Inter-Departmental Correspondence

County Manager/Clerk of the Board



January 24, 2008


February 5, 2008







Honorable Board of Supervisors


John L. Maltbie, County Manager


Second Amendment to Agreement with Health Management Associates




Adopt a Resolution:



Accepting the Phase 2 Final Report from Health Management Associates (HMA);



Authorizing a Second Amendment to the Agreement with HMA, extending the term to August 15, 2008 and increasing the total amount payable thereunder by a maximum of $210,375, from $299,699 to $510,074, and extending HMA’s scope of work to include intensive consultation and assistance to the County in implementing operational changes to its healthcare delivery system and in developing a more comprehensive and collaborative network with private healthcare providers; and



Authorizing the County Manager to execute subsequent amendments and minor modifications not to exceed an aggregate of $25,000 and to make minor changes in the types of services and activities provided under the Agreement.



Approve an Appropriation Transfer Request (ATR) transferring Non-Departmental Reserves in the amount of $587,644 to Health Department Salaries and Benefits and Services and Supplies.



Commitment: Ensure basic health and safety for all.

Goal 8 and 22: Help vulnerable people – the aged, disabled, mentally ill, at-risk youth, and others – achieve a better quality of life.


This Agreement contributes to this commitment and goal by providing the County with assistance in implementing operational changes and developing a more effective healthcare network for underserved populations.



During the past two years, fiscal pressures faced by the County have highlighted the unsustainable growth in General Fund contribution toward the delivery of healthcare services. Total budgeted contributions to San Mateo Medical Center (SMMC) increased to over $72 million in FY 2007-08 from $54 million two years ago. In April 2007 SMMC presented County management with a preliminary internal analysis of financial gain and loss by service line.


On June 11, 2007, the County entered into an Agreement with Health Management Associates (HMA) for the purpose of reviewing SMMC’s internal financial analysis and preparing five-year financial projections, assuming no changes to the configuration of services at SMMC. This financial analysis project is referred to as “Phase 1.”


On September 25, 2007, the County executed an Amendment to its Agreement with HMA to authorize Phase 2, whereby HMA developed recommended courses of action for the delivery of indigent healthcare within a financially sustainable system of care. Within this work, HMA also examined the capacity of private healthcare providers to address current and likely future gaps in the context of options being considered by the Blue Ribbon Task Force (BRTF) on Adult Healthcare Coverage Expansion.



The Phase 2 final report, “Assessment of Strategic Priorities for San Mateo Health Services,” outlines several opportunities for the County to continue its role in delivering healthcare in a more effective, efficient, and collaborative system of care. Integral to these opportunities are areas of operational restructuring and leadership for designing a public-private network within the County which meets its mission and responsibilities. HMA’s findings detail recommendations regarding the County’s healthcare role in the community, SMMC medical services, psychiatric and long-term care services, and the Health Plan of San Mateo (HPSM). These recommendations align with the preliminary recommendations of the BRTF, which your Board adopted in July, 2007.


HMA has proposed a more intensive “Phase 3” role, in which they will assist the County in implementing recommendations identified in the report, and developing an approach that can guide the County in redesigning its healthcare system and developing a more effective network with private healthcare providers. Given the importance and complexity of the policy issues before your Board, the County Manager’s Office has initiated a two-year “Health System Redesign Initiative” involving the senior executives leading SMMC, the Health Department and Health Plan of San Mateo to craft and implement priority recommendations from the HMA study in alignment with the work of the BRTF. A newly created Special Assistant to the County Manager role will serve as the lead staff. The Redesign Initiative implementation plan will be presented for your Board’s consideration at a later date and include areas of priority focus as well as the capacity to explore other opportunities that arise.



This Amendment to perform Phase 3 of the project increases the contract amount by $210,375, from $299,699 to $510,074, and extends the term to August 15, 2008. The contract is structured as a per-hour consulting arrangement to enable the County to manage the intensity of assistance needed, with a maximum obligation of $210,375 over the next six months. The ATR transfers funding from Non-Departmental Reserves to the Health Department to support the cost of the Amendment and personnel and consulting services costs for the first six months of the Health System Redesign Initiative. Initiative costs for FY 2008-09 and subsequent years will be included in future year budgets.