COUNTY OF SAN MATEO

Inter-Departmental Correspondence

San Mateo Medical Center

DATE:

August 30, 2002

BOARD MEETING DATE:

September 10, 2002

TO:

Honorable Board of Supervisors

FROM:

Nancy J. Steiger, Chief Executive Officer

SUBJECT:

Amendments to the Agreements with Unilab Corporation and Quest Diagnostics

Recommendation

Adopt a resolution authorizing the President of the Board to 1) approve a waiver of the Equal Benefits Declaration for Unilab Corporation, and 2) execute amendments to the agreements with Unilab Corporation and Quest Diagnostics for the processing of laboratory specimens referred by the San Mateo Medical Center Laboratory.

Background

The San Mateo Medical Center (SMMC) Laboratory contracts with independent laboratories to perform lab tests which are not performed at SMCGH because of the specialized and expensive equipment required. This allows the Hospital to be able to refer a specimen to the laboratory which charges the lowest fee for a given test. These lab tests are reimbursed depending on the patient's coverage.

SMMC has contracted with Unilab Corporation and Quest Diagnostics under a single resolution since March 1, 1997. The current agreements are consolidated under a single resolution for a maximum of $544,000 for the term of March 1, 2000 through February 29, 2003. The agreements include provision for rate increases not to exceed 3% annually.

Discussion

Hepatitis testing referrals to these two vendors have increased due to the elimination of the service from Blood Centers for the Pacific as well as an increased awareness of Hepatitis C. Cost per test is $60. Unfortunately, due to the increasing costs of blood products, there isn't a savings in the contract with Blood Centers of the Pacific to offset this increase. San Mateo Medical Center currently averages 150 panels per month compared to 75 per month a year ago. These tests are currently being provided by Unilab or Quest and performed out of state. In addition, the FDA recently reduced the types of testing available by Abbott which again increased the number of referrals to Quest and Unilab. Approximately 100 tests such as B12, folic acid, and ferritim, which test for anemia, are now being sent to Unilab or Quest. The monthly usage of reference lab services increased by 27% from 1999 to 2000 and 10% since 2000. This, in addition to the elimination of the two reference laboratories, has increased the dollar volume to Unilab by over 300% over the last year. San Mateo Medical Center Laboratory staff will continue to evaluate bringing high volume tests in-house.

San Mateo Medical Center is requesting a waiver of the Equal Benefits Declaration for Unilab Corporation because Unilab's benefits currently do not extend to domestic partners. Unilab will review all benefits including implementation of a Domestic Partners Benefit package at their next contract negotiations scheduled in the spring of 2003.

County Counsel and Risk Management have approved the terms and conditions of the agreements.

Vision Alignment

These agreements keep the commitment to Ensure Basic Health and Safety for All and goal number 5: Provide residents access to healthcare and preventive care. The Agreements contribute to this commitment and goal by continuing to provide laboratory services to county patients.

Term and Fiscal Impact

The term of the agreements remain the same, three years, from March 1, 2000 through February 29, 2003. The maximum amount the County shall be obligated to pay the Contractors is increased by $1,344,000 from $544,000 to $1,888,000. Funds to cover this cost have been included in the FY2002-2003 Adopted Budget.