County of Santa Clara
Santa Clara Valley Health & Hospital System
Santa Clara Valley Medical Center
Hospital Administration
71752 A
DATE:
August 5, 2014
TO:
Board of Supervisors
FROM:
Paul E. Lorenz, Chief Executive Officer, SCVMC
SUBJECT: Consider Recommendations relating to California Emergency Physicians
RECOMMENDED ACTION
Consider recommendations relating to California Emergency Physicians Medical Group.
(Santa Clara Valley Health and Hospital System)
Possible action:
a. Approve exception to Board of Supervisors Policy 5.4.5.4, Length of Term of Contracts,
relating to extension of Agreement with California Emergency Physicians Medical
Group for physician and mid-level provider staffing.
b. Ratify Twelfth Amendment to Agreement with California Emergency Physicians
Medical Group relating to providing physician and mid-level provider staffing,
increasing the maximum contract amount by $1,000,000 from $36,690,000 to
$37,690,000, and extending the Agreement for a one-month period through May 31,
2014, that has been reviewed and approved by County Counsel as to form and legality.
c. Approve Thirteenth Amendment to Agreement with California Emergency Physicians
Medical Group relating to providing physician and mid-level provider staffing,
increasing the maximum contract amount by $36,000,000 from $37,690,000 to
$73,690,000, and extending the Agreement from May 1, 2014 through April 30, 2017,
that has been reviewed and approved by County Counsel as to form and legality.
FISCAL IMPLICATIONS
Approval of the recommended action would not require any modification to the current
Board-approved budget for Santa Clara Valley Medical Center (SCVMC). The recommended
action extends the existing contract at current rates with no anticipated change in purchase
volume.
The SCVMC Emergency Department (ED) and Express Care Clinic provide services to
Board of Supervisors: Mike Wasserman, Cindy Chavez, Dave Cortese, Ken Yeager, S. Joseph Simitian
County Executive: Jeffrey V. Smith
Page 1 of 5
approximately 112,000 patients annually. This generates approximately $30,000,000 net
revenue each fiscal year and also serves as the entry for 50% of SCVMC’s admissions. This
contract is needed to maintain the service to the SCVMC Emergency Department and
Express Care Clinic.
CONTRACT HISTORY
For ED and Express Care Clinic provider staffing services, the Board of Supervisors
delegated authority to the Executive Director, Santa Clara Valley Health and Hospital System
(SCVHHS), or designee to execute an Agreement and any subsequent amendments with
California Emergency Physicians Medical Group (CEP) in August 2006. The initial
Agreement between the County and CEP for the provision of physician and midlevel
provider staffing services in the ED became effective on October 1, 2006.
The Executive Director of SCVHHS exercised the Board delegated authority on three
separate occasions to amend the CEP contract. The First Amendment became effective on
September 1, 2007; it established the terms and conditions for MedAmerica and MedAmerica
Billing to access SCVHHS information systems remotely. CEP owns these firms and they
provide coding and quality assurance services related to the contract. On October 1, 2007,
the County and CEP modified the initial rate structure, set a minimum annual compensation
amount and lengthened the notice of termination without cause. Fourteen months later on
January 1, 2009, the Third Amendment modified the rates per visit. On September 27, 2011,
the Board of Supervisors approved a three month extension to the Agreement with CEP.
On December 13, 2011, the Board approved a two month extension to the Agreement to
provide additional time for contract negotiations in connection with the issuance of an RFP.
On February 28, 2012, the Board of Supervisors approved a one month extension through
March 31, 2012 and on March 20, 2012, the Board approved a nine month extension to the
Agreement.
On December 18, 2012, the Board approved an amendment extending the term of the
Agreement through December 31, 2013 and granting the County the option to further extend
the term of the Agreement for an additional year through December 31, 2014.
On December 23, 2013, the County Executive entered into a two (2) month amendment
extending the term of the Agreement through February 28, 2014.
On February 4, 2014, the Board Ratified the Ninth Amendment extending the term of the
Agreement through February 28, 2014 to allow the parties to evaluate CEP’s concerns and to
prevent a gap in coverage.
On February 28, 2014, the County Executive entered into a one (1) month amendment
extending the term of the Agreement through March 31, 2014.
On March 25, 2014, the Board Ratified the Tenth Amendment extending the term of the
Agreement through March 31, 2014 to allow the parties to continue to evaluate CEP’s
concerns and to prevent a gap in coverage.
On March 28, 2014, the County Executive entered into a one (1) month amendment
extending the term of the Agreement through April 30, 2014.
Board of Supervisors: Mike Wasserman, Cindy Chavez, Dave Cortese, Ken Yeager, S. Joseph Simitian
County Executive: Jeffrey V. Smith
Agenda Date: August 5, 2014
Page 2 of 5
On April 29, 2014, the Board Ratified the Eleventh Amendment extending the term of the
Agreement through April 30, 2014 to allow the parties to continue to evaluate CEP’s
concerns and to prevent a gap in coverage.
On April 30, 2014, the County Executive entered into a one (1) month amendment (Twelfth
Amendment) extending the term of the Agreement through May 31, 2014.
The Twelfth Amendment was prepared for Board for ratification on May 20, 2014. Since the
negotiations with respect to the Thirteenth Amendment appeared to be concluding at the
same time the Twelfth Amendment would be brought to the Board for ratification, the
decision was made to bring both the Twelfth Amendment and the Thirteenth Amendment to
the Board in a single transmittal. Negotiations between the parties, however continued
through the Board’s recess.
The Twelfth and Thirteenth amendments are therefore being brought to the Board for
ratification and approval respectively the first Board meeting after the Board summer recess.
REASONS FOR RECOMMENDATION
A Request for Proposals (RFP) to provide staffing services for the ED, Express Care Clinic
and Outpatient areas was released on July 25, 2011. The RFP covered services currently
provided by Supplemental Provider Services, Inc. and California Emergency Physicians
Group (CEP). The proposals were due on August 24, 2011. An Evaluation Committee
gathered to review the proposals and it then created a short list on September 9, 2011.
Contract negotiations were then undertaken with RFP responders on the short list.
Concurrently with the contract negotiations: (1) SCVMC sought and hired a new Chief
Executive Officer; (2) SCVMC undertook a search for a Chief Medical Officer; (3) SCVMC
had an Interim Chief Nursing Officer; and (4) SCVHHS staff undertook the design for the
Epic electronic medical record, known as HealthLink at SCVMC . In light of these changes,
SCVHHS believed the County would be best served by concluding the implementation of
HealthLink and allowing the new SCVMC executive management team to evaluate the needs
for service in the ED, Express Care Clinic and the Outpatient areas. In addition, new
potential service providers expressed an interest in offering these services to the County.
SCVHHS therefore recommended that the Board approve a one year extension of its current
contract with CEP through December 31, 2013 with the inclusion of a provision allowing the
County to extend the contract an additional twelve months through December 31, 2014, if the
County so desired.
In November 2013, CEP representatives approached County representatives to indicate that
the contract either needed to be re-structured or that CEP would need to terminate its contract
(as permitted by the contract itself) since HealthLink related changes now made the
Agreement unsustainable.
Because the proposed terms of a contract extension with CEP was not finalized until
December 23, 2013, and the contract with CEP was scheduled to expire on December 31,
2013, the County Executive in the exercise of his Board delegated authority [pursuant to
Board Policy 5.3.5.3 (B)] entered into a two (2) month extension with CEP (Ninth
Board of Supervisors: Mike Wasserman, Cindy Chavez, Dave Cortese, Ken Yeager, S. Joseph Simitian
County Executive: Jeffrey V. Smith
Agenda Date: August 5, 2014
Page 3 of 5
Amendment) to allow for the parties to analyze CEP’s request for a rate change and prevent
an interruption in ED physician coverage.
Having still not reached a long term agreement with CEP, as the County continued to analyze
CEP’s request for a rate change and in order to prevent an interruption in ED physician
coverage, the County Executive in the exercise of his Board delegated authority [pursuant to
Board Policy 5.3.2.3 (B)] entered into a one (1) month extension with CEP (Tenth
Amendment).
Subsequent to that, having still not reached a long term agreement with CEP, as the County
continued to analyze CEP’s request for a rate change and in order to prevent an interruption
in ED physician coverage, the County Executive in the exercise of his Board delegated
authority [pursuant to Board Policy 5.3.2.3 (B)] entered into a one (1) month extension with
CEP (Eleventh Amendment).
CEP and the County had not reached a long term agreement. The County continued to
analyze CEP’s request for a rate change and in order to prevent an interruption in ED
physician coverage, the County Executive in the exercise of his Board delegated authority
[pursuant to Board Policy 5.3.2.3 (B)] entered into a one (1) month extension with CEP
(Twelfth Amendment). The one (1) month extension is accordingly now being brought
before the Board for ratification.
Following execution of the Twelfth Amendment to the Agreement, CEP and County
representatives continued to discuss CEP’s concerns.
CEP and the County have now reached a long term agreement subject to Board approval.
The new terms and conditions are outlined in the Thirteenth Amendment now being brought
to the Board for approval.
In brief, CEP’s rate under the Thirteenth Amendment increases by $6.00 per patient from $92
to $98 from May 1, 2014 to April 30, 2015. CEP’s rate then increases by $2.00 per patient
from $98.00 to $100 from May 1, 2015 to April 30, 2016. CEP’s rate then increases by
$2.00 per patient from $100 to $102 from May 1, 2016 to April 30, 2017. The first increase
from $92 to $98 is intended to address the fact that CEP was unwilling to continue to provide
ED services at what it calculates as an operating loss. The second two increases are intended
as fixed increases in lieu of CPI increases. That said, the County retains the ability to
terminate its contract with CEP on 150 days’ notice if it so chooses.
Pursuant to Board Policy 5.4.5.4, exceptions to the maximum five-year term of contracts
must be approved by the Board. The Board in December 18, 2012 approved an amendment
allowing the County to extend the term of the Agreement beyond the five-year term. Under
the terms of the December 18, 2012 amendment, the County could continue services with
CEP through December 31, 2014 if the County so desired. The County still desires to
receive CEP’s services through December 31, 2014, but CEP requires an amendment to its
rates in order to do so. The County and CEP have therefore spent nine months negotiating
the terms of a new financial arrangement which works for both parties. In addition, if
circumstances should change, either party can choose to terminate the contract on 150 days’
notice. During that time, the County could choose to issue an RFP to bring in a new
Board of Supervisors: Mike Wasserman, Cindy Chavez, Dave Cortese, Ken Yeager, S. Joseph Simitian
County Executive: Jeffrey V. Smith
Agenda Date: August 5, 2014
Page 4 of 5
provider. CEP for its part has expressed a commitment to transition ED services in an
orderly and professional manner should either party choose to exercise its 150 day notice
termination right.
CHILD IMPACT
The recommended action will have no/neutral impact on children and youth.
SENIOR IMPACT
The recommended action will have no/neutral impact on seniors.
SUSTAINABILITY IMPLICATIONS
The recommended action will have no/neutral sustainability implications.
BACKGROUND
Emergency Department and Express Care Clinic
Santa Clara Valley Medical Center’s Emergency Department has 24 beds, including two (2)
dedicated trauma beds. Since 1986, the ED has also operated as a Level 1 Trauma Center
receiving adults and pediatrics via ambulance, walk-in and helicopter.
In October 2006, California Emergency Physicians Medical Group (CEP) began staffing the
physician and midlevel providers working in ED and Express Care Clinic. Since that time
CEP has had steady progress on providing better access to care and improvement in
satisfaction with the ED visit.
CONSEQUENCES OF NEGATIVE ACTION
Failure to approve the recommended action may affect the operations and ability to provide
services in the Emergency Department and Express Care Clinic as it would limit provider
coverage without the assistance of contracted providers.
STEPS FOLLOWING APPROVAL
Upon approval, the Clerk of the Board will send one signed copy of the Thirteenth
Amendment to SCVHHS – Finance Administration – SCVMC Contracts Management Unit,
2325 Enborg Lane, Suite 360, San Jose, CA 95128, Attn: Veronica Vargas Soliz.
ATTACHMENTS:
 CEP - A13 (PDF)
 CEP - Amendment 12 (PDF)
 BOS Policy 5.4.5.4 Length of Term
(PDF)
Board of Supervisors: Mike Wasserman, Cindy Chavez, Dave Cortese, Ken Yeager, S. Joseph Simitian
County Executive: Jeffrey V. Smith
Agenda Date: August 5, 2014
Page 5 of 5