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Knowledge at Wharton

Health Care

How the Mayo Clinic Built Its Reputation As a Top Hospital

Peer collaboration, a team approach to care, and patients come first

Published: Thursday, September 13, 2018 - 12:00

‘How is it that in the middle of a relatively small town of about 125,000 people in Minnesota, you’ve got the No. 1-rated healthcare system probably in the world?”

The question was put to Jeffrey Bolton—the Mayo Clinic’s chief administrative officer—by Larry Jameson, executive vice president of the University of Pennsylvania Health System, during the recent Wharton Leadership Conference. Jameson, who was interviewing Bolton, said he wanted to understand “the Mayo magic.”

Founded more than a century ago by two brothers in the rural Midwest, the Mayo Clinic has built a world-renowned reputation as an exemplary network of clinics and hospitals that has become the preferred destination of patients with difficult-to-treat conditions. Today, the nonprofit health system cares for more than a million people annually from about 140 countries. It employs more than 63,000 people and brings in $12 billion in annual revenue. The Mayo Clinic was ranked No. 1 in the 2018–2019 “Best Hospitals Honor Roll” compiled by the U.S. News & World Report. Indeed, it regularly lands at or near the top of these rankings.

As the human life span lengthens and more money is spent on medical care, places like the Mayo Clinic, with employees who take pride in it being a referral center for advanced and complex cases, will become even more essential. “As people live longer and have multiple chronic diseases, the need for... advanced services will be ever greater,” Jameson says.

Patients come first

Bolton says what differentiates the Mayo Clinic from many healthcare organizations is that the needs of the patient come first. While many medical centers claim the same thing, he says, the Mayo Clinic is actually structured to support patients’ needs as a goal. The health system is organized to foster teamwork, not hierarchy.

Bolton traced the concept to the clinic’s beginnings in the late 1800s. Brother physicians William and Charles Mayo, along with a small group of other founders including Franciscan nuns, created a model of medical collaboration inspired by helping local victims of a tornado. Teams of specialists provided patient-centered care, although the term didn’t exist then.

An oft-repeated anecdote from the clinic’s early days reflects the organization’s focus on teamwork instead of position. William Mayo was once asked by a patient, who was looking for the person in charge, “Are you the head doctor here?” He answered, “No, my brother’s the head doctor. I’m the belly doctor.”

The collaborative model is still alive and well in the organization, says Bolton. Indeed, he adds, Mayo is one of the largest integrated group practices—not only within and across specialties but in administration, nursing, and technology.

Jameson says he has seen the Mayo Clinic teamwork in action. “I want to underscore that [Jeffrey] is not just blowing smoke,” he notes. “This is the way it really works.” Patients come into the Mayo Clinic and see a doctor. If there’s a deeper problem involved, say with the gastroenterology system or another issue, the patient gets moved that day, or even that hour, to the next specialist, “... so problems get solved. And this is what attracts people,” explains Jameson.

Bolton notes that part of Mayo’s philosophy has always been that “the wisdom of peers is greater than any individual.” It’s almost expected, he says, that if you see a patient with an issue you’re unsure about, “you pick up the phone and call a colleague—either within your specialty or another specialty—and seek out insight.” And now that Mayo Clinic has electronic medical records, that colleague can also pull up and view the patient’s information.

Indeed, Bolton says the Mayo Clinic was the first hospital to maintain standardized information on its patients, starting 110 years ago. Obviously, these were on paper and traveled with the patient, but “every physician that saw that patient had the full record in front of them—the medications, the diagnoses.”

Salaried doctors

Another feature that distinguishes the Mayo Clinic is that it’s a physician-led organization, which is fairly rare. Yet this model leads to better quality of care that routinely lands the clinic atop the lists of best hospitals. Bolton says the Mayo Clinic uses a “leadership dyad” model in which a physician leader is paired with an administrative partner. Bolton himself is the administrative partner to president and CEO John Noseworthy, a neurologist and multiple sclerosis specialist.

Putting doctors in charge of the organization is one way to ensure that Mayo Clinic patients are provided the best of care. This approach is taken by the entire clinic, including its research and educational branches. “We are really very conscious about having our physicians and scientists co-lead,” Bolton says.

Even the way Mayo physicians are compensated reflects the institution’s collaborative philosophy. Bolton explains that all of Mayo’s specialists, subspecialists, and physician-scientists get a salary after five years on staff. This also is unusual in healthcare. He adds that the salaries are consistent within specialties: All cardiologists are paid the same, all neurosurgeons are paid the same, and so forth. “So there’s no real incentive for driving volume within your practice,” Bolton says. “You’re really, again, focused on what the needs of the patient are.”

Jameson agrees that the salary arrangement removes “potentially perverse incentives that are based on volume.” American medicine is often criticized for being too profit-oriented, sometimes at the expense of optimal patient care.

With its adherence to close peer collaboration, a team approach to care, and preset salaries, the Mayo Clinic’s foundational tenets go against the conventional image of the American doctor as a lone, brilliant individual who builds a reputation and gains wealth as patients flock to his or her practice. Would some physicians hesitate to work in this kind of environment? “I think you could imagine that the Mayo Clinic really isn’t the workplace for everyone,” says Bolton. “You have to come in with a certain mindset, and really focus on the mission.”

The money and the mission

The Mayo Clinic has its own set of challenges, however. A central one involves maintaining both financial sustainability and the quality of care that has made it world-famous.

“Every hospital system that has some Catholic roots has heard the phrase, ‘no money, no mission,’” says Bolton, referring to the Franciscan sisters’ role in the clinic’s founding. “A lot of people forget, though, the other side of that: ‘No mission, no need for money.’” There are tensions at the clinic around balancing the business side and the humanitarian vision. Some staff members feel it is becoming too “corporate,” but Bolton says the clinic works to continually underscore the values upon which it is built.

Bolton also talks about the complexity of running a hospital system today, including the massive capital demands of healthcare. “It’s a people-intensive industry, something like the airlines, if you think about capital and people,” he says. Mayo does a lot of charity care and subsidizes a great deal of Medicaid and Medicare business, but needs a certain amount of commercial business to balance that out and generate a profit even though it’s a nonprofit. Mayo’s business model needs continued investment and reinvestment to stay at the leading edge, says Bolton.

First published Aug. 28, 2018, on the Knowledge@Wharton blog.


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Knowledge at Wharton

Knowledge@Wharton is the web-based research and business analysis journal of the Wharton School of the University of Pennsylvania. Launched in May 1999, its goal is to disseminate business knowledge and insights to readers around the world. The Knowledge@Wharton Network offers free access to analysis of current business trends; interviews with industry leaders and Wharton faculty; articles based on the most recent business research; conference overviews, book reviews, and links to relevant content; and a searchable database of more than 1,500 articles and research abstracts.