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Mayo Clinic plans $800M expansion in Arizona, Florida

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Dive Brief:

  • Mayo Clinic this week announced a $648 million expansion that will roughly double the size of its Phoenix campus.
  • The five-year capital investment project includes new clinical space, support services and infrastructure and is expected to add 2,000 new jobs, including 200 physicians, by 2029. Mayo said the expansion is needed to meet growing demand from patients with complex medical conditions residing in the southwestern U.S.
  • The Rochester, Minnesota-based health system is also pursing a $144 million expansion in Jacksonville, Florida. It will add a five-story medical building, parking garage and connecting structures to its existing 400-acre campus.

Dive Insight:

Mayo’s expansion plans come as many nonprofit health systems are divesting and downgrading facilities in the face of higher operating costs and slower revenue growth. Financial challenges include fewer inpatients, lower reimbursements and a shift to delivering more care in outpatient settings.

Mayo, however, appears to be on sound financial ground. The system reported $3.1 billion in revenue for the second quarter of 2018, up from $3 billion in the same period last year. Operating income dipped 7.6% to $159 million, due in part to rising expenses.

Under the lofty construction plan, called Arizona Forward Project, Mayo’s Phoenix campus will go from 1.7 million square feet to 3.1 million square feet and support 374 beds, up from 280 currently.

Highlights include a six-story patient tower, three-floor addition to the existing four-story clinic building, three-story facility for expanded emergency and other departments, expanded patient and infrastructure space and added parking. The new patient areas could open as early as June 2020, Mayo said.

The Phoenix complex, ranked one of America’s best hospitals in 2018 by Healthgrades, has already undergone significant growth. In the past five years, the hospital added a new cancer center, proton beam facility and image guided operating rooms.

Mayo has faced some struggles, however.

Earlier this year, the company was caught up in a contentious battle with employees over plans to consolidate services at its Albert Lea, Minnesota, hospital with a facility 25 miles away in Austin.

The system has also faced pushback from Minnesota lawmakers that a $585 million public funding initiative to support Destination Medical Center may be overly ambitious. The project calls for a mixed-use development project near Mayo’s Rochester, Minnesota, headquarters.

In addition to expansion projects, Mayo has been rolling out Epic’s EHR systemwide, with costs estimated at about $248 million. That effort is expected to wrap up sometime this year. Mayo CEO John Noseworthy has acknowledged the move is unpopular, but said it will “serve the best interests of our patients.”