Minnesota clinics report sharp slowdown in medical spending growth

Health care spending at Minnesota clinics slowed sharply last year as physicians discouraged unnecessary procedures and steered patients to lower-cost sources for prescription drugs, lab tests and imaging scans. But some clinics did considerably better than others.

The total cost of care for privately insured patients rose just 2 percent from 2016 to 2017, at a time when some health care economists had predicted at least 5 percent growth, according to a report released Tuesday by Minnesota Community Measurement, a health care nonprofit.

Per-patient costs were $563 per month on average, but that varied widely based on where patients received their primary care. The cost ranged from $1,093 per month for patients at Mayo Clinic in Rochester to $398 per month for patients of the Community-University Health Care Center in Minneapolis. That spread can't be explained by the severity of patients' illnesses or injuries, because clinics' costs were weighted to even out those differences, said Julie Sonier, president of MN Community Measurement. The findings in the annual total cost of care report were based on an analysis of claims paid by the state's four largest private health insurers for care in 2017.

"There's still a band of the highest cost [provider] being about two-and-a-half times more than the lowest cost," she said. "For individual consumers, who are increasingly faced with higher out-of-pocket costs, having that information that there is this vast difference in price by setting is important."

All costs in the report were assigned to primary care clinics, even when their patients received treatment elsewhere, at hospitals or specialty clinics. The idea is that primary care doctors are the traffic cops of health care, so they are responsible for whether patients receive unnecessary treatments or go to high-cost specialists when cheaper doctors are available.

The latest report suggests that doctors in Minnesota managed costs by steering patients to lower-cost clinics instead of hospitals for outpatient services. Spending on outpatient hospital services declined 1 percent in 2017, after increasing 7.3 percent in 2016.

Imaging services alone proved to be 45 percent more expensive at outpatient hospital facilities compared with stand-alone imaging centers or clinics.

Remarkable new drugs that cure hepatitis C fueled much of that increase in 2014, but growing competition has tempered those drug prices since then.

A key question in comparing clinics by cost is whether some are more expensive because they are more aggressive in ordering tests and procedures or because they simply charge higher prices.

In Minnesota, it appears that price has more influence on clinic costs, Sonier said, because providers in this state seem to do better than others at discouraging unnecessary procedures.

Prices varied even for garden-variety procedures. The average price for ankle X-rays, for example, ranged from $28 for patients who received primary care at Hennepin Healthcare to $359 for patients who went to Grand Itasca Clinic and Hospital, a Grand Rapids, Minn., facility that otherwise was in line with state cost levels.

Despite the weighting to even out differences in patients' illnesses, the cost report tends to look worse for specialty providers such as Mayo as well as pediatric clinics. Rural providers tend to have higher total costs as well, in part because they don't have as many options when it comes to referring patients to nearby specialists.

The Twin Cities' largest primary care providers all came in close to the state average for total monthly cost of care — with Allina at $524, Fairview at $495, and HealthPartners (which invented the methodology for this analysis) at $470.

Business leaders said the comparison information is vital as health care costs increase and workers are asked to pay greater shares.

"To truly improve health care for the people who write the checks for care across the state — primarily employers and individual consumers — we need reliable, accessible and comparable data," said Deb Krause, vice president of Minnesota Health Action Group, a nonprofit that addresses health care costs on behalf of large employers.

Minnesota remains the only state in which such detailed clinic price information is published, but Sonier said the methodology has been endorsed by the Network for Regional Healthcare Improvement and is now being used to compare clinics nationwide.