COUNTY OF SAN MATEO

Inter-Departmental Correspondence

SAN MATEO MEDICAL CENTER

DATE:

June 22, 2005

BOARD MEETING DATE:

July 12, 2005

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

Nancy J. Steiger, Chief Executive Officer, San Mateo Medical Center

SUBJECT:

Amendment to the Agreement with Unilab Corporation, Now a Part of Quest Diagnostics, Inc.

RECOMMENDATION:

Adopt a Resolution:

1)

Authorizing execution of an Amendment to the Agreement with Unilab Corporation, now a part of Quest Diagnostics, Inc. for the processing of laboratory specimens referred by the San Mateo Medical Center (SMMC) Laboratory, increasing the amount by $550,000 and bringing the total obligation to $1,590,688

2)

Authorizing the Chief Executive Officer of San Mateo Medical Center to execute amendments not to exceed $25,000

VISION ALIGNMENT:

Commitment: Ensure Basic Health and Safety for All.

Goal 5: Provide residents access to healthcare and preventive care.

The Agreement contributes to this commitment and goal by continuing to provide laboratory services to county patients.

Performance Measure(s):

Measure

FY 2004-05
Actual

FY 2005-06
Projected

Percent of reference laboratory reports available in SMMC information system within 3 working days

50%

95%

Due to Quest Diagnostic’s interface capability, laboratory results are available to San Mateo Medical Center within three working days, enabling physicians to treat patients promptly and effectively.

BACKGROUND:

The SMMC Laboratory contracted with independent laboratories to perform lab tests that are not performed at SMMC because of the specialized and expensive equipment required. This allowed the hospital to be able to refer a specimen to the laboratory which charges the lowest fee for a given test. These lab tests were reimbursed depending on the patient's coverage.

After a Request for Proposal process in January 2003, Unilab was selected as the vendor for provision of laboratory services. On August 5, 2003, your Board adopted Resolution 66194 authorizing an Agreement with Unilab Corporation, now a part of Quest Diagnostics, Inc. Quest Diagnostics, Inc. who proposed the lowest rate per test, merged with Unilab in February 2003. As part of this reorganization, Quest proposed to upgrade their information system and move hospitals from Unilab to the Quest sites. A substantial number of tests were rebuilt into the present systems and subsequently rebuilt into the upgrade. It was beneficial to contract with Unilab until the upgrade was implemented.

At this time, it was also necessary to contract with Stanford Laboratory where specialized tests not available at Unilab are processed.

DISCUSSION:

Quest is now fully reorganized. The interface capabilities of Quest Diagnostics now allow SMMC laboratory faster access to specimen results. In addition, Quest now processes most of the specialized tests offered by Stanford and at lower rates. Consequently, 90% of the tests originally sent to Stanford Laboratory are now being referred to Quest. The increase in tests being sent to Quest has exhausted the maximum amount in the agreement. The Agreement with Unilab Corporation, Now a Part of Quest Diagnostics, Inc. is being amended to increase the maximum amount by $550,000 and to replace all references to “Unilab Corporation, now a part of Quest Diagnostics, Inc. with “Quest Diagnostics, Nichols Institute”.

County Counsel and Risk Management have reviewed and approved this Amendment.

FISCAL IMPACT:

This Amendment increases the maximum amount of the agreement by $550,000, from $1,040,688 to $1,590,688. Funds are included in San Mateo Medical Center’s Adopted Budget for FY2004-2005. Funds are included in the Recommended Budget for FY2005-06. The term of the agreement, March 1, 2003 to February 28, 2006 remains the same.