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Government challenging Mayo

With more than 30,000 workers in Minnesota, the Mayo Clinic is the largest private employer in the state. The famous Rochester-based organization is also a major financial force, dwarfing even the Mall of America for economic impact.

With more than 30,000 workers in Minnesota, the Mayo Clinic is the largest private employer in the state. The famous Rochester-based organization is also a major financial force, dwarfing even the Mall of America for economic impact.

Augmenting the clinic is the Mayo Health System, a network of affiliated clinics and hospitals in more than 62 communities in Minnesota, Wisconsin and Iowa. There are also Mayo Clinic operations in Florida and Arizona.

But despite its size and international reputation, Mayo faces challenges similar to those of Northland health care providers in terms of aging demographics, Medicare reimbursements and budget actions by the state.

And like Duluth's medical district, the Mayo Rochester campus has parking problems.

"It's one of the most difficult issues for us," said Jeffrey O. Korsmo, chief administrative officer of the Mayo Clinic Rochester. Korsmo spoke Thursday at the College of St. Scholastica's Minnesota Dialogue Breakfast Series.

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He has worked with Mayo for 20 years, serving in a variety of roles, including chief financial officer. Korsmo traced the history and philosophy of Mayo Clinic and where it is today.

"Our research and education support cutting-edge care," Korsmo said. "The integration of research and education into practice is very important at Mayo."

He said Mayo's direct economic impact on the state is $3.97 billion a year, about 1.3 percent of Minnesota's economy. He said it is about three times the impact of the Mall of America, which they frequently point out to legislators. And about half of the clinic's revenue comes from outside the state.

"Mayo has about 30,000 workers in the state and creates about 39,000 indirect jobs," Korsmo said. "One out of every 50 jobs in the state is related to Mayo."

He said visitors to Mayo annually spend about $80 million on hotel rooms and another $40 million on retail sales.

Looking to the future, Korsmo said Mayo has a variety of challenges, including how to differentiate itself from other medical providers, how to achieve breakthrough financial performance and the fact that Medicare reimbursements are making it more difficult for hospitals to survive.

Korsmo is also concerned about the proposed changes to MinnesotaCare and increases in the hospital bill tax rate.

"The MinnesotaCare issue and state reimbursement is a growing problem," Korsmo said. "Financial hardship care write-offs have gone up."

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But Korsmo said the problem that has most of their attention is the huge demographic shift in the heath care professions. "By the middle of the next decade there is almost certain to be a shortage of health care workers," he said.

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