Retiring Mayo CEO reflects on triumphs, tensions at helm of Minnesota's largest employer

The five living U.S. presidents gathered this month to pay respects to George H.W. Bush — and four of them, it turns out, have met personally with Dr. John Noseworthy.

Noseworthy is the Mayo Clinic chief executive who's retiring at year's end after nine years running one of Minnesota's most visible institutions. He attended Bush's memorial service in Washington, D.C., as well, after developing a relationship with the Bush family through fundraising efforts over many years.

Philanthropy is one of many hallmarks for Noseworthy's tenure, a period in which the clinic raised more than $3.5 billion in its largest campaign and emerged from the Great Recession on stronger financial footing. It was a time of triumphs and tensions as Mayo Clinic bolstered its reputation for patient care and became a focus for statewide economic development while facing tough questions about the cost of its services and the sort of access Mayo provides to patients with government insurance.

"We're doing well right now, but we're doing well because it's all-hands-on-deck," Noseworthy said in an interview. "We have hundreds of engineering projects underway at any one time to improve the safety and the quality of our care and make it more efficient and ultimately drive down the cost of our care and improve the accessibility. That's our main focus."

Noseworthy took the top job at Mayo in late 2009, a time when the Rochester-based clinic and many other health care systems were suffering financially from the nation's deep recession.

In the decade before Noseworthy became CEO, Mayo Clinic's financial performance was "closer to break even," said Martin Arrick, managing director with S&P Global Markets. Under Noseworthy, the profit margin improved as the clinic posted net income of more than $500 million per year on average.

"Dr. Noseworthy, obviously, was part of a change in their approach," Arrick said. The lesson for many hospitals was that given uncertainty with investment income, health care systems "have to do a better job with operations ... because that's the one thing you can really control."

As a child, Noseworthy developed an interest in medicine while accompanying his father, an Episcopal minister, on trips to the hospital. Born and raised in Massachusetts, Noseworthy's parents were Canadian and his father had been dispatched for several years to work in Boston. Not even 10 years old, Noseworthy would sit in hospital lobbies and wonder at the sights and sounds while his dad visited sick parishioners.

After his medical training, Noseworthy eventually landed at Mayo Clinic in 1990. He was chairman of the neurology department from 1997 to 2006 and became medical director of the clinic's development department, which works with benefactors.

Physicians aren't generally exposed to fundraising, Noseworthy said, and some of his colleagues ask what it's like asking people for money. Yes, you have to ask, Noseworthy replies, but it helps that donors typically are former patients who've already said they want to help.

Rather than a hard sell — "you're not shaking them by the ankles," he said — a conversation with benefactors often leads to wide-ranging discussions about the clinic's future. Donors often have "seen the vicissitudes of the business world," he said, and become valuable outside advisers.

George H.W. and Barbara Bush opened their home in Kennebunkport, Maine, to Mayo Clinic for 13 years, hosting seminars where potential donors could learn about the clinic while also getting a chance to meet the former president and first lady. Barbara Bush served on Mayo's board of directors from 1993 to 2001.

"We've worked with every president since Lincoln," Noseworthy said.

Mayo Clinic's elite status can morph into perceptions of elitism, and that was true during Noseworthy's tenure.

In 2013, Noseworthy led a push at the State Capitol for taxpayer support of infrastructure projects in Rochester that would complement economic development investments by Mayo and private sector partners. The $585 million project called Destination Medical Center ultimately won support from lawmakers, but on the eve of a key committee hearing, Noseworthy famously warned that the clinic has "49 states" eager to host Mayo's planned multibillion-dollar expansion if the state was unwilling to pitch in.

Last year, the clinic evoked the ire of nearby Albert Lea with plans to close the maternity and inpatient surgery units of the hospital there, which is part of Mayo's multistate network of hospitals and clinics. A few months earlier, state officials raised concerns after the Star Tribune reported comments Noseworthy made to employees that the Rochester-based health system would give preference in certain circumstances to patients with private insurance over those with lower-paying Medicaid or Medicare coverage.

Reminded of the "49 states" comment during an interview, Noseworthy said he wasn't trying to suggest the clinic would leave Minnesota and noted the clinic itself is more than twice the size of the Pentagon. In the end, Destination Medical Center is "absolutely" a point of pride, he said, even though he bristles at the persistent misunderstanding that Mayo somehow gets money directly from taxpayers.

"We needed some infrastructure money for the sidewalks and the sewers," Noseworthy said. "Not a penny of that goes to Mayo Clinic."

Noseworthy said earlier this year that he regretted not providing a better explanation of the need for change in Albert Lea, but he said he still believes it was the right decision. As for prioritizing some privately insured patients with equivalent, non-emergency conditions, Noseworthy later said he regretted the word choice. In the interview, he stressed that more than half of the clinic's work is with Medicare and Medicaid patients where government payment rates don't cover the clinic's full costs.

During Noseworthy's tenure, a Minneapolis-based nonprofit, Minnesota Community Measurement, started publishing annual reports showing that Mayo Clinic in Rochester has the highest total cost of care among all health care groups in the state. The reports reinforced concerns raised in late 2013 when individual health insurance rates under the federal Affordable Care Act spotlighted how Rochester premiums were well above the national average and much higher than rates in the Twin Cities and most of Minnesota.

"They can talk efficiency all they want," said Brad Arends, a benefits consultant in Albert Lea who's part of a push to recruit different health care providers to the community. "But the insurance companies in the state of Minnesota price southeast and south-central Minnesota higher not because we are less healthy, not because we are more obese, but because we are captive to the Mayo Clinic."

Noseworthy insists the Minnesota Community Measurement ratings are based on a methodology that doesn't adequately adjust for Mayo's patient population, which includes patients that other centers would rather not treat because their cases are too complicated. And he bristles at the suggestion that Mayo Clinic is expensive.

"If you don't get the diagnosis right, that's expensive," Noseworthy said. "The science of measuring quality and value is in its infancy."

Under Noseworthy, Mayo opened a prominent center for sports medicine in downtown Minneapolis. Mayo opened — and ultimately closed — a retail outlet at the Mall of America in Bloomington. Still active is a high-profile research partnership called OptumLabs with Minnetonka-based UnitedHealth Group.

Drawing in part on philanthropy, Mayo invested more than $300 million to build cutting-edge radiation treatment centers in Rochester and the clinic's campus in Arizona. A push for more commercialization of Mayo Clinic ideas during Noseworthy's tenure helped generate Cologuard, a low-cost diagnostic test for colon cancer.

Mayo Clinic was Minnesota's largest nonprofit group last year. Improved financial performance has meant more stability for a growing workforce of more than 60,000 people, Noseworthy said, as well as a long list of capital expenditures plus big investments in education, research and technology. But the focus has been on patient care, he said, not revenue.

In January, Dr. Gianrico Farrugia will become the next chief executive at Mayo. Noseworthy, at 67, is a dozen years older, but Farrugia has even more experience at the clinic (he started at Mayo at a younger age and rose to become CEO of the clinic's hospital in Florida).

"He's been in Rochester for 26 years. He's been in Florida and done a magnificent job," Noseworthy said. "The table is set for him. The organization is ready."

Former chief executives don't remain on the board of directors at Mayo, and Noseworthy doesn't plan on practicing medicine again. He says he'll retire and then plan for what's next.

"There's going to be a great big hole out there for me when I go," Noseworthy said. "The way I reconcile it, if you want a personal statement, is — I just have to stop myself and say: How lucky you are. How lucky you are to work at the Mayo Clinic, let alone to have a chance to influence its future."