Study of Minnesota clinics shows some are twice as expensive as others.
Article by: JEREMY OLSON, Star Tribune
Updated: December 18, 2014 – 9:00 AM
Spending on medical care varies dramatically depending on the clinics that Minnesotans choose — from $269 to $826 per patient per month — according to a first-of-its-kind analysis designed to make patients wiser shoppers and doctors more accountable for the cost of care.
The average patient cost $425 per month, but fully one in five of Minnesota’s clinics was substantially cheaper or more expensive than average, according to the analysis by MN Community Measurement (MNCM), a nonprofit agency formed a decade ago to compare clinics by the cost and quality of care.
Even after weighting the data for clinics that treat sicker or more problematic patients, the analysis found huge variations in cost.
“What’s striking is the difference,” said Jim Chase, MNCM’s president.
At Fargo-based 7-Day Clinic, a walk-in provider of basic services such as strep tests and vaccinations, regular patients cost only $269 per month, and at Hudson Physicians patients cost $344. On the other end of the scale, patients receiving most of their primary care from University of Minnesota Physicians cost $567 and patients with Mayo Clinic cost $826 per month.
The “total cost of care” report, released Thursday, was billed as a major advance in the consumer health care movement — and one that would soon be mimicked by other states and federal agencies seeking to place more cost and quality data in consumers’ hands.
Clinics have been ranked in the past on their costs for individual procedures such as colonoscopies. But the expensive clinics argued they were ultimately more efficient because they had fewer medical errors or could deliver quality care with fewer procedures.
Examining overall patient costs addresses that argument.
“It opens up dialogue about why Provider A is more expensive than Provider B,” said Paul Berrisford, chief operating officer of Entira, an East Metro clinic group where the average monthly cost per patient was $398. “That drives consumerism and internal competition.”
MN Community Measurement already has a track record of spawning change by publishing clinic data. Since 2004, for example, it has graded clinics in Minnesota and just across its borders on meeting care benchmarks for patients with diabetes. Since 2008, the share of diabetics at optimal health has increased from 17 percent to 39 percent.
The new report includes services that patients received away from their main clinic — such as imaging scans at radiology centers or surgeries at hospitals. But in the current era of health care reform, a primary care clinic is often considered the “medical home” for patients and bears responsibility for all medical services they receive.
Chase said the new cost ranking should motivate clinics to re-examine tests they order and reconsider referrals to higher-cost specialists.
Northwest Family Physicians, based in Crystal, ranked favorably, with a monthly cost per patient of $360. In a separate study this fall, it was ranked by a Stanford University think tank as one of the most efficient clinics in the nation — partly because its doctors were trained to provide procedures such as allergy tests rather than refer patients to specialists.
Rewards from insurers or other organizations for measurably efficient care are shared by the entire staff, giving everyone motivation, said Dr. James Welters, Northwest’s president and chief medical officer. “Everybody gets it or nobody gets it.”
MNCM worked with doctors and other specialists over three years to figure out how to fairly evaluate clinics, and also to decide which patients were assigned to which clinics. They used data for all patients privately insured by Minnesota’s four largest health plans and assigned patients to family medicine, pediatric, internal medicine or OB-GYN clinics based on which ones they used most in 2013.
“The reason nobody has done it before is because nobody could get agreement” on how to set it up, said Erin Ghere, a spokeswoman for MNCM. “For the majority of people, it probably stands up that the provider they see the most is their primary care doctor.”
Small clinic groups with fewer than 600 claims for service were excluded. Researchers then adjusted the dollar figures, using a nationally accepted method developed at Johns Hopkins, to adjust for differences in the health of patients at different clinics. All providers reviewed their data in advance of Thursday’s public release.
Overall, the project amassed data on $8 billion in medical services received by 1.5 million patients last year, and reviewed 115 medical groups.
Students low, Mayo high
Mayo had appealed the cost results for its Rochester clinic group, which were 98 percent above average. Clinics aligned with the Mayo Clinic Health System in southeast Minnesota also posted high costs — $524 per patient, or 20 percent above the state average. But Mayo officials particularly disagreed with the Rochester data.
While MNCM removed some of the highest-cost patients who distorted clinic results, Mayo officials said 5 percent of their patients made up 50 percent of their clinic costs. Remove these patients, which included a heart transplant recipient, and Mayo is average for costs, said Dr. John Wald, Mayo’s medical director for public affairs.
While all clinic groups in the state could have high-cost patients, such as those suffering unexpected cancers, Wald said no clinic group in Minnesota has a patient population as challenging as Mayo’s. “Not everyone can make that claim,” he said. “Certainly not everyone can claim the number of complex patients that we see.”
Some results were predictable — such as low average costs for the student health services at the University of St. Thomas, at one end, and higher costs at Mayo and the University of Minnesota, which are renowned for treating complex patients at another.
Chase said that doesn’t change the reality that some clinics spend more than others, even if they have responsibilities such as medical education and research that others don’t.
The analysis also found stark regional patterns. In addition to Mayo, the Gundersen and Olmsted clinic groups serving southeast Minnesota were among the most expensive.
West Side Community Health Services of St. Paul had a high cost — $535 per patient per month — despite being a community clinic focused on low-income, adolescent and minority populations. A clinic executive said the numbers were inflated by West Side’s substantial population of costly HIV patients.
Chase said the data can influence health care in several ways:
For patients, he said, the goal isn’t necessarily to pick doctors on the cheap. But knowing the costs could help in an era of limited insurance networks and increased deductibles.
For clinics, the goal is to become cheaper, not the cheapest, he said; nobody expects equivalency between Mayo and 7-Day Clinic. But if all clinics cut spending by $12 per patient per month, Minnesota patients and insurers would save $750 million in health care costs each year, he said.
Jeremy Olson • 612-673-7744