SUBJECT:       Award of Contract for Job-Related Medical Services (F0405-66)

REPORT IN BRIEF

Approval is requested for the award of a one-year contract to The Permanente Medical Group, Inc., with an option to extend the contract for four additional one-year periods, to provide job-related medical services for the Department of Human Resources Risk and Insurance Division.

BACKGROUND

The State of California Labor Code requires municipalities as well as other public entities to provide their employees with 24/7 medical care for job-related injuries and illnesses.  For at least fifteen years, the City has provided this medical care by contracting with Camino Medical Group.  Camino has also provided other miscellaneous medical services to the City, including pre-employment physicals, drug screening, DOT drug testing, etc. 

Last Fall, Camino Medical Group reduced their occupational medical staff by 66%, and the level of service to the City dropped accordingly.  Upon investigation, Human Resources learned from Camino Management that Camino was no longer earning a profit on their occupational services.  Thus, Camino decided that they would no longer accept new corporate clients.

DISCUSSION

Since Camino is apparently no longer willing or able to provide the level of service the City requires, staff began a proactive search for a suitable replacement facility.  Only two other facilities are available in this area:  U.S. Healthworks and Kaiser On-the-Job. 

After consideration of both facilities, Human Resources staff has determined that The Permanente Medical Group’s Kaiser On-the-Job Clinic is the best option for the City.  Kaiser has approximately fifty On-the-Job Clinics statewide.  The clinic that is closest to Sunnyvale is in Cupertino.  This facility is a state-of-the-art “one stop” occupational medical clinic with medical doctors, chiropractors, acupuncturists, physical therapists, massage therapists, etc., and is able to provide onsite x-rays, CT scans, MRIs, and medical laboratory services.  Having all services required to diagnose and treat most occupational injuries and illnesses has the benefit of convenience for employees and will minimize the time an employee is required to be away from the job for medical treatment.

Staff, therefore, recommends that Council award a contract to The Permanente Medical Group for the job-related medical services previously provided by Camino Medical Group.  A list of available services and pricing is included in the draft Letter of Agreement which is attached to this Report to Council.

The current contract with Camino Medical Group expires on June 30, 2005, but can be terminated at any time without penalty.

The Sunnyvale Municipal Code exempts professional services, including physicians, from competitive bidding. 

FISCAL IMPACT

Typically, expenditures for staff medical services, such as pre-employment physicals, DOT drug testing, etc., do not exceed $20,000 per year.  Funds for these services are budgeted in Program 753 – Personnel Services.

The amount of funding required for Workers Compensation expenses is impossible to predict.  The budget for Workers’ Compensation claims is based on an annual actuarial study.  The FY 04/05 Workers’ Compensation budget included $2,368,000.

RECOMMENDATION

It is recommended that Council award a one-year contract to The Permanente Medical Group, Inc., in the same form as the attached draft and with an option to extend the contract for four additional one-year periods, to provide job-related medical services.

Prepared by:

Elaine Wesely

Purchasing Officer

Reviewed by:

Mary J. Bradley,

Director, Finance

Reviewed by:

Jane Fleenor

Interim Director, Human Resources

Approved by:

Amy Chan

City Manager

Attachment

A.   Draft Letter of Agreement (.pdf)