine."

Examples of 2007 advances include discovering the potential cause of Huntington's disease; partnering with Mayo Health System practices in more than 60 Midwest communities to develop a unique practice-based research network designed to improve patient care and medical practice; and educating more than 3,400 students in the fields of medicine, research and health sciences.

Mayo Clinic also reached its financial goals in 2007. Sites and activities achieved $198 million in income from current activities (ICA), the best measure of overall financial performance, on total revenues of $6.9 billion. This represents a 2.9 percent margin.

In 2007, Mayo Clinic contributed $253 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 $280 million, to nearly $1.6 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 financial target for the year," says Shirley Weis, Mayo Clinic's chief administrative officer. "Net operating income is reinvested into programs that support our mission of practice, education and research.

"Our 2007 financial results show that Mayo operates on slim margins," continues Weis. "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 meet increased pension payment obligations and prepare for other significant financial challenges — including aging baby boomers, Medicare reimbursement declines 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 $346 million of internal and donor funds on these activities in 2007.

"But we can't rely only on excess funds from operations to completely fund our research and education programs," says Weis. "We continue to partner with other groups and individuals to accomplish mutual aims."

In 2007, benefactors contributed more than $373 million and helped fund several important projects, including:

* Significant new efforts in translational research, innovation and individualized medicine
* Mayo Clinic T. Denny Sanford Pediatric Outpatient Center
* Significantly expanded cancer research that includes new facilities occupying one floor of the Gonda Building Cancer Center
* Efforts to make the Mayo Clinic staff the healthiest work force in America, including the opening of the Dan Abraham Healthy Living Center, a new comprehensive wellness and fitness facility in Rochester
* Mayo Clinic Opus Imaging Research Building
* Research in Parkinson's disease, Alzheimer's disease and other neurological disorders on the Scottsdale, Ariz., campus
* Mayo Clinic's new hospital on the Jacksonville, Fla., 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 2007 include:

Minnesota
* Mayo Clinic and IBM announced a broad collaboration to accelerate advances in patient care and research with an aggressive set of technology initiatives. The goal is to take advantage of an explosion in new medical data to drive tighter linkage between research and the practice of medicine to achieve breakthroughs.

* 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. Dedicated in early 2007, the addition houses more researchers and provides greater opportunity for the Partnership to seek new treatments and technologies to fight diseases and improve health. Thus far, the Minnesota Legislature has also provided more than $57 million in research and operational funding for the Partnership. Partnership teams also have published more than 50 papers, filed several patent applications and leveraged more than $25 million in additional income from benefactors and the National Institutes of Health (NIH).

* Mayo Health System — a network of health care facilities serving 68 communities in three states — collaborated with evaluators from the Minnesota Council for Quality to better align and improve the system's clinical and business systems. Mayo Health System uses the Baldrige National Quality Program and its Criteria for Performance Excellence as a framework for system improvement efforts. The Minnesota Council for Quality, a nonprofit corporation that advances improvement and performance excellence, has provided valuable feedback and identified strengths and opportunities for Mayo Health System to improve its processes.

Arizona
* Mayo Clinic celebrated its 20th anniversary in Arizona in June 2007. The medical center now spans two campuses in Arizona, comprising more than 400 acres and encompassing alliances with multiple biotech and academic partners in the Valley.

* Researchers at the Biodesign Institute at Arizona State University (ASU) in Tempe and Mayo Clinic began collaborating to create a vaccine to prevent the development of cancer. This project is the first major initiative undertaken within the Mayo Clinic/Arizona State University Center for Cancer-related Convergence, Cooperation and Collaboration (MAC5) umbrella partnership. Mayo Clinic and ASU have invested seed funds to launch this project and obtain the initial supportive data.

* The Biodesign Institute received a five-year, $7.5 million Department of Defense grant to develop a preventive vaccine against breast cancer. The award ramps up the joint efforts in the MAC5 initiative. The research work will be performed at the Biodesign Institute's Center for Innovations in Medicine and Mayo Clinic's new Collaborative Research Building.

Florida
* Mayo Clinic launched a comprehensive health care disparities program designed to increase the awareness of Mayo Clinic Cancer Center programs and develop new patient care, education and research initiatives in underserved areas, particularly the African-American community. The Mayo program works in partnership with health departments from several north Florida counties as well as other organizations providing consultation and treatment to hundreds of women with abnormal mammograms. Additionally, a diversity outreach initiative titled "Live Well. Be Well." was implemented, involving a group of physicians, allied health staff and volunteers, in partnership with various community organizations, who provided educational programs about breast, prostate and colorectal cancers. In less than a year, more than 6,000 individuals were reached through their efforts.

* Physicians and allied health staff volunteer their professional expertise to support various health initiatives. Through Mayo Clinic's ongoing relationship with Volunteers in Medicine, a volunteer-run clinic that serves working uninsured patients, employees provide primary medical care, health education and specialty consultations.

* Mayo Clinic has provided consultative assistance in curriculum development and building design for a new high school and middle school in St. Johns and Duval counties, respectively.

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, Weis 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 2007, 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.

2007 Financial Highlights

2007 Highlights

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