The average cost for a month of care at Essentia Health clinics in Northeastern Minnesota is more than $80 above the average cost at St. Luke’s hospital clinics, a first-of-its-kind report shows.
Based on 2013 claims data from the four largest health insurance plans in the state, the report shows the average total cost of care per patient, per month at St. Luke’s clinics was $462 — 6 percent higher than the statewide average of $435. At Essentia Health East Region clinics — those in Northeastern Minnesota plus Wisconsin — the cost was $543, or 25 percent above the statewide average.
It’s not a new phenomenon, said Dr. Mike Van Scoy, medical director of population care management at Essentia. The health plans have historically paid more for clinical services in Northeastern Minnesota than in the state as a whole, he said.
“That having been said, it’s high and we all are aware of the problems with the high cost of care,” Van Scoy said. “And we want to do something about that.”
The report, allowing Minnesota consumers to compare the cost of clinics as they might compare the cost of pickup trucks, is new for Minnesota and hasn’t been done anywhere else in the country, said Jim Chase, president of MN Community Measurement.
“Measures like this have been used with individual plans and only shared with providers, but this is the first time … it’s been made public across multiple payers for an entire state,” Chase said in an interview.
The report, published in December, evaluated costs from more than 1.5 million patients at 115 medical groups representing 1,052 clinics across Minnesota and neighboring communities, according to a news release from MN Community Measurement, a nonprofit dedicated to publicly reporting health care information.
Health care costs evaluated for the report totaled more than $8 billion.
The news release noted that if the average per-patient cost were reduced by just $12 a month, Minnesotans would save $750 million in health care costs annually.
‘We think it should be transparent’
The report used the full cost of care — both the amount paid by patients and by their insurers. It used a method developed at Johns Hopkins to take into account the higher costs associated with sicker patients and more complex cases. Medical groups were given the opportunity to review their results and appeal if they felt the results were invalid, according to Community Measurement.
John Strange, CEO of St. Luke’s, said he hadn’t seen the results ahead of time.
Von Scoy said he had.
“We didn’t challenge the result, and we didn’t challenge the concept,” he said. “We think it should be transparent.”
Essentia has been working since 2011 to reduce costs, he said. The hope is to “bend the cost curve.” He illustrated by holding his hand so it was pointing up at an angle, and then lowering the angle. The cost of health care inevitably will rise, he said, but the Essentia system is dedicated to slowing that increase.
“We know that our costs have increased, but they have increased less than the cost of health care provided by our peers,” Van Scoy said. “So directionally, we’re headed in the right path. We’re still higher, but we predict at a certain point we’re going to be much more competitive.”
Clinics in Duluth tend to be somewhat more expensive, Strange said, because they treat a higher percentage of Medicare and Medicaid patients — 60 percent for St. Luke’s clinics. Medicare payments don’t meet the clinics’ cost of providing care, and Medicaid in Minnesota pays only half as much as Medicare, he said. So rates paid by commercial insurers go up to make the difference.
“I call it the silent tax,” Strange said.
Van Scoy said Essentia’s costs may be higher because the system makes a point of offering significant services at clinics in smaller communities.
“I have a friend who’s a (gastroenterologist), and he wakes up at 4:35 in the morning to drive up to Ely to do a clinic up there,” Van Scoy said. “And he can’t necessarily see a lot of patients and do lots of colonoscopies, but for the people who need him to come up there, he’ll go. And so we have used the higher rate for the community benefit.”
Strange said little about the price difference between the two Duluth-based systems.
“In this case it shows us being relatively effective in relationship to Essentia,” he said, but added, “Essentia is a good system. They deliver a good product.”
Van Scoy, too, was cautious about comparing the two.
“I think there’s good people at St. Luke’s and they wake up every day trying to do a good job,” he said. “And I have friends that go there, and I want them to get good care, too. But I just think that what we do is — we just kind of have a different outlook of our mission, and we’re really not similar health care systems.”
But competition — or the lack of it — could be one reason rates are generally higher in one region of the state than another, Chase said.
“I think we’re seeing in some areas where there’s only a couple of systems or only one predominant system, that the pricing and total cost seems to be higher than others,” he said.
Consumers shouldn’t look at just cost but also quality and patient experience information that already is available from MN Community Measurement, he said.
Essentia Health encourages consumers to do that, Van Scoy said, linking to the information on its own home page.
“It shows you everything from patient safety to hospital-acquired conditions to chronic disease management,” Van Scoy said. “It’s scary, but it’s the right thing to do.”