COUNTY OF SAN MATEO

Inter-Departmental Correspondence

San Mateo Medical Center

 

DATE:

August 4, 2008

BOARD MEETING DATE:

September 9, 2008

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

 

TO:

Honorable Board of Supervisors

FROM:

Sang-ick Chang, M.D., Chief Executive Officer

San Mateo Medical Center (SMMC)

SUBJECT:

Amendment to the Agreement with Associated Medical Specialists

 

RECOMMENDATION:

Adopt a Resolution authorizing the execution of an Amendment to the Agreement with Associated Medical Specialists (AMS) to provide internal medicine, cardiology, and hospitalist services, for the term October 1, 2005 through September 30, 2008, increasing the maximum amount payable by $894,571.58 from $11,080,524.59 to $11,975,096.17.

 

VISION ALIGNMENT:

Commitment: To Ensure Basic Health and Safety for All.

Goal(s): Provide residents access to healthcare and preventive care.

The Agreement contributes to this commitment and goal by providing comprehensive internal medicine services to County patients. Contractor performance is measured by adherence to the quality improvement plan for internal medicine and cardiology standards with specific benchmarking indicators.

 

Performance Measure(s):

Measure

Annual RVU Budget

Year 2

10/06 – 09/07

Actual

Year 3

10/07-9/08
Projected

Maintain overall productivity units for Specialty Clinics, inpatient care and procedures.

34,850

47,493.65

45,583.64

 
 

BACKGROUND:

San Mateo County provides basic medical care to the low-income, uninsured, and underinsured population. This care includes internal medicine services. Since 1975, Associated Medical Specialists (AMS) has provided internal medicine subspecialty inpatient and outpatient services, including cardiology, hematology/oncology, gastroenterology, rheumatology, endocrinology, pulmonology, and critical care, as well as the management and supervision of those services. In addition, in 2005 AMS expanded their role to include conducting history and physicals for mental health patients, medical coverage for Cordilleras, and the provision of on-call coverage for the Burlingame Long-Term Care facility (BLTC).

 

DISCUSSION:

AMS provides both hospitalist and subspecialty services. Historically, SMMC negotiated with AMS a reimbursement model based on Relative Based Resource Value Work Units (Work RVUs). This model was based on the actual cost of providing services and the projected needs for such services.

 

This reimbursement model resulted in an original savings to the County of nine percent (9%) in the 2004-05 approved budget. However, SMMC also expected an increase in Work RVUs by each individual doctor to enhance revenue generation projections for the hospital.

 

The result of the newly structured agreement based on RVUs was a 36.3% increase over baseline RVUs in the second year of the Agreement, and an increase of 30.8% over baseline RVUs in the third year of the Agreement. The increased RVU units were valued at $50 per unit.

 

The bonus based on RVUs paid in year one to AMS was $323,334. In year two, AMS received an RVU bonus of $761,342. For year three, AMS has accrued an RVU bonus of $513,143 for the first three quarters of the year. For the remainder of year three, SMMC and AMS have agreed on a one time payment of $250,000 to complete the RVU bonus obligation under the Amendment to this Agreement. These bonuses resulted in a 17% increase in total costs between years 1 ($3,579,655) and 2 ($4,184,915) of the agreement, and a 7% decrease in costs between years two and three ($3,895,806) of the agreement. The estimated savings from the bonus settlement in year 3 is $434,191.

 

The Health System Redesign Initiative Team and County Counsel have reviewed and approved this Amendment.

 

The contractor has assured compliance with the County’s Contractor Employee Jury Service Ordinance, as well as all other contract provisions that are required by County ordinance and administrative memoranda, including but not limited to insurance, hold harmless, non-discrimination and equal benefits.

 

FISCAL IMPACT:

The term of this Agreement is October 1, 2005 to September 30, 2008. The maximum amount payable is $11,975,096.17. Funds were included in SMMC’s previously Adopted Fiscal Year Budgets and have been included in FY2008-09 Recommended Budget.