■ February 2014 • VOLUME 6, ISSUE 5 PUBLISHER James P. Santori EXECUTIVE EDITOR Joe Spear ASSOCIATE EDITOR Tim Krohn CONTRIBUTING Tim Krohn WRITERS Pete Steiner Kent Thiesse Heidi Sampson Kristen Dulas PHOTOGRAPHERS Pat Christman John Cross COVER PHOTO John Cross PAGE DESIGNER Christina Sankey ADVERTISING Ginny Bergerson MANAGER ADVERTISING sales Danny Creel ADVERTISING Barb Wass ASSISTANT ADVERTISING Sue Hammar DESIGNERS Christina Sankey CIRCULATION Denise Zernechel DIRECTOR
For editorial inquiries, call Tim Krohn at 507-344-6383. For advertising, call 344-6336, or e-mail mankatomag@mankatofreepress.com. MN Valley Business is published by The Free Press Media monthly at 418 South 2nd Street., Mankato MN 56001.
■ Local Business memos/ Company news................................7 ■ Business and Industry trends.........9 ■ Minnesota Business updates....... 10 ■ Business Commentary................. 11 ■ Construction, real estate trends.. 25 ■ Agriculture Outlook...................... 26 ■ Agribusiness trends..................... 27 ■ Job trends..................................... 28 ■ Retail trends................................. 29 ■ Greater Mankato Growth.............. 30 ■ Greater Mankato Growth Member Activities ....................... 31
From the editor
By Joe Spear
Health care brings stable demand
T
here are few businesses that are more driven by soaring demand than health care. But there are also few businesses where demand is less influenced by regular economic events that are created by the business cycle. Interest rates, employment trends will impact the cost of putting health care in place, but they have very little impact on demand for health care. This is only my thesis, of course, but the comparison makes sense to me. Interest rates rise and the consumer thinks twice about a new car, a home improvement or even charging up the credit cards at Christmas time. But the same interest rate rise doesn’t appear to impact a decision to get a knee replacement and certainly not a heart stent. Others take care of our decisions on these consumer issues. Insurance companies mostly pay for these things and indeed plan for these events, thus “insuring” demand in some respects. Even if the consumer loses their employment, they are usually covered for health care by the government or others, and especially so now with the expansion of the coverage provided in the Affordable Care Act. It’s now becoming clear why medical providers and insurance companies were on board with the ACA from the start. This kind of “insured” demand is mostly good for the Mankato economy. The area has become a regional center for medical services. It seems all major providers, the Mankato Clinic, the Mayo Clinic Health System, the Orthopaedic and Fracture Clinic have or are undergoing fairly major expansions. But operating a medical business certainly is no gravy train. As government and insurance companies put in place more rules and are able to more accurately judge treatment quality and outcomes, they have their own kind of pressure to put on the providers. It’s clear the providers who don’t shore up their efficiencies and improve their outcomes will be competing against a large number of those who
6 • February 2014 • MN Valley Business
do. So places like Mayo Clinic Health System in Mankato as well as the Mankato Clinic are creating coordinated care and “Health Care Homes” in the case of the Mankato Clinic. That has helped keep health care costs in check as overall they’ve gone up less than inflation the last two years, notes Dr. Greg Kutcher, president and CEO of Mayo Clinic Health System. “And that’s not by accident,” Kutcher says. “There’s a lot of focus on doing things differently and being more efficient.” Mankato Clinic’s Health Care Homes is another project that coordinates care so providers can have higher outcomes at lower cost. The clinic has even started a sort of house call program where its doctors and nurses go out to assisted living facilities to see patients who have difficulty with their mobility. Mankato’s Orthopaedic and Fracture Clinic has even been renting hotel rooms for patients recovering from surgery because it’s cheaper but it’s also more comfortable for the patients. Nurses rent rooms too so there is 24/7 oversight of recovering patients. Still, there remain growth areas for new services as well. Some is driven by need like children’s behavioral health services added by the Mankato Clinic. “We’ve really expanded there. We added two or three more providers that focus on children’s behavioral health. That was a big need we couldn’t meet before,” says Mankato Clinic CEO Randy Farrow Kids playing more sports earlier has driven some services for the Orthopaedic clinic. High school students are getting orthopaedic injuries sooner as a result. Demographics will also drive that business. MV Joe Spear is executive editor of Minnesota Valley Business. Contact him at 344-6382 or jspear@mankatofreepress.com