San Francisco’s health network has finalized its first contract with a private health insurer, Canopy Health — meaning Zuckerberg San Francisco General Hospital, long perceived as the hospital of last resort, is now in the business of wooing expectant mothers to choose to deliver at its Family Birth Center. 

“I imagine this could be a very positive thing,” said 28-year labor and delivery nurse Dianna Yanez. “The goal is to have more clients, have more people deliver with us, and spread the word around the community that we are a good and safe place to have a baby.” 

And not just more clients, but more well-heeled clients. This could be a cost-beneficial move for the hospital: The women currently delivering at ZSFGH tend to be covered by Medi-Cal or have no insurance at all. And while the city wouldn’t disclose Canopy’s payment rates — this is a confidential matter for three years — it did note that it’s higher than those paid by Medi-Cal.

In short: ZSFGH will be better compensated for the same procedures. And a delivery, in which a three-day stay at the hospital is par for the course, entails a significant amount of compensation.  

Department of Public Health staff said the signing of this contract was not a reaction to billing controversies at ZSFGH that erupted earlier this year, when it was revealed that even insured patients were being hit with crippling debts through the practice of “balance billing.” Because the hospital was out-of-network for private insurance companies, there was often a great divergence between what ZSFGH billed the insurance and what the insurance company would deign to pay — leaving individuals responsible for the “balance.” 

This situation, however, did highlight the hospital’s unhealthy and precarious “payer mix.” With few privately insured patients, ZSFGH ministers mostly to Medi-Cal recipients or the marginally insured. Deals like the one initiated July 15 with Canopy would begin to change that mix, however. 

“It is good for the hospital to diversify its revenue with different payors,” notes Department of Public Health spokeswoman Rachael Kagan. “We have been working to accomplish private contracting for some time now.” 

Inundating the hospital with better-paying privately insured patients at the expense of publicly insured patients would be cause for concern. But this doesn’t figure to happen at the Family Birthing Center, one of the few departments at ZSFGH that isn’t overloaded beyond capacity.

Kagan says the Department of Public Health hopes 60 privately insured Canopy patients deliver at ZSFGH. Hospital staff have been told to expect up to 80. This would represent a small bump in the total number of deliveries at the hospital, which is about 1,200 a year. 

Just how many privately insured mothers opt to deliver at ZSFGH will depend on how effectively the hospital sells itself as the “good and safe place to have a baby” — and how effectively it can dispel the perception that anyone who could afford to go elsewhere would do so. 

Hospitals competing for patients — especially expectant mothers — often play up amenities more closely resembling a luxury resort than a medical center: private rooms, steak dinners, sumptuous views. 

It remains to be seen if ZSFGH will go this route. What it does have to offer, however, is a 24-hour/seven-day on-call midwife — which no other city hospital does. ZSFGH also claims the lowest C-section rate in all San Francisco. 

Kagan declined to reveal whether the city is in negotiation with other private insurers, which could alter ZSFGH’s payer mix even more. The Canopy deal required three years to close. So it would be surprising if others aren’t in the works, if not imminent. 

“Our hope is that down the road we can expand access to more of our services to Canopy Health and other commercially insured patients,” wrote Roland Pickens, the director of the city’s Health Network, in the inter-office memo announcing this deal.