2017-013 Clinic Management Services
Date: February 10, 2017 Report No. 2017-013
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Provide an update on the Request for Proposal (RFP) #6198, Employee Health
Clinic and Operation Management Services. This item will be part of the February 21, 2017,
City Council agenda.
EXECUTIVE SUMMARY:
The City opened the Employee Health Center (Clinic) in December of 2011 as part of a broader
strategy to reduce the cost of health care for the organization and improve wellness in our
employees. The City currently has a contract with CareHere to operate the clinic, and since the
contract with this firm expires at the end of February, an RFP was issued to solicit proposals
from interested providers. After an extensive evaluation process which is described below, staff
is recommending a new five-year contract with CareHere. Since the Council has inquired about
the health clinic in the past, and vendors may attempt to contact you concerning this contract,
staff wanted to provide information regarding this contract in advance of this item being on the
City Council agenda for February 21, 2017. Staff would also like to point out that the RFP
prohibits respondents from contacting the City Council, members of the evaluation team, or City
employees (other than Purchasing) prior to this item being considered, and if such contact is
initiated it can result in the respondent being disqualified from the procurement process.
BACKGROUND:
The City opened the Clinic in December of 2011 in office space provided by Denton Regional
Medical Center in the professional building attached to the hospital. Through a Request for
Proposal (RFP) process, the City secured the services of CareHere, LLC, to oversee the Clinic
operations and manage the medical staff, who are contract employees of CareHere, and not the
City.
The Clinic essentially provides all services that a family practice physician performs, in addition
to various lab draws that are sent to an outside laboratory for processing. During the first four
full years of operation, the Clinic has provided over 35,000 patient appointments to employees,
-funded health plan.
Since the beginning, CareHere has been a valuable and trusted partner in helping the City
develop, open, and grow the Clinic. We have ongoing, open dialogue regarding the operation of
the Clinic, with the goals of improving care for our employees, retirees, and dependents, while
positively impacting their overall health, guiding our decisions. CareHere brings local (DFW
area), state-wide, and national experience to these discussions with expansive resources to help
meet our needs.
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Date: February 10, 2017 Report No. 2017-013
DISCUSSION:
The City prepared RFP #6198 - Employee Health Clinic Operation and Management Services
and sent it out to 368 prospective suppliers. In addition, specifications were placed on the
Materials Management website for prospective suppliers to download and advertised in the local
newspaper. The City received seven (7) responses from interested companies that met our
minimum specifications.
A four person review committee evaluated the proposals on the following criteria:
Compliance with specifications, quality, reliability, characteristics to meet stated or
implied needs (20%)
Indicators of probably performance under contract (30%)
Price, total cost (50%)
gained and clarified during the formal presentations, and reference checks, the review committee
scored CareHere the highest and believe they provide the best overall value to the City.
Evaluation - Cost
The total cost to operate the Clinic can be broken down into two separate components:
1. Administrative cost this is the amount that is paid to the contractor for operation,
management, and oversight of the Clinic. This is typically a set amount, on a per
employee per month (PEPM) basis, and includes the fees to:
a. Manage the Clinic;
b. Provide the Electronic Medical Record (EMR) system;
c. Provide online patient portals and appointment scheduling; and
d. Provide wellness resources including website, health coaches, nutritionists, etc.
.
2. Operational cost
the day-to-day operation of the Clinic, or paid directly by the City to the vendor. These
are billed on a monthly basis, without markup, and include:
a. Clinic staff salaries and benefits;
b. Medical supplies and equipment;
c. Expenses for outside lab work;
d. Office lease;
e. Office utilities;
f. Office supplies and equipment; and
g. Medical malpractice insurance.
In evaluating the total cost of each proposal, while the main component is the PEPM
administrative cost paid to the contractor, we also evaluated the lab costs for various high
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Date: February 10, 2017 Report No. 2017-013
frequency tests, and the costs associated with the annual HRA. We also factored in one-time
costs for implementation, transition, and data transfer associated with a new vendor coming
onboard.
While CareHere did not have the lowest estimated five (5) year total cost, they did reduce their
PEPM cost by $1.50 (estimated $135,000 savings over five (5) years). Additionally, CareHere
has always included the cost of one HRA per employee within their PEPM administrative cost,
while all other vendors pass that cost through to the City.
Other potential costs of changing vendors, that are not as easy to quantify, include:
1. Staff turnover the Clinic medical staff are contracted/employed by CareHere. It was our
intent to retain the current Clinic staff, if possible, to preserve the continuity of care for
the patients. All the providers and medical assistants are well liked and respected by the
Clinic patient base, and by City staff that engage with them. There was the possibility
that a new vendor might not want to retain the staff, or that the staff might not want to
work for/be contacted with the new vendor.
2. Medical records transfer while the hard dollar costs to transfer the data from one EMR
having to get permission from each patient to transfer those records to another company
would also impact the Clinic.
Evaluation Performance
CareHere has established themselves as a strong, flexible, and responsive partner for the Clinic.
During our time with CareHere the Clinic has continued to grow and expand services, while
remaining a cost effective alternative to seeking care from providers under the insurance plan. As
such, we have a baseline understanding of what the City expects from a Clinic manager and the
means to achieve our shared outcomes.
CareHere has several clinics in the DFW area, and a clinic presence throughout Texas, and
across the country. While many of the other vendors had similar employer clinic management
experience, there were several areas of concern with their proposals when compared to our
experience with CareHere:
1. Lack of expressed commitment to retain the current Clinic staff one of the main keys to
a successful clinic is the provider/patient relationship. Throughout the RFP document we
made it clear that it was our intention to retain the current provider staff at the Clinic.
While several ve
RFP response gave the review committee any confidence that retaining the current staff
was a priority.
2. No afterhours call center/nurse line the Clinic currently has a 24/7 call center and
nurseline that patients can call to schedule appointments, seek minor medical triage, or
request information from the Clinic. This service is utilized approximately 100 times per
month after normal Clinic business hours. Several vendors did not offer this service.
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Date: February 10, 2017 Report No. 2017-013
3. Minimum age requirements for patients the Clinic currently sees patients who are two
(2) year of age and older. For example, one vendor would not see patients who are less
than five (5) years of age. The Clinic currently treats 37 children between 2 5 years of
age, and provided 41 patient encounters last calendar year to that demographic. A change
in companies would require these employees to find alternate care for their children
within the health plan, which would increase their out-of-pocket costs.
4. Wellness program is provided by a third-party vendor some vendors were lacking a
wellness platform completely while others proposed to out-source the entire wellness
platform (including wellness coaches and the web services) to a third-party vendor.
than the lowest priced respondent, when evaluating above risk factors regarding the complete
overall cost and performance, and the fact that we will be experiencing a savings from CareHere
lowering their PEPM fee, the $75,000 per year savings in the context of our $20,000,000 health
plan budget does not seem that great.
CONCLUSION:
Staff will be recommending awarding a one (1) year contract, with four (4) one-year options to
renew, to CareHere, LLC, at $20.00 per employee per month (PEPM), for the one (1) year
amount not-to-exceed of $386,325, and a five (5) year total not-to-exceed $2,005,280). This
total five (5) year cost estimate includes a 2% increase in employees per year.
STAFF CONTACT:
Scott Payne, Risk Manager
349-7836
Scott.Payne@cityofdenton.com
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