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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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San Mateo Medical Center
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DATE:
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January 18, 2006
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BOARD MEETING DATE:
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February 28, 2006
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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Nancy J. Steiger, Chief Executive Officer, San Mateo Medical Center
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SUBJECT:
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Agreement with Quest Diagnostics, Nichols Institute
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RECOMMENDATION:
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Adopt a resolution:
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A.
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Authorizing the execution of an Amendment to the previous Agreement with Quest Diagnostics, Nichols Institute to process laboratory specimens referred by San Mateo Medical Center’s Laboratory, increasing the amount by $75,000 and bringing the total obligation to $1,665,688
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B.
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Waiving the Request for Proposal (RFP) process
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C.
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Authorizing the execution of a new Agreement with Quest Diagnostics, Nichols Institute to process laboratory specimens referred by San Mateo Medical Center’s Laboratory for the term March 1, 2006 to February 28, 2009, in an amount not to exceed $1,800,000.
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D.
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Authorizing the Chief Executive Officer of San Mateo Medical Center to
execute amendments not to exceed $25,000
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VISION ALIGNMENT:
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Commitment: Ensure Basic Health and Safety for All.
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Goal 5: Provide residents access to healthcare and preventive care.
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The Agreement contributes to this commitment and goal by continuing to provide laboratory services to county patients.
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Performance Measure(s):
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Measure
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FY 2005-06
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FY 2006-07
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FY 2007-08
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FY2007- 08
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Percent of reference laboratory reports available in SMMC information system within 3 working days.
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95%
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95%
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95%
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95%
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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.
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BACKGROUND:
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In the past, 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 SMMC to refer a specimen to the laboratory which charged the lowest fee for a given test. These lab tests were reimbursed depending on the patient's coverage.
A Request for Proposal was conducted in January 2003 wherein Quest Diagnostics, Nichols Institute was selected as the provider of laboratory services for SMMC. In addition to proposing the lowest rate per test, the interface capabilities of Quest Diagnostics allows SMMC Laboratory faster access to specimen results. Quest also processes most of the specialized tests, previously offered by Stanford, at lower rates. Consequently, 90% of the tests originally sent to Stanford Laboratory are now being referred to Quest. On August 5, 2003, your Board approved an agreement with Quest Diagnostics for a maximum of $1,040,688 for the term of March 1, 2003 through February 28, 2006. The Agreement was subsequently amended on July 12, 2005 to increase the maximum amount of the agreement by $550,000
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DISCUSSION:
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Delay in obtaining compliance with State regulations for recently purchased analyzers has caused an increase in the volume of tests sent to Quest. SMMC had anticipated processing a number of high volume tests in-house on these recently purchased analyzers, rather than sending these tests to Quest. In addition, more precise higher cost tests, required by physicians for accurate diagnosis of patients’ illnesses, are not available in-house. These additional costs require an increase of $75,000 to the maximum amount of the previous Agreement.
Staff will be trained on the new analyzers and tests brought in-house starting April 2006.
The new Agreement with Quest is three years. SMMC is requesting a waiver of the RFP process. Quest’s individual test prices are governed by the terms of the Amerinet Buying Group Contract ensuring competitive rates. A database has been created linking the SMMC Laboratory System with Quest’s system. This interface allows SMMC to order tests and receive results electronically. Recreating this system with another vendor will cost approximately $80,000.
County Counsel and Risk Management have reviewed and approved the Amendment and the Agreement.
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FISCAL IMPACT:
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The term of the previous Agreement remains the same March 1, 2003 to February 28, 2006. The maximum amount the County shall be obligated to pay the Contractor is increased by $75,000, from $1,590,688 to $1,665,688. Funds are included in SMMC’s FY2005-06 Adopted Budget.
The term of the new Agreement is March 1, 2006 through February 28, 2009. The maximum amount of the agreement is $1,800,000. Funds for these services are included in San Mateo Medical Center’s FY2005-06 Adopted Budget and funds will be included in future budget requests.
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