Cost of medical care rising faster than incomes in Minnesota, group says

The cost of medical care in Minnesota is rising faster than Minnesotans' incomes, says a report released on Wednesday. And the costs at Duluth's major health providers are higher than the state average, according to the report issued by the nonpr...

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The cost of medical care in Minnesota is rising faster than Minnesotans' incomes, says a report released on Wednesday.

And the costs at Duluth's major health providers are higher than the state average, according to the report issued by the nonprofit MN Community Measurement.

Statewide, the average cost of care for commercially insured patients per month rose from $449 in 2014 to $474 in 2015, according to the report. That's an increase of 5.6 percent. According to U.S. Census Bureau data, average income in Minnesota rose 3.15 percent the same year.

St. Luke's Clinics and Essentia Health ranked in the middle third of providers, but with above-average costs - $504 at St. Luke's and $523 at Essentia. Statewide, the average cost ranged from $365 at St. Paul-based Synergy Family Physicians to $914 at the Mayo Clinic in Rochester.

Since 2013, the first year for which MN Community Measurement reported data, the cost at St. Luke's has increased from $462. It actually dropped at Essentia, from $543. But the 2013 measure included only Essentia's eastern region, and the 2015 data included all of Essentia, so the figures aren't directly comparable, said Dr. Mike Van Scoy, medical director of population care management at Essentia.
Nonetheless, the health system has been conscious of holding costs down, Van Scoy said.


"We have been successful," he said. "Even though the costs are high, they're not as high relatively speaking as they were before."

MN Community Management determined its results from more than 1.5 million 2015 health insurance claims from commercially insured patients enrolled in the four largest Minnesota health plans, the nonprofit reported in a news release.

The group releases the data to provide transparency and help Minnesotans make informed choices about health care, said Jim Chase, MN Community Management's president.

"With more and more people who have higher deductibles and co-pays, these kind of differentials are meaningful," Chase said.

He noted that the group's website also publishes quality measures for the medical groups. Decisions shouldn't be made on price alone, Chase said.

The data show that the cost of inpatient hospital care actually remained flat from 2014 to 2015, but other costs increased. They were led by a 9.3 percent increase in take-home pharmacy costs.

John Strange, CEO of St. Luke's, identified pharmaceuticals as the major problem.

"We're getting hammered by the pharmacy costs," he said. "That's a huge concern. We use a lot of pharmaceuticals. ... We're kind of trapped. There's not a lot we can do."


In an attempt to keep drug prices down, St. Luke's is part of a group purchasing organization, Strange said.

Van Scoy agreed that pharmaceutical spending is a key issue.

"It's been one of the main drivers of cost increases," he said. "You'll see a lot more attention focusing on pharmacy cost of care."

The report also shows a wide disparity in the costs paid to each medical group by commercial health plans for 90 common medical procedures - with some costing more than 10 times as much at the most expensive medical group compared with the least.

For example, a basic knee X-ray cost as little as $20 at one medical group and as much as $219 at another. The statewide average was $58.

The range for a colonoscopy went from $347 at the least to $1,810 at the most, with an average of $590.

The costs hospitals face for a procedure such as a colonoscopy vary from region to region, Van Scoy said. But in Essentia's case, a "working group" has been established with the health system's gastroenterology department to try to keep colonoscopy costs down.

"We see (the cost) as a barrier ... to getting the best care," he said. "We want to improve the number of patients getting a colonoscopy."


Costs tend to be higher in Northeastern Minnesota than in the state as a whole because of its rural, small-town nature and the distances traveled, Van Scoy said. For example, a specialist who travels to a rural community will have less time to see patients than if he or she stayed in Duluth.

"There are unique geographical nuances that affect us and St. Luke's," he said.

Strange said St. Luke's hospital's participation in the Wilderness Health collaborative - a coalition of regional hospitals formed late in 2014 - is a means of saving money by sharing in certain costs.

"We constantly look for ways to improve efficiencies and cut our costs," he said.

Chase said prices can be higher when there isn't a lot of competition or when a medical group has a good reputation. "You really need to compare your choices within a given region," he said. Care from Essentia costs more than at St. Luke's, Van Scoy said, because Essentia has a "broader mission."

"I feel like we provide more," he said. "I don't feel that the two health care systems are comparable in terms of what we provide."

Strange said Essentia offers some pediatric services that St. Luke's doesn't have, but otherwise, he said, the two are comparable in what they offer.

See for yourself 

Compare prices, quality of care for Minnesota medical groups at .

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