Does Mayo Clinic's reputation justify higher costs?

The Mayo Clinic's pricing practices could be casting a shadow over its iconic reputation.

A Duluth News-Tribune report claims that the Minnesota-based institution has used its reputation and market leverage to charge some of the highest prices in the state, prompting some businesses and purchasing groups to consider choosing less expensive providers.

Using 2012 hospital data, the News-Tribune reported that Mayo charged  $1,311 for a colonoscopy, compared to less than $600 at other providers. A knee X-ray cost private insurers $92 at Mayo, compared with $69 and $51 at other clinics. And it discounts charges to insurers by only about 20 percent, compared to the 40 percent to 50 percent discounts offered by other providers in Minnesota.

"Even if they bought ... top-of-the-line equipment for colonoscopies, there still is only one way to do a colonoscopy," Angie Carlson, an executive who makes insurance purchasing decisions with DataIQ in Eden Praire, Minnesota. She could have saved 5 percent off premiums in 2015 by excluding Mayo, but told the Tribune she chose to stick with the organization as a provider--for now.

Mayo officials countered by saying their colonoscopies are more thorough than other providers in terms of catching polyps and less likely to lead to complications such as perforated bowels.

However, other sector observers say the emergence of more pricing and quality data for consumers could prompt them to switch to less expensive providers. And that has Mayo executives concerned about the long-term ramifications.

"If Mayo Clinic were perceived as being too expensive and not worth it, it would be a huge risk to the organization," Mayo Chief Executive Officer John Noseworthy, M.D., told the Tribune.

But at the same time, a variety of health insurance and other industry executives say that Mayo has created innovations that provide more efficient care--and keep costs down. One example--a telemedicine platform aimed at reducing healthcare costs while boosting medical service access via cloud-based software.

A forerunner in the patient experience movement, Mayo has focuses on customer service with a number of initiatives, such as including the families of patients in the continuum of care. Mayo's room design keeps large groups of relatives and friends in mind, for example, with features such as sofas that can seat as many as a dozen visitors.

To learn more:
- read the News-Tribune article