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‘It is an affordability issue’

December 1, 2017 GMT

A new report has highlighted an old concern for residents of Southeast Minnesota — and riled Mayo Clinic officials.

Minnesota Community Measurement’s new study on health-care cost and utilization has once again found that the Southeast Region pays significantly more than anywhere else in the state. That fact is driven by higher-than-average costs at Olmsted Medical Center and Mayo Clinic, which the report says continues to charge the most in the state on a risk-adjusted basis.

Residents of the Southeast Region pay an average of $601 per month, which is 22 percent higher than the Metro Region and 19 percent higher than the state average of $490, according to MNCM’s 2017 Cost & Utilization Report that analyzed every patient who was billed through private insurance at 122 medical groups across the state.

The report says Mayo Clinic and its regional facilities account for eight of Minnesota’s nine most expensive sites. The most expensive health care facility in the state is Mayo’s Rochester campus, which cost patients a risk-adjusted monthly average of $977 — almost exactly twice the state average.

Emergency room utilization had the highest correlation to total cost, according to the report. Outstate utilization of the ER was 20 percent higher than the metro region, led by Mayo’s Rochester campus that had a 61 percent higher observed rate than expected.

“I like to think about it as the whole region rather than one provider, but in the southeast part of the state, the resource use is the same as the state average and the price is higher,” said MNCM President Julie Sonier.

“It is an affordability issue for people living in that part of the state.”

The study suggests a typical resident of Rochester will pay nearly $1,600 more each year in health-care costs than someone living in Minneapolis. Looking closer, a patient at Mayo would, on average, pay $6,554 more annually than a patient at North Clinic in Minneapolis, which is on the other end of the cost spectrum in MNCM’s new report.

As one specific example of the wide cost variance, MNCM reports that Mayo charges $534 for a cardiac stress test. That’s more than twice the state average of $201 and three times higher than Essentia Health West charges at $145. Many other examples in the 58-page report show similar cost variations.

Mayo, which has been the nation’s top-ranked hospital by U.S. News & World in three of the last four years, pushed back on the numbers listed in the new report while noting that it often delivers complex care that others do not. Dr. Paula Santrach, Mayo’s chief quality officer, also questioned MNCM’s methodology — which Mayo has also done in previous years — while arguing that Mayo’s numbers are “artificially high.”

“Mayo Clinic supports transparent, total cost of care measures that provide meaningful cost information,” Dr. Santrach said in a written response. “Cost of care is an important element when considering the overall value patients receive when seeing a health care provider. However, cost of care reports are much more complicated for destination centers such as Mayo Clinic.

“Mayo Clinic has worked with Minnesota Community Measurement to help resolve methodological issues so the measures truly allow patients to ‘compare apples to apples’ when evaluating both cost and value of care. However, MCM continues to include destination patients from across Minnesota who seek complex care at Mayo. By including complex care patients, total cost of care at Mayo looks artificially high.”

“Understanding the cost of care and its components is very important as we continue our journey toward value based care. With some modifications to the measurement approach, the cost of care delivered to our regional population would be more accurate, allowing patients to make well-informed choices about their health care.”

In tax forms filed earlier this month, Mayo reported a net income of $257 million in 2016 across all sites, down from $271 million in 2015. Mayo Clinic cared for 1.3 million patients last year, from all 50 U.S. states and 136 foreign countries, according to Mayo Clinic’s website.

Sonier said the study involved collecting data from Minnesota’s four largest insurance companies to aggregate results, do quality checks, and provide preliminary data for medical groups to review. That standardized methodology is aimed at making the numbers more easily comparable, she said.

For example, the “risk-adjusted cost of care” attempts to examine the numbers as if each site had the same mix of patients, according to MNCM spokesperson Brian Strub.

“We certainly are committed to being transparent about our methodology, but we are open to hearing concerns that individual providers might raise and are open to how we might adjust our methods,” Sonier said.

Additionally, OMC’s costs are classified as “high” by MNCM’s HealthScore, based on the fact that the risk-adjusted monthly average is $660. That’s more than one standard deviation about the mean, according to MNCM.

Winona Health’s HealthScore is listed as “average” based on a cost of $604 per month.

Julie Harrington, OMC’s director of quality improvement and patient safety, says that the higher costs are a regional issue that providers have started discussing among themselves. However, she says ongoing uncertainty at the state and federal level makes it difficult to affect change at the local level.

“What we’re trying to do is make sure we get the right care to the right person at the right time,” Harrington said. “I’m actually looking at those numbers as a way to improve our performance. It’s showing us we have some work to do.”

According to the new report, Mayo’s cost index in Rochester hit 99 percent last year, up from 92 percent in 2015. OMC’s cost index was 34 percent in 2016 and Winona Health’s was 23 percent.

Additionally, Mayo’s costs increased by 6.5 percent and the Southeast Region’s costs rose 4 percent. Those figures both outpaced the statewide increase of 3.4 percent.

″(The state’s increase) is lower than the historical average for annual per person growth, so that’s good news in a sense,” Sonier said. “But it’s also still true that that’s faster than the growth in income … so costs in healthcare poses a problem for people.

″(Local increases mean) that the challenge of affordability in health care may be even greater for people in that part of the state.”

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Most expensive MN hospitals in 2016

Average monthly cost per patient

1. Mayo Clinic, Rochester $977

2. MCHS, Cannon Falls, $765

3. MCHS Eau Claire, (Eau Claire, Wis.) $755

4. Children’s Hospital, $741

5. MCHS Franciscan Medical Center (La Crosse, Wis.), $731

6. MCHS Northland, $716

7. MCHS Red Cedar, $706

8. MCHS Chippewa Valley, $698

9. MCHS Lake City, $674

10. Gunderson Health, (La Crosse, Wis.) $673

11 Scenic Rivers, $671

12. Olmsted Medical Center, $660

13. Northpoint Health, $653

14. Prairie Ridge, $631

15. Riverwood Aitkin, $625

16. Sleepy Eye Medical Center, $624

17. MCHS Austin & Albert Lea, $624

18. MCHS Red Wing, $621

19. Pipestone Family Clinic, $618

20. Sawtooth Mountain Clinic, $607

21. Winona Health, $604