ROCHESTER, Minn.—The Mayo Clinic has big plans to join other top-flight medical centers in an expensive fight for well-heeled patients, but it faces a problem: Its sleepy hometown needs a face-lift.
Mayo, the biggest private employer in Minnesota, is proposing to invest $3 billion to $3.5 billion over 20 years to transform its already big operation here into a "destination medical center." But the clinic thinks Rochester needs some major upgrading as well—including new parking, sewers and other public works and maybe even a high-speed rail link to Minneapolis/St. Paul some 75 miles to the north.
Much of that would be aimed at attracting a bit of glitz to this out-of-the-way city, such as high-end hotels and restaurants, to help the clinic appeal more to lucrative patients from around the world.
Mayo officials want Minnesota taxpayers to kick in $585 million to revamp the city's infrastructure over 20 years to make Rochester more attractive for development—and suggests the clinic could expand elsewhere if the money doesn't come through. (It already has satellites in Scottsdale, Ariz., and Jacksonville, Fla.) Some state lawmakers have balked at the price and pushed the city and county to pick up a bigger share.
Mayo's plans come as other top medical centers have spent heavily to attract well-insured patients that need complicated, expensive medical care, said Leigh Turner, an associate professor at the University of Minnesota who studies the globalization of health care.
As governments, corporations and other employers try to rein in medical spending, patients who can pay top dollar increasingly are valuable, he said.
"The clash is about patients with significant resources, whether personal funds or gold-plated health-care plans," Mr. Turner said.
Johns Hopkins Hospital in Baltimore last year opened a $1.1 billion building partly funded by the president of the United Arab Emirates, Sheikh Khalifa bin Zayed al Nahyan, and New York Mayor Michael Bloomberg. The Cleveland Clinic has spent $712 million on expansion since 2011, and the new facilities have helped attract patients from across the world, a spokeswoman said.
Massachusetts General Hospital in Boston, meantime, is nearly finished with a $1.5 billion fundraising initiative to revamp its facilities, including a cutting-edge, 530,000-square-foot clinical-care and surgery center that opened in 2011.
Mayo is in danger of falling behind such rivals in more attractive and accessible cities, said Bradly Narr, Mayo's head of anesthesiology and medical director of the planned expansion. Mayo Chief Executive John Noseworthy "gets the daylights beat out of him by the trustees because there are no four- or five-star hotels" in Rochester, he said.
The Mayo expansion would transform this city of 107,000 people, helping create as many as 40,000 jobs by 2030, or a 50% increase in the city's workforce, according to projections by local officials. Mayo predicts its own 20-year spending plan would attract more than $2 billion in additional private investment.
State lawmakers are considering revised legislation unveiled last week that would shift some $200 million of the public investment from the state onto taxpayers in Rochester and the surrounding county.
After some lawmakers scoffed at an earlier, larger request for state funds, Mayo officials warned they could invest someplace else. While on a recent trip to Washington, Mayo's Dr. Noseworthy told the Minneapolis Star-Tribune that "there are 49 states that would like us to invest in them. That's the truth."
Mayo, with 34,300 employees here, is regularly ranked among the world's top hospitals and often is attributed with developing an approach where teams of specialists work together to solve complex cases. The nonprofit center developed the first heart-bypass machine and has treated several U.S. presidents and foreign heads of state.
Outside the Mayo-dominated downtown, Rochester is a workaday city, with strip malls and fast-food outlets. International Business Machines Corp. IBM +1.17% is another major employer but has been shrinking the workforce at its sprawling facility here and recently said it would move some jobs elsewhere.
As the center of the local economy, Mayo looms over the city, which was founded as a stagecoach stop less than a decade before the clinic's founder, William Worrall Mayo, arrived here in 1863. Mayo occupies some 15 million square feet—triple the size of the Mall of America near Minneapolis.
"This town wouldn't be here if it wasn't for Mayo," said Chad Roelofs, a bartender at the restaurant Pescara, who estimates 90% of his customers have a connection to the clinic. "You're either going to Mayo, work at Mayo or are selling something to Mayo."
That influence worries some locals, who criticize Mayo for a lack of transparency in its expansion plans, with little questioning from local officials.
County Judge Kevin Lund and local auctioneer John Kruesel sent a letter to legislators this month suggesting the proposed project would "generate for Mayo one more level of unfettered power in a community they have always controlled."
They also question the city's preparation for the expansion's impact on police, schools and social services. "Growth can be good but growth has a negative aspect to it as well," Judge Lund said during a recent meeting of the local chamber of commerce. "This community is at a tipping point already relative to the services that should be provided and aren't being provided."
"As far as I'm concerned, they're the finest medical institution in the world," said Mr. Kruesel, sitting in his cluttered antiques shop. "But given its scope here, one has to take a critical eye and balance the benefits and risks of this project."
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