MANKATO — After wallowing through a dreary 2009, things could only go up in 2010.

“This year was certainly better than 2009,” said Dr. Greg Kutcher, president and CEO of Immanuel St. Joseph’s Mayo Health System.

“Considering the hole we were in, we got back to where we needed to be.”

That is the view from most sectors of the local economy at the close of the decade.

Good, but not robust

Lonnie Trasmaer, who has spent 26 years in banking and the 10 years prior to that in real estate, said the economy in 2010 is clearly better in this region than in most.

“It’s much more stable here than in the metro areas. We have some presence in both,” said Trasmaer, president of Wells Federal Bank, based in Wells.

“I wouldn’t call it robust, except in the ag sector. But I’m not as pessimistic as a lot of the banker surveys are.”

He said banks and businesses have become very cautious about why they lend and why they borrow.

“In the past, people didn’t seem to care when or how they’d pay it back and the bankers didn’t seem to care either. It’s probably healthy for us that there’s more accountability by everybody, but it’s very painful.”

One thing he has seen is a boost in home refinancing. “We’ve seen an incredible surge in the past four or five months. Interest is at historical lows and it’s a superb time to refinance.”

That doesn’t mean it’s easy to refinance, he said, with tougher credit standards from Freddie Mac and Fannie Mae.

“In the past, your credit score could be in the mid-600s. Now you have to be closer to 700. You can’t have any late payments in the past year and the debt to asset ratio is stricter.”

Trasmaer said the commercial side of lending also has shown some strength late in the year. The bank is helping finance the new St. Peter Food Co-op and has a large project coming in Mankato, which he couldn’t disclose.

“I’m starting to see more in new construction rather than rehabbing. There are some big projects. That’s an optimistic sign.”

He said his business clients remain uncertain about governmental changes and policies and aren’t expecting robust sales soon. “But they’re pretty comfortable sales will be the same.”

Trasmaer said business owners in the region are practical.

“People’s expectations are a little more realistic here. They understand businesses grow marginally rather than exponentially and they manage their businesses accordingly.”

Health care fuels economy

While not recession-proof, health care generally grows no matter the economy, driven by more usage from an aging population.

In the Mankato region, growth has been fueled by two large providers: The Mankato Clinic, one of the largest physician-owned operations in the state, and by the Mayo-owned ISJ system, which is in the midst of transitioning into a larger operation more closely aligned with Mayo Clinic.

Next year, ISJ will become part of what will be called Mayo Clinic System to fully align with one of the most respected brand names in health care.

ISJ has operated a regional medical system with hospitals and clinics from Springfield to Waseca and points north and south of Mankato. Recently, Mayo combined the ISJ and its Fairmont system as one with Kutcher as CEO of the entire region.

While both were owned by Mayo, the two systems had separate boards of directors but now operate under a single board. The combined system has  about 3,000 employees and nearly two dozen sites that stretch from northern Iowa to Le Sueur and Springfield to Waterville.

At the end of this year, ISJ’s Mankato operations had 1,669 full-time equivalent employees, about a dozen more than at the end of 2009.

Kutcher said the year past has shown continued economic struggle but also planning and growth for the future.

“Certainly the economic challenges continued in 2010 and they will continue,” he said.

“What we’re building for is the future and I think that was the biggest success in 2010. Health care, after changing slowly for years, is changing very rapidly,” Kutcher said.

“Health care was not a health care system but a disease-treatment system. We’re building a new system by aligning more closely with Mayo Clinic.”

While much of that work involved policy and operation changes, bricks and mortar also continue to be added in Mankato.

ISJ this year began construction on a new emergency department and related space for operating rooms, central supply and sterilization. The nearly $30 million project will be done in 2012.

Kutcher said the construction got the OK from Mayo, despite a tight year for capital projects. “The reason we were able to build this is that we’d built a good, solid emergency department.”   

Kutcher said Mayo’s decision to bring together its health systems and align them more closely with Mayo Clinic coincides with a new approach for the system.

“We’re working on the customer pieces and on creating more value for the patients — that’s a big thing for us. It’s not just getting good medical care, it’s outcomes, safety and service, divided by cost,” Kutcher said.

“From a patient’s standpoint, we want them to feel comfortable to go to their own community and know they’ll get the best care. And if they don’t have the programs there, they’ll go elsewhere in the system to get the care they need. They don’t have to feel like they have to bypass their local system and go 90 miles away.”

Better coordinating care for patients — particularly those with chronic and/or multiple conditions — is a focus that should bring better care more efficiently.

“A large part of health care that is driving the cost is the explosion of chronic diseases that we couldn’t take care of in the past. We’re trying to build that coordinated care closer to home.”  

ISJ — and Mankato Clinic — continued to fully implement complex electronic records systems this year to aid in care coordination

And ISJ has been increasing its palliative care — a specialty focused on reducing severity of disease symptoms and improving quality of life, rather than focusing exclusively on striving to halt, delay or reverse a serious disease.

Kutcher said he believes the local health care delivery system is well placed to meet future needs.

“We’re really excited about what we’re doing. We’ve worked  very hard to prepare for the future. And we have a community at large that’s very energetic and willing to roll up their sleeves and tackle problems. As a leader, that means a lot to me.”

Outsiders taking a look

Jonathan Zierdt, president and CEO of Greater Mankato Growth, said it’s nice to have 2009 fading into the distance.

“If you look back at 2010 and compare it to 2009, 2010 was a relatively good year — 2009 was the heart of the business adjustments and recession,” he said.

“We weathered this storm relatively well, we weren’t unscathed. But compared to many states in the country, we weathered it pretty well.”

He and other business and government leaders say the diversity of the area economy has helped.

“Take manufacturing, it’s 17 percent of our economy, but inside manufacturing there is everything from electronics, to ag processing, to sheet metal,” Zierdt said. “It allows us to have highs in some areas and lows in others.”

A new Pipeline Report created by GMG has begun to show benefits for future growth, Zierdt said. The online report details economic details and business expansions in the region.

“People are getting excited about it. There’s a lot of attention from outside developers and media outlets. We have about 100 businesses that are doing $150 million in expansions or improvements announced since the first of the year. People from outside see that in the report and say, ‘What’s going on there?’ ”

Zierdt said he continues to hear of tougher requirements for businesses seeking financing and lines of credit.

“It’s not the way it was a few years ago, there’s a bit more challenge to it.”

Public jobs on the line

While most of the private sector job layoffs came in early 2009 and some continued into 2010, public sector employment has remained more stable. But that is likely to change.

“Public employees are going to have to share in the same pain as the private sector has. It’s just delayed because of the labor contracts,” said Mankato City Manager Pat Hentges.

The city, like other local governments, has had workforce reductions by not filling open positions that are not considered critical.

“The challenge for minimizing taxes and to make up for shortfalls in Local Government Aid, we will have to have layoffs and reductions in hours.”