Mayo Clinic is planning to pull back on billion-dollar investments in Minnesota if health care reform legislation advances that would regulate nurse staffing levels and penalize hospitals engaging in high-cost growth.

Mayo lobbyist Kate Johansen emailed Gov. Tim Walz on Wednesday, expressing frustration over the proposals, which have not included Mayo's compromises. The proposals are designed to fix some of the staffing shortages, delays and high costs of medical care, but Johansen said they could come at the expense of a Mayo construction plan equal to quadruple the $1 billion spent to build U.S. Bank Stadium.

"Our Board was set to move forward to consider this investment next week," the email said. "Because these bills continue to proceed without meaningful and necessary changes to avert their harms to Minnesotans, we cannot proceed with seeking approval to make this investment in Minnesota. We will need to direct this enormous investment to other states."

The threat is a late-in-the-game move for a hospital system that has been on the losing end of legislative debates this session, and did not get requested increases in reimbursement from Minnesota's public health care plans. The House and Senate have approved the reforms in health budget bills — with the differences between those bills being ironed out by a conference committee.

Mayo's ire is focused on a nurse staffing proposal promoted by the Minnesota Nurses Association (MNA), the union that represents nurses at most Twin Cities and Duluth hospitals. The legislation would require hospitals to set up committees — with nurses making up 35% of the membership — to set staffing levels that protect patient care and reduce nurses' workloads.

Mayo has sought an exemption, arguing that it has a real-time, electronic staffing system that is more sensitive to patient and nurse needs than a periodic committee.

Leaders of other hospitals are worried they would have to shut down units and turn away patients if they don't have enough nurses to meet their committee's staffing requirements. The Minnesota Hospital Association estimated the measure would prompt a 15% reduction in hospital capacity that would disrupt access to care for 70,000 Minnesotans.

Lawmakers met with MHA leaders and are negotiating and revising the reform legislation, but Sen. Erin Murphy, DFL-St. Paul, said she is confident the nurse staffing language will survive.

"Regardless of Mayo's position, this legislation has been well thought out," said Murphy, the lead author of the staffing proposal. "It's really important to Minnesotans and their health and well-being."

Nursing union president Mary Turner issued a statement Friday regarding Mayo's threat, arguing that the renowned Rochester-based medical provider is trying to "kill provisions that would provide greater transparency and accountability to the very patients and communities they are meant to serve."

The union and Mayo have been at odds in recent years. Mayo nurses in Mankato voted to leave MNA, but the union prevented a similar loss at Mayo's hospital in Lake City.

DFL control of the House and Senate this year has resulted in extraordinary legislative activity in areas of health care reform that failed to gain traction in past sessions.

The budget bills include plans to create a health care affordability board that would set spending growth levels for Minnesota hospitals and hold them accountable if they exceed those levels. Fines up to $500,000 could follow if providers with excessive spending growth fail to create or enact cost-cutting solutions.

Mayo would be at risk because it routinely appears as the state's highest-cost provider in comparisons by Minnesota Community Measurement. Mayo leaders have argued that the system appears more expensive because it takes on more patients with complex care needs from around the world.

Mayo leaders offered no specifics about their billion-dollar expansion, which would be funded with private money and not involve any public money allocated for the Destination Medical Center (DMC) project.

The roughly $5 billion DMC project includes $585 million authorized by the Legislature in 2013 to improve infrastructure in Rochester over 20 years and cement the city's status as an international hub for health care.

Lawmakers have threatened before to try to cut DMC funding when they disagreed with Mayo policies, such as its COVID-19 vaccine mandate for workers that rankled some Republicans. Murphy said she won't consider that option, because "we made a commitment. I think that's important. I don't operate in ultimatums. I don't think that serves the interests of Minnesotans."

Walz on Friday expressed optimism that a compromise would support nurses and address Mayo's concerns.

"We've always supported making sure that our nurses are supported, have what they need," he said. "We also understand that Mayo Clinic's a unique entity. ... So I know that's being worked on right now."

Solutions for Mayo might not help other hospitals, though. Winona Health posted a 2.5% operating loss in 2022, and is facing worse years ahead, said chief executive Rachelle Schultz. One reform could force her hospital to meet staffing requirements by hiring expensive temporary help while another could penalize it for spending more than expected to provide health care.

The health system loses $1 million with every percent increase in patients from public plans that reimburse at low rates, she said, and the reform bill includes a massive expansion of MinnesotaCare eligibility to give people more health insurance options and lower premiums.

"All of these bills, all at the same time?" she said. "It's too heavy. It's too much. How do we absorb all that?"

Mayo's letter to Walz was first reported by the Minnesota Reformer.

Staff writer Briana Bierschbach contributed to this report.