Olmsted Medical Center

The story of Olmsted Medical Center, like most stories, begins "Once upon a time…"

At the end of World War II, there were only three physicians in Olmsted County who were not employed by the Mayo Clinic; two in Rochester and one in Stewartville. Several of Rochester's civic leaders, including Harry Harwick, then Mayo Clinic administrator, felt a need to attract additional non-Mayo physicians to the community. But, the existing hospitals were limited to Mayo physicians. As a result, as one official put it, "it became increasingly difficult to attract general practitioners to the Rochester area. It was felt that a community hospital was essential to correct the situation."

In 1947, a referendum was passed to permit a three-quarter million dollar county bond issue to build a hospital. Unfortunately, the site originally selected near Bear Creek was flooded the next year, and the county decided that would not be a good place to put a hospital. Eventually, the state gave the county a portion of the state hospital land. Construction finally got underway in 1954, and the Olmsted Community Hospital opened in June 1955.

Meanwhile, Dr. Harold Wente, who had married a lady from Rochester, finished his medical training and reviewed practice opportunities. Lured by the promise of the proposed hospital, Dr. Wente opened his office on July 15, 1949, on the second floor of the Lawlers Dry Cleaners on Broadway in downtown Rochester (where the parking ramp next to Michael's Restaurant now stands). Dr. Wente had little more than a plan for a career as a solo general practitioner at this time—and no idea of what would eventually transpire. In 1952, however, Dr. Wente was joined by a college friend who had gone to medical school after infantry service in the war, and a third partner joined them the following year. By the summer of 1953, they had outgrown their office, so they built a new office building on Third Avenue SE and took the name, "Olmsted Medical Group."

When Olmsted Community Hospital began to take shape, Dr. Wente thought that a small hospital staffed only by general practitioners would not succeed. So, when the hospital opened, Olmsted Medical Group included a surgeon, an obstetrician, and an ophthalmologist, and was thus beginning to become a multi-specialty group. IBM came to Rochester in 1956, and Rochester doubled its size in the next 10 years. Many of the new young families came to the new Medical Group, which added on to its building several times, and opened a second clinic in northwest Rochester. In 1970, the Group clinics were brought together in a new building around the comer on Ninth Street SE, one block east of Broadway.

A series of firsts!

The early success of Olmsted Medical Group was in large part due to the vision, energy and personality of Dr. Wente. He established a multi-specialty group that has throughout the years been at the forefront of many developments in the delivery of medical care. In 1963, Olmsted Medical Group became one of the first incorporated group practices of the country and, because of that, was also among the first to be able to offer a retirement plan and other fringe benefits to its employees (actually several years before such plans became legally recognized). The Group became one of the first to computerize its business systems, and it was one of the first groups in the country to develop satellite clinics in nearby communities, beginning with Hayfield in 1972. It was one of the first to have a medical director, to become accredited, to have an organized quality assurance program, and to establish a patient education department.

Olmsted Community Hospital was also initially successful. Soon after opening, it organized the first hospital auxiliary in Rochester, and in 1968 a new obstetrical wing and second operating room were added. The hospital was again renovated in 1979-80, followed by another major modernization and expansion in 1985-86.
Changes in Medicare in 1983, with the advent of diagnosis-related groups (DRGs) and the shift of most surgery to the outpatient setting, resulted in a marked decrease in hospital utilization nationwide. Small hospitals such as Olmsted Community were seriously threatened. It was felt that the only way for the hospital to survive was for Olmsted Medical Group to increase both the number of patients it cared for and the range of services offered. From 1986 to 1990, the Group more than doubled in size, adding a number of new specialties as well as six new branch offices. The main Rochester office was enlarged in 1987-88, and growth has continued at a more moderate pace since then.

As the Medical Group became a larger organization, it required expensive facilities and equipment and became important as an institution—more important and needing to be more permanent than its physicians. The physicians felt that they had outgrown the model of a professional corporation and were willing to give up dividends and capital gains in order to achieve a tax exempt status, which would make retaining earnings more productive. The Group became not-for-profit in 1988, and in 1993 became a 501(c)3 corporation and was approved by the IRS for tax exempt status. By doing this, the physicians gave up ownership but maintained local control and kept the organization financially healthy. The result was an organization that is more stable and secure, one that is better suited to survive the continuing turmoil of health systems reform, and thus provides all of its employees, including physicians, greater job security. It can also better provide the facilities and equipment that Olmsted Medical Center needs to serve patients.

While Olmsted Medical Group was expanding by adding new specialists, the hospital did not attract other physicians to Rochester. As the Group's physicians constituted almost the entire medical staff of the hospital, the Group and hospital had become a de facto healthcare system, one with two heads that didn't always work well together. Each institution had to look out for its own interest, no matter how hard they tried to cooperate. After the Group became not-for-profit, it was politically feasible to look at a merger with the hospital. This process began in early 1994, and an agreement was reached in late 1995. On January 1, 1996, the hospital was transferred from the County to Olmsted Medical Group, now named Olmsted Medical Center.