Study: Aurora's costs near area average

By Elizabeth Sanders

Milwaukee Business Journal, Aug. 17, 2007

Amid the debate of the necessity of building a regional medical center in the village of Grafton, Aurora Health Care officials are touting the fact that the organization's costs have decreased and are near the Milwaukee-area average.

In addition, Aurora has been working to reduce operational costs, Dr. Nick Turkal, chief executive officer of Aurora Health Care wrote in an Aug. 15 e-mail sent to Milwaukee-area business and community leaders.

The health system's costs have been in the spotlight in recent weeks after it announced plans to build a hospital in Grafton as part of its acquisition of Advanced Healthcare S.C., the area's largest physician-owned multi-specialty group.

Aurora's costs are only 1 percent higher than community average, according to a benchmark study of 2005 data by Benefit Services Group Inc., a Pewaukee-based employee benefits brokerage and consulting firm. The study was based on data reported in the 2005 Wisconsin Fiscal Survey and data from the Wisconsin Hospital Association.

The study also showed that when considering only commercial payers and adjusting for case-mix differences by health system and discounts, Froedtert & Community Health, Wauwatosa, is 6 percent lower than the community average and Columbia St. Mary's, Milwaukee, is 2 percent below.

In comparison, ProHealth Care Inc., Waukesha, is 1 percent above and Wheaton Franciscan Healthcare, Milwaukee, is 4 percent above the community average.

There were no specific figures included in the study.

The 2006 numbers, which will be released in the near future, indicate that Aurora and Wheaton have continued to improve their cost structures, said Gerald Frye, president of the Benefit Services Group Inc., which funded the study. The study did not include information on Medicare, Medicaid or uninsured patients, only commercially insured patients, Frye said.

The structural changes that Wheaton has undergone since 2005, including the June 2006 closing of St. Michael Hospital in Milwaukee and organizational restructuring, have made its pricing and cost structure more competitive, said Coreen Dicus-Johnson, senior vice president of payer contracting and revenue operations for the health care system.

Turkal said part of the reason for Aurora's lower cost structure is a push to have more patients seen in clinics, rather than being treated in a hospital. One-third of care provided by Aurora is in a hospital setting, Turkal said.

"We are moving our care out into the community, where our patients can easily access what they need," he said.