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Study: Health Care Costs Vary Widely in Minnesota

Cost of care up 5.6 percent, continues to climb.

A new report from Minneapolis-based nonprofit Minnesota Community Measurement offers extensive detail on health care clinic and procedure costs across the state. One of the conclusions is no big surprise: “There continues to be significant increases in costs each year.” But the survey, released on Tuesday, also found “significant variation” in costs for care between different medical groups.
 
In some cases, the price differences are startlingly wide.
 
For example, the average cost of a lower extremity MRI is $216 from the Avera Medical Group, but is listed at $1,573 at the Mayo Clinic in Rochester. Avera is based in Sioux Falls, South Dakota, but has clinics in southwestern Minnesota. Other locations within the Mayo system are even more expensive: the average MRI at its Red Cedar facility in Menomonie, Wisconsin, is $3,904.
 
For such an MRI test, the report found that the state average cost was $645. Most providers in the Twin Cities metro area were in that ballpark: Minneapolis-based Fairview Health Services is listed at $512; Minneapolis-based Allina Health Clinics was $656.
 
The detailed data and cost calculations are meant to raise awareness among patients and providers. MNCM tracks the costs of 90 common medical procedures with different medical groups.
 
“How do you go to a doctor that will help get you the least services that you need for the best outcome?” said Jim Chase, president of MNCM. “This kind of data helps people to think about that, especially the medical groups for their patients.”
 
Chase said that pricing is generally lower in the metro area because there is more competition in the market, compared to outstate areas that have fewer health care options. He added that emergency room usage is higher in outstate areas, which often lack urgent care clinics.
 
MNCM’s report indicates that the total cost of medical care for commercially insured patients increased 5.6 percent in 2015 from 2014. Total costs increased 3.2 percent from 2013 to 2014.
 
The MNCM report calculates the “total cost of care” through an analysis of both price and utilization, defined as the number of services a patient receives.  For all patients in the state from ages 1 to 64, MNCM calculates the total cost of care at $474 per month, which works out to about $5,700 per year.
 
Costs vary by age group and gender. For women from 40 to 64 years old, the total cost of care is $662 per month, which translates into more than $7,900 annually. Chase said that the cost of care calculation is meant to include all inpatient, outpatient and pharmacy costs paid by both the patient and insurer, but does not include the cost of health plan premiums.
 
MNCM’s Minnesota HealthScores website allows consumers to search in-depth data to compare costs for clinics and procedures.
 
Chase acknowledges that historically, the average patient has a regular clinic and hasn’t necessarily done research to compare costs.
 
“I think for all of us it’s hard for us to think about shopping for care one item at a time,” said Chase.
 
But amid increased focus on finding ways to reduce perpetually increasing health care costs, Chase said having easy access to pricing data ultimately benefits everyone.
 
“[Medical] groups across the state are realizing they have to manage this cost of care in partnership with their patients,” said Chase. 
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