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Northland pays more for health care

An eye exam for a new patient in Essentia Health's East Region facilities costs more, on average, than anywhere else in Minnesota, according to an annual cost comparison report released today.

The report, issued by the nonprofit MN Community Measurement, shows that the cost of medical care overall rose 3.4 percent from 2015 to 2016 in Minnesota — a slower growth rate than the 5.6 percent of the year before.

It also showed, as it has in previous years, that the cost of medical care tends to run higher in the Northland than it does in the state as a whole.

The average risk-adjusted cost for overall care per patient per month was $565 in Northeastern Minnesota, compared with the statewide average of $490 and outstripped only by the $601 average cost in the southeastern part of the state. The lowest average cost, $468, was in the metro region.

Consumers should be aware of pricing variations, said Julie Sonier, president of Community Measurement.

"We've got a two-and-a-half-fold difference across medical groups in the total cost of care," Sonier said. "That's something that I think there's not a lot of awareness of."

The report breaks down pricing for a wide spectrum of clinical and hospital services, ranging from a colonoscopy to a pregnancy test to urinalysis with microscopy.

Regional differences show up in the category of "average cost per procedure for eye exam — new patient." Essentia Health East, which consists of six hospitals and 18 clinics and includes Duluth, is listed as the most pricey among 49 providers at $335 — compared with a state average of $198.

But three of the next 10 also are in the Northland: Relf EyeCare specialists ($259), St. Luke's Clinics ($250) and Weis Eye Center ($226). The least expensive in the state was $110 at Glenwood Medical Center in central Minnesota.

Asked what the explanation might be, John Strange, CEO of St. Luke's, pointed to a regional population that is aging more rapidly than in the rest of the state.

"With the aging of the population, the eye exams are more comprehensive and may take longer," he said.

Representatives at Relf EyeCare and Weis Eye Center were unable to respond to inquiries in time to be included in this story.

Both Strange and Dr. Mike Van Scoy, medical director of population care management at Essentia, said it's more important to look at the big picture than at specific services.

"I think that every year you're going to find one thing that might look like an outlier," Van Scoy said. "But I try to focus on the overall affordability."

In that regard, Essentia East is improving, Van Scoy said, with an annual cost increase of 3 percent each of the past three years. During that time it went from 11th most expensive in the state to 25th most expensive.

Strange pointed again to the aging population as one factor in the region's relatively high medical costs. More elderly patients means more patients who are on Medicare, which does not fully cover the cost of treatment, he said.

Last year, Strange said, St. Luke's lost $41 million treating Medicare patients. Those costs get passed on to patients who are commercially insured.

The fact that the region's population is relatively unhealthy is also a factor, Van Scoy said. The "social determinants of health" — such as drug use, obesity, smoking and alcohol use — in St. Louis County are among the worst in the state, he said.

"We realize that these determinants are predictors and increase your risk of needing high-cost health care," Van Scoy said. "So we feel like a lot of this starts outside our walls, but it impacts what things look like inside our walls."

Both Van Scoy and Strange also cited pharmaceuticals as a key driver of medical costs. Last year, St. Luke's spent $30 million on drugs, and the cost was up 11 percent from one year to the next, Strange said.

Van Scoy cited similar figures.

"It is the biggest driver of expense for health care right now," he said. "There's more dollars spent in pharmacy than in professional services. If you take all the physical therapy and nursing education and dietitian and physician clinic visits and add them up, your pharmacy outweighs those services."

Both also touted efforts to control costs. St. Luke's is part of a group purchasing cooperative that gives it leverage with suppliers' prices, Strange said.

To help consumers on the front end, Essentia offers a health insurance plan, Essentia Choice Care with Medica, and "owns" 50 percent of the risk, Van Scoy said. It has lowered premiums for those enrolled by 15 percent, he said.

Essentia also is emphasizing quality control to reduce costly complications such as infections and readmissions, Van Scoy said.

Community Measurement offers its report in hopes consumers will use it as a tool in evaluating health care choices, Sonier said.

"Cost should not be the only factor," she said. "Quality certainly comes into play and patient satisfaction as well. ... I would encourage people to concentrate on the entire picture as opposed to one piece of the picture."

Total cost of care

Risk-adjusted cost of care per patient per month in 2016 and the percentage above or below the state average for Northland health care providers:

  • Essentia Health East — $595 (+21 percent)
  • Fairview Mesaba Clinics — $652 (+14)
  • Grand Itasca Clinic — $475 (-3)
  • Lake View Clinic, Two Harbors — $539 (+10)
  • Raiter Clinic — $582 (+18)
  • St. Luke's Clinics — $527 (+7) 

To learn more

See the MN Community Measurement 2017 Cost and Utilization Report at mncm.org. Click on "Cost of Care."

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