Thanks to managed care, patients at San Francisco General Hospital are charged less for medical attention. But that savings — along with skyrocketing unpaid bills and ballooning employee costs — has put the hospital in the red.
A $40.8 million budget shortfall is fueling San Francisco’s overall deficit, according to budget figures released by the Department of Public Health — which, with a $1.6 billion budget and 8,000-plus employees, is The City’s largest department. And, “When DPH has a problem, so does The City,” said Greg Wagner, the health department’s chief financial officer.
General Hospital serves 1,500 patients daily and is the only trauma center between The City and Palo Alto. It also serves many low-income and elderly patients who rely on Medi-Cal and Medicare.
In the past, hospitals charged Medi-Cal and Medicare a fee for services rendered to their beneficiaries. Reliance on a new “managed care” model has resulted in lower charges, but also has brought in $8.2 million less than budgeted.
And budget figures show that “bad debt,” or situations where a patient simply cannot pay for the care he or she received, is skyrocketing. The hospital allotted some $58 million for bad debt, but it has been stuck with nearly $91 million in unpaid medical bills.
“We’re funding wards for which we’re not being given money to fund and keep open,” said Dr. Edward Chow of the Health Commission.
Unless the situation is fixed, the hospital might have to pick between keeping its “open door” for incoming patients or “becoming like other places — when the 200 beds are filled, that’s sort of it,” Chow said.
Staffing costs also are up, according to Wagner. Changes in labor agreements increased employee overtime and holiday pay, said Wagner, adding that staff costs make up “the majority” of the hospital’s $16.8 million in extra costs.
Overall, projected annual revenue is expected to dip to $906.3 million, $24 million under budget, and costs are expected to rise to $947.1 million, Wagner said.
S.F. General is undergoing a $900 million rebuild that will almost double the size of its emergency room and increase total hospital capacity to 284 beds. That project is paid for by bonds passed in 2008 and is not related to the operating deficit.
State and federal belt-tightening also has hurt the hospital. The health department anticipated receiving up to $16.2 million for mental health care costs, but Wagner said that money is unlikely to be delivered.