MNCM News

"The two words ‘information’ and ‘communication’ are often used interchangeably, but they signify quite different things. Information is giving out; communication is getting through." -- Sydney J. Harris

Significant Differences Identified in Regional Total Cost of Health Care

Read the 2014 Total Cost of Care Report

New analysis released by MN Community Measurement (MNCM) evaluates the total cost of care by region of Minnesota and neighboring states, as well as by type of care provided. It reveals significant regional cost differences.

The 2014 Total Cost of Care Report shows that the cost of care ranges from a low of $415 per patient per month in Eastern North Dakota to a high of $535 per patient per month in Southeastern Minnesota. The average monthly cost statewide is $435 per patient per month.

“The regional differences in the cost of care are very meaningful for patients,” explained Jim Chase, MNCM President. “Patients who have the ability to travel for care may choose to travel to a less costly region of the state with this knowledge.”

The report also reflects the centralized health care market that exists in Minnesota. Despite variation across regions, large medical groups in the Metro area see the majority of patients and have the majority of primary care locations – and, thus, have the largest impact on the overall cost of care in Minnesota. Just seven large medical groups care for half of the 1.5 million patients accounted for in this data.

This analysis utilizes the Total Cost of Care data that MNCM released in December 2014. Information on 115 medical groups, representing 1,052 clinics across Minnesota and in neighboring communities, are included in the data and are available on MNHealthScores.org.

Despite Regional Differences, Metro Area has Most Impact on Statewide Cost

A range of $120 per patient per month exists across six regions in Minnesota, Western Wisconsin, Eastern North Dakota and Eastern South Dakota. While the Metro area was not the highest or lowest cost region statewide or when the results were separated by adult and pediatric patients, it has the largest impact on the overall cost of care in Minnesota due to the volume of patients seen by Metro area providers.

Sixty-one percent of all available primary care clinic locations exist in the Metro region, and those providers see 66 percent of all patients included in this measure. Additionally, the cost of some other regions is driven heavily by one or two large medical groups in those areas.

Just seven large medical groups – Allina Health System; Essentia Health – East Region; Fairview Medical Group; HealthPartners Clinics; Mayo Clinic Health System; Park Nicollet Health Services; and Sanford Health – Fargo Region – see half of all commercially-insured patients in Minnesota and neighboring communities.

Spending Differs Between Adult and Pediatric Patients

This report also analyzes the areas of health care the majority of spending occurs, and how spending differs between adult and pediatric patients.

As would be expected, pediatric patients spend a larger percentage on primary care services than their adult counterparts. This is due to the fact that children generally have fewer chronic conditions and other risk factors. The majority of their costs are for routine pediatric care. However, pediatric patients spent fewer actual dollars on care overall. The area with the largest gap in dollars spent between pediatric and adult patients is in Specialty Care and Ancillary Services, which suggests there could be some unwarranted cost variation in that area of care.

The categories of care evaluated by the report are inpatient facility, outpatient facility, primary care, pharmacy and specialty care and ancillary services.

Total Cost of Care

Total Cost of Care is a National Quality Forum (NQF)-endorsed methodology, which includes all costs associated with treating commercially-insured patients, including professional, facility inpatient and outpatient, pharmacy, lab, radiology, behavioral health and ancillary costs. NQF is considered the gold standard of health care measurement.

The total cost of care is the full cost – paid by both patients and health insurance companies. The amounts have been risk-adjusted and outlier costs have been removed to create a level playing field for all medical groups so true differences in cost can be evaluated.

“Every member of our community can benefit from this information,” Chase explained. “ Providers, purchasers and consumer need reliable, consistent information on health care cost to make informed decisions.”

This data is based on 2013 claims from the four health plans in Minnesota with the largest commercially-insured populations: Blue Cross and Blue Shield of Minnesota, HealthPartners, Medica and PreferredOne. The health care costs evaluated for this report totaled more than $8 billion.

MNCM is currently compiling the second year of Total Cost of Care results, which will be based on 2014 claims, and expects to publicly release it in late 2015. We hope to evaluate year-over-year trends, as well as how costs differ by community size, with that data.