COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Information Services Department

DATE:

09/05/2003

BOARD MEETING DATE:

09/23/2003

TO:

Honorable Board of Supervisors

FROM:

Chris Flatmoe, CIO\Director of Information Services Department

SUBJECT:

Agreement with Siemens Medical Solutions USA Inc. for core health information support and new applications for San Mateo Medical Center.

RECOMMENDATION:

Adopt a resolution to:

1)

Waive the Request for Proposal process; and

2)

Execute an agreement with Siemens Medical Solutions USA Inc. "Siemens" for core health information ("Core") support and new applications in an amount not to exceed $12,000,000; and

3)

Grant signature authority to the CIO for modifications to the terms, scope and conditions up to the standard contract amount

BACKGROUND:

In 1997, the Health Services Agency received Board support for a 7-year contract with Shared Medical Solutions ("SMS") to include the development of a core health information system and ongoing systems support. The term for this 7-year contract was to begin at first productive use of the core system product. First productive use was October 1999. The purpose of the core system was to provide patient care providers with a single system that will contain the majority of clinical and financial information for patients and clients of the Health Services Agency. In 2001, the Information Services Department (ISD) assumed information technology management responsibilities for the Health Services Agency and for San Mateo Medical Center. Also in 2001, Siemens Corporation Inc. acquired SMS and assumed contractual and systems support responsibilities for the SMS customer base including San Mateo Medical Center.

In 2002, your Board approved the separation of San Mateo Medical Center from the Health Services Agency. The core system serves San Mateo Medical Center and does not currently serve the Health Services Agency.

DISCUSSION:

Both the current agreement and the proposed agreement with Siemens include 2 primary components: remote computing operations support (RCO) \ software maintenance fees and new applications. RCO and software maintenance support currently includes: lab, radiology, life time clinical record (LCR), patient accounting, inpatient and outpatient order processing, patient management and resource scheduling. Although once the least expensive core system alternative the current high cost of RCO support limits San Mateo Medical Centers ability to acquire and implement new applications.

The primary goal of this proposed new agreement is to reduce the RCO support fee's and allow San Mateo Medical Center the option of acquiring and implementing new applications. In the interest of expanding their install base of products at San Mateo Medical Center, Siemens is supporting San Mateo County's effort to establish this new agreement. This would be a new agreement and not an amendment to the current agreement.

The proposed new agreement represents over $4,200,000 in savings over term versus the current agreement. Additionally, the proposed new agreement includes key protectors for the County not included in the current agreement. These protectors include: support for all Siemens applications for the term of this new agreement, this will ensure no vendor initiated requirements to replace applications, an improved user acceptance testing (UAT) process with the right to reject an application that fails UAT with a full refund, expanded support hours and a guaranteed minimum discount amount for future Siemens applications and professional services.

Prior to the establishment of the original agreement with SMS a request for proposal (RFP) process was completed. The result of this RFP was the decision to partner with SMS for development and support of the core system. A conservative estimate of costs for moving to an alternative core system is $5,000,000. Further, ISD and San Mateo Medical Center staff have seen measurable improvements in both relationship management and application support since the acquisition of SMS by Siemens. Therefore, we feel it would be in the best interest of the County to waive the Request for Proposal process and execute the new agreement with Siemens.

VISION ALIGNMENT:

The Siemens Agreement is aligned with Partnerships: responsive, effective, and collaborative government goal number 20: Government decisions are based upon careful consideration of future impact, rather than temporary relief or immediate gain. This Agreement reduces the RCO support fees in order to allow San Mateo Medical Center the option of acquiring and implementing new applications with a substantial discount on all future purchases.

FISCAL IMPACT:

· The current contract term with Siemens extends to Oct. 2006. The term of the new contract is 7-years and would start at contract execution. The new contract would immediately supercede the current contract. The projected savings of $4,200,000 over term is achieved through 2 primary components. These primary components are:

· Annual RCO and software maintenance fee's savings of $3,100,000.

· Processing requirement fee's adjusted to include 281 beds at Burlingame Health Center at no charge to San Mateo County resulting in a savings of $1,100,000.

Additional savings will be achieved through guaranteed minimum discount amounts for new applications and professional services.

The total contract amount is $12,000,000 or roughly $1,700,000 per year. Of this amount, $720,000 represents annual RCO support and $980,000 is for new applications. Current fiscal year funding for this agreement is included in the ISD 2003-2004 budget.