Part 2: Specialty Care Comes With a Big Price Tag in Alaska

The Alaska Health Care Commission just released a series of reports that try to understand why health care costs so much more in Alaska. One important finding is that the cost for specialty care is much higher here than in other parts of the country.

The commission reports compare costs in Alaska to states in the Pacific Northwest, Hawaii and two low population states, Wyoming and North Dakota. On average primary care doctors and pediatricians charge about 40 percent more in Alaska. But with some specialists, that number rises to 80 percent or more. Dr. Ward Hurlburt chairs the commission and is also the director of the division of public health.

“The difference in pricing has been a significant finding,” Hurlburt said. “I think we all know intuitively, if you go to the doctor, hospital or emergency room, but to have that documented is impressive.”

The fees for some common procedures can be 4-5 times higher than in the comparison states. In Cardiology, for example, a left heart catheterization costs about $2,200 in Alaska and only 400 in Washington. In orthopedics, a knee surgery costs $6,400 in Alaska and only $1,700 in Washington.  Hurlburt says some of that higher cost can be attributed to the fact that everything costs more in Alaska, but not all.

“Medicine is a business, it’s a unique business with ethical and moral dimensions to it, but it is a business and like most businesses there is probably some tendency to charge what you can charge,” Hurlburt said. “If Mcdonalds could charge twice as much, they probably could, if the competition wasn’t there.”

Commission members are quick to say the reports are not about finger pointing, or assigning blame. Commission member Jeff Davis is president of Premera Blue Cross Blue Shield in Alaska. He is also careful not to assign blame. But says having these prices documented, in a very public way, may be a first step towards bringing them down.

“Davis: And I think the work of the commission will cause some people to do some soul searching and to say, wow, I didn’t realize this is what the situation was, is this the outcome that we want for my particular role in the whole equation? Annie Feidt: By Soul searching, who are you talking about? Davis: Well I think providers are certainly going to look at what’s in that report and say is this the way it has to be, is this the way it should be.”

I called four different specialty care clinics in Anchorage, to try to understand why their fees are so high. No one called back. But there are people in Anchorage who can see the issue from the specialist’s perspective. Dennis McMillian is President of the Foraker Group. He has spent the last 20 years trying to find affordable health care plans for non profits in Alaska. That search has been fruitless, but he says there are good reasons the doctors are charging so much.

“Now that’s not the doctors fault, necessarily, to some extent it’s our fault, because we want all this here and these specialists who charge so much here charge so much here because if they were living in the Lower 48 they would have a lot more people to charge to make what they’re making,” McMillian said.

We are a low population state far away from larger West Coast cities where there is more competition in the market, and more patients for doctors to draw income from. One of Jeff Davis’s favorite anecdotes he’s heard on the commission came out of Ketchikan. He says it highlights one of the big problems with cost in Alaska.

“Really they need about one and quarter orthopedic surgeons in Ketchikan to meet the demand. But you can’t just hire one and a quarter of a surgeon when you live on an island in Southeast Alaska, you have to hire two. And therefore that drives a number of costs that is higher than you would expect if you were in an urban area,” Davis said.

The high cost of specialty care is just one factor driving up health care costs in Alaska. Tomorrow, we’ll look at how hospital profits may factor into the equation.

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