Mayo Albert Lea could be run profitably without consolidation, report finds

Though the Rochester, Minn.-based Mayo Clinic Health System has said it is not possible to profitably run its Albert Lea campus without removing services, a new by Quorum Health Resources, commissioned by the Save Our Hospital committee, denotes otherwise.

In June, Mayo announced it would consolidate services between their Albert Lea and Austin campuses. Mayo plans to transition inpatient, birthing and ICU services from Albert Lea to Austin and behavioral health services from Austin to Albert Lea. Mayo administrators have said physician shortages and lack of patient volume make it unfeasible to run Albert Lea as a full-service inpatient hospital, but Albert Lea citizens in the Save Our Hospital committee believe Mayo can do more.

The Quorum report indicates the financial success of other rural Minnesota hospitals and their ability to recruit physicians means that Albert Lea could find similar success if leaders shifted organizational strategy.

"Through financial modeling, it appears that, under the right conditions, that a hospital can survive for some period of time in Albert Lea, Minn. However, those conditions are considerable," the report reads.

The considerable conditions are:

  • "Significant capitalization ($60 million to $80 million) would be required to either acquire the existing hospital from Mayo Clinic or build a new one, as well as to invest in the physician network necessary to grow and sustain it.
  • The new entity would need to capture significant market share that is currently aligned with Mayo Clinic through provider and payer relationships.
  • The hospital would need to operate efficiently in order to manage costs to achieve the necessary EBIDA margin (around 10 to12 percent) to be sustainable in the long term".

Quorum adds the city of Albert Lea could try and find another health system to act as its capital partner and control the hospital, or it could continue to negotiate with Mayo to adopt new strategies.

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