COUNTY OF SAN MATEO

Inter-Departmental Correspondence

San Mateo Medical Center

DATE:

September 16, 2005

BOARD MEETING DATE:

October 18, 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 Alliance Imaging, Inc.

RECOMMENDATION:

Adopt a Resolution:

1)

Authorizing an Amendment to the Agreement with Alliance Imaging, Inc. to revise “Personnel”, “Unit Description”, and “Scheduling” in Exhibits A and B, to extend the term of the Agreement by 18 months to April 15, 2008, and to increase the maximum amount of the Agreement by $850,000

2)

Authorizing the Chief Executive Officer of San Mateo Medical Center to execute subsequent amendments and minor modifications not to exceed $25,000 and to make minor changes in the type of services and activities provided under the Agreement

VISION ALIGNMENT:

Commitment: Ensure Basic Health and Safety for All and Responsive, effective and collaborative government

Goals 5 and 20: Provide residents access to healthcare and preventive care and Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.

As the Medical Center volume continues to grow, with the proposed increase in clinic volume, opening of the Geriatric Assessment Center, and increasing volume in the ED, MRI services are a critical component of the effective diagnosis and treatment of San Mateo Medical Center patients. Cost effective management of MRI services allows for increased access and less invasive healthcare. This

agreement allows San Mateo Medical Center to address the need to provide timely access to essential services while concurrently reducing the expense and enhancing revenue by providing imaging services.

Performance Measure(s):

Measure

FY 2005-06
Projected

FY2006-07

Projected

FY2007-08

Projected

Percent of scans conducted on site

82%

85%

85%

Average number of exams/month

8

8

9

This agreement will enable us to achieve and potentially exceed these goals in addition to bringing in new revenue. Without the extension of the agreement, increasing numbers of MRI scans would be conducted off site at other facilities at an increased cost to San Mateo County.

BACKGROUND:

Based on cost effectiveness, staffing, and flexibility with scheduling based on volume, Alliance was the vendor of choice after a Request for Proposal Process, in 2003, for magnetic resonance imaging (MRI) services. On October 7, 2003 your Board approved an Agreement with Alliance Imaging, Inc. to provide MRI services. The term of the Agreement is October 15, 2003 through October 15, 2006 with a maximum amount of $1,700,000. The agreement includes on site service three days per week by contracting for a three-year term with a mobile MRI service leasing company and a fee per scan cost of providing an MRI tech at a fair market value/competitive rate.

MRI Scans are one of five of San Mateo Medical Center’s most costly and highest volume outsourced services. By having Mobile MRI Services on-site, SMMC has reduced the overall costs of providing the service (including labor and equipment), enhanced patient care by providing increased access, improving physician satisfaction and generating new revenue.

DISCUSSION:

SMMC entered into a three- year agreement with Alliance Imaging to provide on-site MRI services (including equipment and technician) on a fee per scan basis. The goals of the contract, which have been met, were to provide quality access to necessary medical services, to reduce utilization of costly outside referrals and to generate new revenue. The initial agreement included use of a 1.0 MRI which at the initiation of the contract was six year old technology. Within the last two years, the quality of the scans has significantly declined, to the extent that physicians are referring again to off-site, better quality MRI units. SMMC has negotiated with Alliance Imaging to provide a newer model, a 1.5 MRI, which would enhance the quality of images being produced, improve physician satisfaction and reduce off site utilization. The current monthly average of $47,222 per month would apply while the term of the Agreement is extended by eighteen months. Because the unit is mobile, SMMC would not bear the cost of finance charges or depreciation, but would benefit from the upgrade in technology.

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

FISCAL IMPACT:

The Amendment extends the term of the agreement by 18 months, making the new term of the Agreement October 15, 2003 to April 15, 2008. The Amendment also increases the maximum amount by $850,000, from $1,700,000 to $2,550,000. Funds are included in the Adopted Budget for FY2005-06 and funds will be included in future year budget requests.