To: Board of Supervisors of the County of Sonoma, Board of Directors of the Sonoma County Water Agency, Board of Commissioners of the Community Development Commission, and Board of Directors of the Sonoma County Agricultural Preservation and Open Space District
Department or Agency Name(s): Human Resources Department
Staff Name and Phone Number: Lynne Durrell, 707-565-6089
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Amendment to Permanente Medical Group, Inc.
End
Recommended Action:
Recommended action
Authorize the Interim Director of Human Resources to execute a contract amendment with The Permanente Medical Group, Inc., increasing the contract maximum limit for occupational health services by $400,000 through June 30, 2024.
end
Executive Summary:
The Permanente Medical Group, Inc., a subsidiary of Kaiser Permanente, has provided occupational health services to the County since 2003. Following a Request for Proposals in March 2019, Kaiser was selected again due to the wide scope of occupational health services they offer and the proximity of facilities to County worksites. The contract was approved for an initial term of three years, through FY 21/22, with the option to extend the contract for two years at the discretion of the Human Resources Director.
The 2019 contract was established with a not-to-exceed amount of $600,000 for the initial three-year contract. In 2022, the Human Resources Director approved extension of the contract for two fiscal years, through FY 23/24. While expenses for the additional fiscal years were budgeted and available, the HR Director amendment and authority did not adjust the agreement’s maximum not-to-exceed amount for the two additional fiscal years.
Staff recommends increasing the contract maximum not to exceed amount by $400,000 for the period of July 1, 2022 through June 30, 2024, for a total not-to-exceed amount of $1,000,000 for the totally of the expanded five year term.
Discussion:
The Permanente Medical Group provides occupational health services to the County including: exams and treatment of work related injuries and illness in support of the County’s self-insured workers’ compensation program, pre-employment physical examination, employee Tuberculosis (TB) testing and vaccinations, seasonal influenza vaccination clinics, medical surveillance and other annual examination, fitness -for-duty/return-to-work examinations, pre-placement and reasonable suspicion drug testing, for consultation in the areas of occupational health and safety as requested by the County.
After issuing a request for proposals for occupational health services in February 2019, the County entered into a contract with The Permanente Medical Group. The initial contract provided $600,000 in funding for fiscal years 19/20, 20/21, and 21/22, and provided HR Director authority to extend the contract for an additional two fiscal years, through June 30, 2024. There were no rate increases for services under the contract for the initial three-year period. When the contract was extended in 2022, Kaiser adjusted service rates on the fee schedule to reflect the increased costs of services due to post pandemic inflation to medical supplies and staff. While the cost of services under the contract were budgeted for all five fiscal years, there was no additional funding provided in the contract for the subsequent two fiscal years of 22/23 and 23/24.
While pre-employment testing costs dropped through the first part of the pandemic due to a slow down in hiring, hiring rates at the County have surged over the past year. The number of new hires has increased by 21% since this same time last fiscal year. The initial slowing of hiring during the pandemic allowed us to stretch the original $600,000 of the contract for a greater period of time, reducing the overall funding needed for the extension period. However, with the wave of new recruitments and hires, and an increase in costs under the extended contract due to post-pandemic inflation, restoration of funding through the end of the contract will be needed in order to maintain to services.
In order to cover anticipated costs through June 30, 2024, Human Resources is requesting $400,000 to cover costs for fiscal years 22/23 and 23/24. This would amend the contract to provide a not-to-exceed amount of $1,000,000 for all five fiscal years of the contract.
Strategic Plan:
N/A
Prior Board Actions:
5/14/2019 - Authorized the Human Resources Director to execute a new agreement with the Permanente Medical Group, Inc. for an initial three-year term with the ability to extend for two additional fiscal years through 6/30/2024.
6/6/2017 - Authorized the Human Resources Director to execute a new agreement with the Permanente Medical Group, Inc. for a two-year term through 6/30/2019.
Fiscal Summary
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Expenditures |
FY 22-23 Adopted |
FY23-24 Projected |
FY 24-25 Projected |
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Budgeted Expenses |
$200,000 |
$200,000 |
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Additional Appropriation Requested |
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Total Expenditures |
$200,000 |
$200,000 |
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Funding Sources |
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General Fund/WA GF |
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State/Federal |
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Fees/Other |
$200,000 |
$200,000 |
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Use of Fund Balance |
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Contingencies |
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Total Sources |
$200,000 |
$200,000 |
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Narrative Explanation of Fiscal Impacts:
Services are budgeted in the Self-Insurance Workers’ Compensation budget whose funding comes an internal services rate contributed by all county departments/agencies. The expenditures will be absorbed within existing appropriations in FY 2022-23 and has been included in the requested FY 2023-24 budget.
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Staffing Impacts: |
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Position Title (Payroll Classification) |
Monthly Salary Range (A-I Step) |
Additions (Number) |
Deletions (Number) |
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Narrative Explanation of Staffing Impacts (If Required):
N/A
Attachments:
Amended contract with The Permanente Medical Group aka Kaiser Permanente on the Job (KPOJ) for the term July 1, 2022 - June 30, 2024
Related Items “On File” with the Clerk of the Board:
N/A