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Best Practices: Minnesota's Highest Value Hospitals

August 15, 2009 By Kyle R. Bauser, Graduate Research Fellow

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Executive Summary
Minnesotans don't have to sacrifice health care quality in order to control costs; however, for the state's hospitals and medical centers to continue delivering high-quality health care at an efficient value - relative to the rest of the country - state policymakers and health administrators must find ways to increase the number of well-trained, dedicated and caring primary care medical professionals. This is becoming increasingly difficult, as general practice physicians are becoming a scarce commodity in Minnesota and across the nation, especially in rural counties.

This report outlines the positive outcomes and cost savings for hospitals, medical providers and insurers when medicine is coordinated through a primary care physician using a holistic approach that encourages healthy habits, manages chronic conditions, and provides routine check-ups and immunizations.

To that end, the report examines quality of care (measured by diagnosis outcomes, mortality rates and patient satisfaction) and value (measured by average Medicare reimbursement for Diagnosis Related Groups adjusted for cost of living, percentage of uncompensated care and educational costs) and ranked the ten best medical centers in terms of value in Minnesota with Fairview Northland Regional Hospital coming in on top. Overall, for the quality ranking, the margins between positions were sometimes very small, indicating Minnesota hospitals, in general, deliver high-quality health care.

Typically, smaller medical facilities that had a higher proportion of primary care physicians to specialists came out better in both value and quality of care. The report finds that while specialists play an important role in treating and caring for those with advanced and acute illnesses, the United States' system of medicine and the insurance payment structure has resulted in an increasing over reliance on specialty doctors as a first line of defense. This has led to many of the skyrocketing costs associated with medical care.

To battle these high costs and expenses, Medicare has increased its reimbursements to hospitals that treat high proportions of low-income patients (via disproportionate-share hospital funds). While this certainly helps targeted hospitals, there is question as to whether or not the help is negligible and that the distribution formula might not target correctly the hospitals that cater to the majority of uninsured patients. The hospitals that ranked well in the report not only earned high quality marks, but they did so with less Medicare funding per-patient than competitors given the cost-of-living, educational and uncompensated care expenses each hospital covered. If anything, these hospitals deserve more Medicare reimbursements to help compensate for their number of uninsured patients.

Minnesota typically ranks toward the top of lists when it comes to national medical and health studies, coming in as the 4th healthiest state, according to United Health Foundation's America's Health 2008 rankings. The main reason Minnesotans are generally healthier is our low uninsured rate; on average more than 92 percent of Minnesotans have some type of health coverage compared to the nations' 85 percent. That means more people are seeing primary care doctors who are prescribing preventative treatments and better managing illnesses like diabetes and heart disease, limiting the need for extensive and more expensive specialists' procedures.

In order to continue on this trend toward high quality, efficient health care outcomes, Minnesota needs to better incentivize primary care positions for young medical professionals. Recently, The Journal of the American Medical Association released a report concluding that only two percent of medical school students planned to persue a career in general internal medicine.

The lures of prestige, high six figure salaries, and lack of laborious administrative work have many young doctors continuing on toward a specialization. By 2020, the U.S. will be short 40,000 primary care doctors, according to the president of the American Academy of Family Physicians. In rural Minnesota, the lack general practitioners is even starker, with fewer primary care doctors per capita than micropolitan and metropolitan counties.

While our nation is looking for ways to ensure more people receive access to medical services, cutting cost without reducing services or coverage is crucial. This report examines how that is possible both here in Minnesota and across the country.

Key Findings

While this report concludes that higher spending does not necessarily correlate with better quality, it shows that increasing the primary care labor corresponds to higher value and quality of care.

  • By taking a holistic approach to medicine, where primary care doctors encourage healthy habits, manage chronic conditions, and provide routine check-ups and immunizations, costs can be better controlled.
  • The American Academy of Family Physicians estimates that adding one primary care doctor for every 20,000 people decreases the number of unexpected premature deaths by 9 percent.
  • 98 percent of medical school students plan to seek careers in fields other than primary care because of the extra administrative duties, lower salary and exorbitant administrative duties.
  • The U.S. health care system will be short 40,000 primary care doctors by 2020.
  • In general, hospitals that have low proportions of Medicare reimbursements to amounts of uncompensated care, education costs and cost-of-living expenses, perform more favorably in the value ranking, while hospitals that have higher proportions of primary care/family physicians compared to specialists fair better in the quality ranking.


  • Medicare and insurance companies should structure payments to encourage more preventative medicine, wellness programs and better treatment coordination to help control costs while increasing salary and other incentives for primary care physicians.
  • Encourage medical students to enter primary care practices, especially in rural areas by extending incentive programs.


  • The Minnesota Rural and Urban Physician Loan Forgiveness Program and the Minnesota State Loan Repayment Program provide up to $17,000 and $20,000, respectively, for students who practice in federally designated Health Professional Shortage Areas.
  • The National Health Service Corps, which covers U.S. medical students, offers up to $50,000 loan forgiveness to primary-care providers-including nurse practitioners and generalists-who will work in rural counties.
  • Nurse practitioners need to play a larger role in health care reform as they have many of the same privileges as physicians such as diagnosing patients and prescribing medicine, but cost much less. Medicare even reimburses up to 80 percent to nurse practitioners of what physicians receive.
  • More Medicare reimbursements need to be made to hospitals with higher percentages of uncompensated care.

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