REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
January 27, 2026
FROM
ANDREW GOLDFRACH, ARMC Chief Executive Officer, Arrowhead Regional Medical Center
SUBJECT
Title
Agreements with Philips Healthcare a Division of Philips North America LLC for Preventive Maintenance Service, Software Updates, and Backup Power Source
End
RECOMMENDATION(S)
Recommendation
1. Approve Service Agreement with Philips Healthcare a division of Philips North America LLC, including non-standard terms, for preventive maintenance service for the Philips Azurion 7 M20 imaging system, an advanced image-guided system, in an amount not to exceed $1,125,857.22, for a five-year term effective after the one year warranty expiration date.
2. Approve Service Agreement with Philips Healthcare a division of Philips North America LLC, including non-standard terms, for the preventive maintenance service for the Azurion Biplane imaging system in an amount not to exceed $862,303, for a five-year term effective after the one-year warranty expiration date.
3. Approve Service Agreement with Philips Healthcare a division of Philips North America LLC, including non-standard terms, for software updates and the provision of a backup power source for the Azurion Biplane imaging system in an amount not to exceed $128,420.11, for a five-year term effective after the one-year warranty expiration date.
4. Approve Service Agreement with Philips Healthcare a division of Philips North America LLC, including non-standard terms, for preventive maintenance services for the IntraSight Intravascular Ultrasound imaging system in an amount not to exceed $441,117.52, for a five-year term effective after the one-year warranty expiration date.
5. Approve Service Agreement with Philips Healthcare a division of Philips North America LLC, including non-standard terms, for the preventive maintenance service for the EPIQ Elite G Diagnostic Ultrasound imaging system, in an amount not to exceed $307,549.55, for the term of January 27, 2026 through January 26, 2030.
(Presenter: Andrew Goldfrach, ARMC Chief Executive Officer, 580-6150)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Provide for the Safety, Health and Social Service Needs of County Residents.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost). The agreements include provisions allowing annual price adjustments of up to three percent beginning after the first contract year, subject to contractual notice requirements. The total not to exceed cost of $2,865,247.40 reflects the combined value of all related service agreements and add-on service components and is funded by State Medi-Cal, Federal Medicare, private insurances, and other departmental revenue. Funding sources may change in the future pending any legislative activity related to the repeal and/or replacement of the Affordable Care Act. Adequate appropriation and revenue have been included in the Arrowhead Regional Medical Center (ARMC) 2025-26 budget and will be included in future recommended budgets.
BACKGROUND INFORMATION
The Service Agreements with Philips Healthcare a division of Philips North America LLC (Philips) will provide preventive maintenance services for various equipment at ARMC, including the Azurion 7 M20 imaging system, two Azurion Biplane imaging systems (Biplane), IntraSight Intravascular Ultrasound (IVUS) imaging system, and the EPIQ Elite G Diagnostic Ultrasound imaging system, and will provide software updates and a backup power source for the Biplane.
ARMC purchased the equipment from Philips to replace equipment that was at end of life, but the equipment was not all purchased on the same date and will be installed on different dates and/or in different locations within the hospital. The one-year warranty begins once the equipment has been installed, causing the effective dates for the Service Agreements to vary. The pricing of the Service Agreement for each equipment is based on its specifications and type of imaging equipment.
The Philips Azurion 7 M20 imaging system is an advanced image-guided therapy (IGT) system for minimally invasive procedures, offering high-quality X-ray imaging with its 20-inch detector ceiling-mounted designs like FlexArm, and intuitive touchscreen controls for vascular, neurological, and general interventional need, helping doctors make fast, and informed decisions in complex surgeries.
The Philips Azurion Biplane imaging system is a sophisticated IGT system, which primarily features two X-ray detectors for simultaneous 2D and 3D imaging from different angles, enabling minimally invasive diagnosis and treatment of complex conditions, like strokes, aneurysms, and cardiac issues, by providing rapid, precise, real-time guidance for neurovascular procedures from a single control interface.
The Philips IVUS imaging system is a digital system that combines imaging and physiology application for both coronary and peripheral vascular procedures. It allows physicians to visualize the inside of blood vessels, assess plaque, guide interventions, and optimize treatments results. It provides high-resolution, cross-sectional images of blood vessels, allowing for detailed assessment of plaque morphology, vessel size and lesion length.
The Philips EPIQ Elite G Diagnostic Ultrasound imaging system is a high-end diagnostic ultrasound used for comprehensive heart and vascular assessment, providing clear images for diagnosing heart conditions, monitoring blood flow, assessing heart function, evaluating plaque, and examining blood vessels for disease, using advanced features like 3D/4D imaging, elastography for enhanced clarity, and workflow.
Under Philips’ service terms, pricing may be subject to annual adjustments of up to three percent after the first year with advance written notice.
The Service Agreements are based on Philips’ standard commercial service agreements, negotiated by the parties which deviate from the standard County contract terms as follows:
1. Payment terms are Net 30 days from date of invoice with interest for late payment accruing at an annual rate of 12%.
• County standard payment terms are Net 60 days with no interest or late payment penalties.
• Potential Impact: County standard processing time is 60 days or more. Failing to pay Net 30 days may result in a material breach of the agreements, which could allow Philips to terminate the agreements and seek other legal remedies, including charging the County interest at a rate of 12% annually, which could exceed the agreement amounts.
2. Except for claims based on bodily injury (including death) and property damage to the extent caused by Philips’ negligence or willful misconduct, claims based on gross negligence, willful misconduct, or violations of law, and indemnification, Philips limits its liability to the total amounts payable under the agreements.
• The County standard contract does not include a limitation of liability.
• Potential Impact: Claims could exceed the liability cap and the Agreement amount leaving the County financially liable for the excess.
3. Philips’ general indemnity obligations are limited to claims of bodily injury (including death) or property damage to the extent caused by Philips’ negligence.
• The County standard contract general indemnity provision requires the Contractor to indemnify, defend, and hold County harmless from third party claims arising out of the acts, errors or omissions of any person.
• Potential Impact: Philips’ indemnity obligation is more limited compared to the standard County general indemnity obligation. In the event a claim arises that falls outside the scope of Philips' limited indemnity obligation, the County could be financially responsible for the defense of the claim and any resulting judgment/settlement.
4. The County is required to notify Philips prior to any legally required disclosure of confidential information relating to Philips.
• The County standard contract does not require notice.
• Potential Impact: The County will need to be aware of its obligation to notify Philips prior to any disclosure of confidential information, including in response to a Public Records Act request.
5. Philips is not required to declare and obtain approval of Risk Management for any insurance deductibles or self-insured retentions in excess of $10,000.
• The standard County insurance requirements obligate contractors to declare and obtain approval from Risk Management any deductibles or self-insured retentions in excess of $10,000.
• Potential Impact: If Philips has an unusually high insurance deductible or self-insured retention, this poses a significant financial risk to the County in the event of claim for damages. Philips might not have the immediate funds to cover the out-of-pocket costs before its insurance policy applies, leaving the County potentially responsible for bearing the initial financial burden of making payments to cover that deductible.
6. The County may not terminate the agreements for convenience.
• County Policy 11-05 requires that the County have the right to terminate the contract, for any reason, with a 30-day written notice of termination without any obligation other than to pay amounts for services rendered and expenses reasonably incurred prior to the effective date of termination.
• Potential Impact: The County can only terminate the agreements during the term for an uncured breach by Philips. Any attempted termination by County without cause could result in payment liability for the full agreement amounts, which could result in payment liability where no funds are available due to lack of allocation or loss of funding.
ARMC recommends approval of the agreements with Philips, including the non-standard terms, to enable ARMC to maintain and service the medical equipment for use at ARMC to provide for the safety, health and social needs of county residents treated at ARMC.
PROCUREMENT
Purchasing supports these non-competitive agreements based on specialized credentials/expertise/training. The Philips imaging system has proprietary technology that can only be serviced by Philips.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Charles Phan, Supervising Deputy County Counsel, 387-5455) on December 23, 2025; Risk Management (Stephanie Pacheco, Staff Analyst II, 386-9039) on December 26, 2025; Purchasing (Veronica Pedace, Buyer III, 387-2464) on December 26, 2025; ARMC Finance (Chen Wu, Finance and Budget Officer, 580-3165) on December 30, 2025; and County Finance and Administration (Jenny Yang, Administrative Analyst, 387-4884) on January 6, 2026.