Do the math: Between this ER bill and a subsequent doctor's bill of $483, unemployed former bike messenger Conan Mattisson found himself on the hook for $3,321.47 for a single stitch at Zuckerberg San Francisco General Hospital.

ZFGH — which ran at a stunning 24.5 percent operating deficit in the latest fiscal year — works to collect $3,321.47 from unemployed former bike messenger who received one stitch

[dropcap]“G[/dropcap]oddamn,” says Conan Mattisson with a laugh. “It was probably one of the dumbest accidents ever.”

You know how it is. You buy a new knife and you forget how sharp new knives are and, before you know it, you’ve sliced an inch-deep cut in the webbing of your dominant right hand. Goddamn.

“Oddly enough, there are not a lot of blood vessels there. It didn’t really bleed — but you could see the inner workings of my hand,” continues Mattisson, a 40-year-old former longtime bike messenger. “I could see my tendons. I could see them sliding back and forth in their sheath. It was gnarly.”

Mattisson has gone sailing off any number of bicycles and has learned not to take lightly any injuries to one’s head or hands. He was also short on options: It was nearly midnight on Feb. 14. There was nowhere to go but the emergency room at Zuckerberg San Francisco General. He wrapped up his hand, put on his helmet, and pedaled his bike the mile or so to the hospital from his apartment on Mission and 20th.

He sat for a few hours, was visited by medical personnel for a few cumulative minutes, and ended up with a single stitch in his hand. It was, at most, a five-minute procedure. Done and done — and Happy Valentine’s Day.

Then the bill arrived: $3,321.47.

Gnarly.

“I had no alternative,” says Conan Mattisson. “It was an emergency. That’s why I went to the emergency room.” Photo by Joe Eskenazi.

Jarring billing practices at Zuckerberg San Francisco General made national news earlier this year, with articles coming, first, from Sarah Kliff, then at Vox, and followed by a series from the Chronicle’s Heather Knight. These stories — which Mattisson read, and did indeed ponder as he rode his bike to the hospital — mostly involved “balance billing,” in which insured patients were surprised with astronomical bills because their coverage was deemed “out-of-network.”

Stung by the ensuing political fallout, the hospital in February canceled the practice — and instituted out-of-pocket maximums. This announcement came two weeks prior to Mattisson’s impromptu self-surgery on his right hand.

His situation isn’t entirely similar, however. You need to be insured to be “balance-billed.” And while Mattisson thought he had Healthy SF coverage, it turns out he did not. He is uninsured. And, out-of-pocket maximums or no, the hospital is still aggressively moving to collect what it is owed from Mattisson, who was on food stamps as recently as 2016 and has, in the recent past, experienced bouts of homelessness.

The breakdown of Mattisson’s charges, meanwhile, begs further analysis of the troubling world of hospital billing, which is to economics what Hieronymus Bosch was to tableaus.

The suture kit used for his five-minute procedure — needles and thread, basically — was billed at $226. A tetanus shot ran $309. Mattisson appears to have been billed in two different manners for the actual stitches: It’s listed as a $638 “procedure” on one bill and he also received a $430 bill from the doctor. Just walking into the ER cost $1,665 — regardless of what came next.

“One or two stitches? The bill should be around $200 — for both the doctor and the service. If this was done in a doctor’s office, that would be a reasonable charge,” says Gerard Anderson, a professor of health policy and management at Johns Hopkins University.

The bill should be that. But it isn’t.

“Zuckerberg is notorious for being not necessarily the worst but one of the worst places to go in terms of prices for emergency care,” Anderson continued. “The prices are outrageously high. They are notorious for it. And everybody knows about them.”

Meanwhile, at the billing department of your local public hospital … Illustration by Hieronymus Bosch.

The maddening element about hospital billing is that the costs charged to patients are only abstractly related to the costs incurred by the hospital.

“They do not need to justify their charges. They have full discretion,” explains Ge Bai, a Johns Hopkins professor of both accounting and health management and policy. “There are no regulatory forces to limit their ability to set a high charge. The charge is coming purely from the hospital and subject to no external forces.”  

Patients — especially uninsured patients — “become prey of this charging game.”

Anderson and Bai in 2015 co-authored a paper titled “Extreme Markup: The Fifty US Hospitals With The Highest Charge-To-Cost Ratios.”

So much about healthcare billing is, by design, complicated and opaque and impenetrable. But a charge-to-cost ratio is something that’s relatively easy to grasp. What did it cost them? What do they charge you? Divide the latter by the former.

San Franciscans experience lopsided charge-to-cost ratios every day when they pay $6 for avocado toast that ran the restaurant a few dimes for avocado slices, bread, and electric heat in the toaster.

Or, if you’re Conan Mattisson, you received a stitch from a $229 suture kit.

That’s no fun. But, for Mattisson, it probably would’ve been even less fun at North Okaloosa Medical Center, the gougingest hospital in all the realm per Anderson and Bai’s 2015 paper. It featured a 12.6 charge-to-cost ratio. That’s a 1,260 percent markup.

Your humble narrator unearthed more than a decade of San Francisco General Hospital’s charge-to-cost ratios via the National Bureau of Economic Research. And its 2018 ratio of 4.37 — a 437 percent markup — is nowhere near North Okaloosa’s (49 of the 50 worst gougers as measured by Anderson and Bai were private hospitals and 20, like North Okaloosa, were in Florida).

But that’s still a hell of a markup, and on the high end for a public, not-for-profit hospital. Last year, the ratio at Contra Costa Regional Medical Center was 244 percent. It was 160 percent at San Mateo Medical Center. If Mattisson sliced himself in Martinez or San Mateo instead of San Francisco, he’d probably be facing a significantly lower bill.

To be fair, the ratio across the bay at Oakland’s Highland Hospital was a gaudy 385 percent in 2018. But Highland’s numbers have held relatively steady for 15 years. At San Francisco General Hospital, however, the markup has steadily — and dramatically — risen in that time. Per the National Bureau of Economic Research, SFGH’s markup went from 239 percent in 2005 to 309 percent in 2010 to 398 percent in 2015 to more than 400 percent in recent years.*

But now that SFGH is asking for more and more money from those it serves, it’s doing better and better financially, right?

No. Not right. Wrong. Very wrong.

The “charge-to cost ratio” — essentially the percentage of markup a patient at Zuckerberg San Francisco General Hospital is billed relative to the hospital’s costs — has risen dramatically in the last decade and change. Source: The National Bureau of Economic Research.

The most recent audited numbers we received from the city regarding SFGH’s finances are horrifying.

The hospital, at the end of the latest fiscal year, was more than $530 million in the red — and ran at a negative 24.5 percent operating margin in fiscal 2018-19 ($189.5 million in losses on $772.7 million in operating revenue). SFGH is a county hospital with a mandate to serve the most vulnerable, so it can be expected to struggle financially — but, even among similarly situated institutions, these numbers are alarming. An April article in Modern Healthcare put the median operating margin for public/not-for-profit hospitals at 1.7 percent. That’s positive 1.7 percent.

In other words, if SFGH performed at the median level, it would have made $13 million instead of losing nearly $190 million. (Prorate that loss, by the way, and it comes out to more than $519,000 a day). 

“I’ve read hundreds of these reports,” says a hospital administrator with knowledge of the Bay Area market. “And that is the first time I’ve seen negative operating margins of this size.”

Our hospital has managed to run at a staggering loss, while simultaneously charging its users at such a high rate that a number of health professionals told me, all joking aside, that Conan Mattisson was damn lucky to get out of the ER billed only $3,300 for his single stitch.

Well, that’s a hell of a trick. How could this happen? Good question. We’re working on that. You’re not going to believe this, but it’s not something we can answer in just one article.

Gnarly.

Following the stories in Vox and the Chronicle — and rancor from Mayor London Breed and others — SFGH quickly altered its billing policies.

That’s nice. A shame-based regulatory system, however, is depressing and suboptimal. But that’s the system we’ve got. And not just us: Bai notes that “political cost” and “reputational cost” are factors all hospitals consider when deciding how aggressively to charge and collect from patients.

The No. 1 reason that hospitals aggressively bill their most vulnerable patients? That, too, is relatively easy to grasp. It’s the same reason people from around the world phone you up and demand your Social Security Number: A very small percentage of folks give them everything they want.

Hospitals “don’t get most of the money — in most cases,” says Anderson. “It’s simply preferable for them to charge $3,300 and get it from some people rather than charge $200 and get it from nearly everybody.”

When we presented SFGH with Mattisson’s bill, they refused to parse it. There have been enough stories about outrageous bills and, it seems, they don’t do that anymore.   

SFGH in February belatedly instituted an out-of-pocket maximum, and Mattisson could plead poverty with the hospital and/or apply for Medi-Cal and hope it retroactively covers his bill. He’s doing this. But it still puts the onus on Mattisson to explain why he shouldn’t be charged $3,300 for a single stitch, while the hospital has sent him an itemized bill spelling out exactly why he should.

After much effort, Mattisson may earn a waiver from this crazy, surreal system. But, by all means, the default system remains crazy and surreal. 

Regardless, he says he has no regrets. “I had no alternative. It was an emergency. That’s why I went to the emergency room.” Mattisson does have reservations, though. For Mexico.

“I am saving up to go there for dentistry. I can’t go to General for anything less than bleeding out. It’s disappointing to be abandoned by the American medical system.”

*SFGH did provide cost-to-charge ratios it claimed were gleaned from the Office of Statewide Health and Planning Department. These numbers differed from the National Bureau of Economic numbers. SFGH could not immediately explain the discrepancy. We have used the NBER numbers, as that enables us to compare across multiple hospitals.

**The National Bureau of Economic Research ratios are presented as “cost-to-charge” rather than “charge-to-cost.” You can easily convert the former into the latter by setting up a 1/x fraction. 

Joe Eskenazi

Joe was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. “Your humble narrator” was a writer and columnist for SF Weekly from 2007 to 2015, and a senior...

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19 Comments

  1. Thanks Joe! Keep up the good work. One of the most important articles you have written. SF General is a giant zit on the face of San Francisco. It needs to be popped!

  2. Another case of corruption starting at city hall, and another instance of private citizens propping up an program whose primary function seems to be to rescue street addicts in the most expensive way possible.

  3. More than hurting the patient, this gouges the taxpayers, who ultimately pay the bill.

  4. In a nutshell, this article is about SF General being more expensive than other hospitals in other cities. FYI, EVERYTHING is more expensive in SF compared to other cities. Gnarly right?
    Also, why isn’t Conan insured? It’s US law to have health insurance. Covered California too expensive? Get Healthy San Francisco. There’s a reason SF general operates in the red year after year, it has numerous programs that essentially write off all these bills.

    1. “It’s US law to have health insurance.” No it isn’t. US law is that you have to have health insurance, OR, you pay a fee, which, depending on your income, could be as little as zero dollars. A law that says “you have to do X, or you will be charged zero dollars” can not in any way, shape, form, be described as a serious requirement to do X.

  5. Wow, $309 for a totally un-needed (and risky) tetanus shot. It takes at least 2 weeks for the anti-bodies to kick in from the shot, and I doubt there was any cow poop carrying tetnus on the brand new knife he cut himself with.

    1. Maybe don’t give medical advice if you’re not the qualified provider evaluating the patient? a tetanus shot is actually the standard of care immediate treatment anywhere in the nation for a contaminated wound; Tetanus antibodies begin to appear as soon as 5 days after exposure which is around the time when symptoms may begin to present – and the longstanding immunity is also useful because tetanus symptoms can also present months after exposure; Also, tetanus is not only present in cow feces; tetanus spores are also present in soil, on city streets, in the air, and pretty much everywhere. There have been many cases of patients who developed tetanus after a scrape on the street and were not able to get treated or have it identified in time. Once the symptoms present, there is nothing anyone can do to stop them and they can often lead to death. I agree that the bills are outrageous, but the administration of Tdap is not. I think this gentleman would be quite upset if he had not gotten the standard of care and then ultimately died of tetanus.

  6. My toddler had a fall last year and was rushed to Zuckerberg. We had PPO insurance and at no time during his stay were we ever informed that we were out of network. At any time after he was stable, we could have been moved to the Benioff Children’s hospital less than a mile away, which was in network.

    A month later we received a bill for 80K. He had testing, a few x rays and a CT scan. There was no surgery or invasive treatment. His 5 day stay was observational.

    We had to consult with bankruptcy attorneys and it was so terrifying to feel so helpless. The billing department was ruthless. They called day and night. I had to forward my bills to our legislators and eventually, the bill was reduced. But not before they put negatives on our credit report, which have yet to be removed, even though the bill was paid.

    The staff at the hospital was bright and attentive. But I’d never take my children or anyone else to that hospital again. My husband and I joke that we should get medical emergency bracelets for our kids that say “any hospital but zuckerberg”

  7. Darcie – When your family needed care, that lower-priced health plan wasn’t such a bargain, was it? If you choose PPO coverage, it’s your responsibility to know which hospitals and doctors are in your network and what percentage of the bill you must pay for out-of-network care. You go over these scenarios when you choose a plan, not when you have an emergency, of course.

    Many people choose the cheapest health plan offered by an employer (or in an ACA marketplace). The savings are illusory if the out-of-pocket cost is high.

    In general – if you don’t like (fighting over) high medical bills, pick a closed-panel HMO like Kaiser, and spend the extra money to get a plan with fixed-dollar copayments, not percentage-based coinsurance.

    To the writer – What’s your solution for funding San Francisco General’s operating and capital expenses?

    1. San Francisco General is not in network for anyone, they don’t make deals with insurance companies. They are the local trauma center, and the only option for some care.
      My care at SFGH had no copay because it was an emergency and covered at 100%. This was not a matter of inadequate insurance coverage.
      Their bill was $175k more than my insurance considered reasonable, so I’m stuck owing them.
      THEY ARE THE ONLY TRAUMA CENTER in SF. No ambulance is driving to Stanford or Oakland so that an unconscious person can go to another trauma center.
      I would’ve been taken there if I had Kaiser, too. Though I would like to know if Kaiser would’ve handled that bill differently

      1. Many misunderstandings here, Ex-Patient. People want cheap health plan designs but no financial exposure when there’s a serious emergency. That’s just not possible.

        First, a PPO plan draws an explicit distinction between in-network and out-of-network care. Given that SFGH isn’t in any network, and that it’s the only trauma center in San Francisco, people here who choose cheaper health plans like PPOs are necessarily underinsured for trauma emergencies. You know the situation when you choose your health plan.

        Second, people who choose any plan with percentage-based coinsurance as opposed to fixed-dollar copayments are underinsured for all emergencies…

        In the best-case scenario, emergency care is provided by a hospital that has a contract with the insurer. That contract caps the fees, but all emergency care is expensive, and you are responsible for a percentage. The plan’s out-of-pocket maximum does help here.

        The middle case involves a hospital that does not have a contract with the insurer, but still charges reasonable fees. You’re responsible for a percentage, and your plan’s out-of-pocket maximum does not help, because the transaction is between you and the provider, not between the provider and the insurer.

        The worst case involves a hospital that has no contract with the insurer and charges unreasonable fees. You are responsible for a percentage of those very high fees, and once again, because the insurer isn’t a party to the transaction, the plan’s out-of-pocket maximum is of no help.

        Regarding trauma emergency coverage from Kaiser (or any other insurer), it’s essential to read the evidence of coverage. My particular plan covers non-Kaiser emergency care at my usual fixed-dollar copayment level, provided that it’s an emergency, the care is medically necessary, and Kaiser is notified promptly. Transfer to a Kaiser facility is required after stabilization, unless the care cannot be provided by Kaiser (trauma, some organ transplants, etc.)

  8. “And while Mattisson thought he had Healthy SF coverage, it turns out he did not.” Most adults are aware if they have car insurance, renters’ insurance, and health insurance. It’s the responsible thing to do. This man’s neglect is costing him. Maybe he will actually get Healthy SF coverage, especially since he is currently unemployed.

  9. Hey ‘Insured’ and those who agree with that line of reasoning, I hear your qualms with Darcie’s issues, but it’s not exactly fair that she never be notified that she is out of network. One can not be expected to know if they are in or out of network for all the hospitals around, especially in an emergency]. I was rushed to ZSFG, it is the only hospital that would be able to treat me. I was suffering from 12 fractured and broken bones in my face at 2 am, but even if it was 12 pm on a Monday I would have ended up there. I was not given a choice, and I had no idea if it was in network. However, in an emergency most plans will cover the costs to a degree. The issue is that ZSFG is not in anyones plan period, they do not work with or bargain with any insurers, at all, like other out of network places often do. I was charged an astronomical fee for everything I endured while there for 11 hours. They asked for my health insurance info 3 times, but later claimed I never provided it and that it was my responsibility! and is why they did not send the bill to the insurance company instead billing me directly?!. While at ZSFG I was never told what I was being charged for and that getting a higher dose of morphine would cost me double, or that I was going to pay 17k for an emergency response team that I was never seen by even for 1 min, but instead proceeded to schedule my pre-op appointment back at the same hospital. By the time I saw the doc for my pre-op I had shown my medical insurance card 5 times, and not once did they say it was out of network, even though they know full well all insurance providers are out of network. That alone is scandalous, too, because they would have you believing you might be in network saying things like they will look into it and be sure to bill the insurance company regardless! Had the doctor not caught that it was out of network they would have schedule my facial reconstructive surgery at ZSFH and it would all have been out of network, when I could go down the street and be seen by literally the same doctors in network!!! That is F’d! Anyways, I was charged ~60k to get to the hospital and sit there for 11 hours, get two stitches (which I had to demand because the doctor was inept), get some pain meds, x-rays, and CT scans. This cost about the same as my facial reconstructive surgery 10 days later at Parnassus UCSF where I received anesthesia, stayed in the hospital for 23 hours, was seen by multiple specialists who cut me open and put me back together again with multiple titanium plates and screws, many times more pain meds and for a much longer duration, food, a room, and additional CT scans and x-rays. Explain that to me?

  10. I’m sorry to hear about your experience, manface. It underscores my point.

    Find out, when you choose your plan, whether the hospital closest to your home is in-network. Knowing that emergencies can happen anywhere, find out what percentage of out-of-network emergency room charges you are responsible for.

    People want the benefits of a higher-quality plan in a pinch, without having to pay the higher premiums all along. PPO plan premiums paid by you and/or your employer are lower because the plan is designed to shift the financial risk to you. Ditto for plans with percentage-based coinsurance rather than flat-dollar copayments.

    In some other cases, people who are eligible for free coverage — a fully-subsidized ACA plan, Medi-Cal, or Healthy SF — don’t bother to inquire until they need care. (Let us draw a distinction right now between those who don’t bother and those who can’t. A homeless person or someone with untreated mental illness lacks the fixed address, the identity documents, and access to the information necessary to apply for health coverage.)

  11. the great news is that you can pay all your bills from ZUCKERBERG San Francisco General Hospital using virtual currency know as Facebook Credits

  12. Insured, it’s great that you know and somehow have the time to figure out the intricacies of medical insurance. I can only imagine that either this is your line of work/specialty or that you have greater financial means than most people and, therefore, more time. You seem to be laying blame at the feet of victims. For one, hospitals rarely tell potential patients how much procedures will cost even when potential patients ask. It’s not as if getting stitched for a cut or getting surgery is rare. This information should be readily available so that patients can decide whether to get these procedures. Secondly, most people who are employed do not have much of a choice about which insurance plan they are under. They go with the best option their employer offers. It’s crazy that Zuckerberg is the only trauma center and yet it refuses to accept most outside insurance. Finally, and this may be most important, the real issue is the question of whether hospitals should be able to charge whatever they want for emergency services. I would argue that they should not since this would be inhumane (which is why Shkreli, the man who raised the price of a life-saving HIV/AIDS drug, is universally despised). Though Zuckerberg currently has a cap on what patients must pay for these services thanks to London Breed for helping to somewhat undo the problem she helped create), it’s unfortunate that the cap is quite high and so would not even help people like Mattison. Instead, there should be caps based on the specific care that each patient receives. It’s still unclear to me whether the cap can be adjusted based on income. If other know, please share. (See https://sfist.com/2019/04/17/zuckerberg-hospital-revises-insane-billing-practices-after-media-exposes/)

  13. P.S. Shkreli, much like Zuckerberg, raised the price of an HIV/AIDS drug by an exorbitant amount–56 times what it had cost.

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