REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
July 26, 2022
FROM
WILLIAM L. GILBERT, Director, Arrowhead Regional Medical Center
SUBJECT
Title
Service Agreement with Philips Healthcare for IntelliSpace Software Support and Training
End
RECOMMENDATION(S)
Recommendation
Approve Service Agreement with Philips Healthcare, including non-standard terms, for support and training for IntelliSpace software utilized in the perinatal unit to monitor and alert key events during obstetric care, in the total contract amount of $262,974 for a five-year contract period from August 1, 2022 through July 31, 2027.
(Presenter: William L. Gilbert, Director, 580-6150)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Operate in a Fiscally-Responsible and Business-Like Manner.
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 cost of $262,974 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) 2022-23 budget and will be included in future recommended budgets.
BACKGROUND INFORMATION
Approval of the Service Agreement (Agreement) with Philips Healthcare (Philips) will provide support and training for perinatal software utilized by the ARMC Labor and Delivery Department. The Philips IntelliSpace perinatal software utilizes surveillance monitors that transmit information from fetal and fetal/maternal monitors and generate alerts for key events during the obstetrical care continuum. This Agreement also allows remote software technical support - 24 hours a day and seven days a week, remote clinical application support, and onsite software escalation to resolve technical issues.
The Agreement is Philips’ standard commercial contract, which includes terms that differ from the standard County contract and omits certain County standard contract terms. While the parties negotiated certain contract terms to County standards, Philips would not agree to others. The non-standard and missing terms include the following:
1. The Agreement does not include certain standard County insurance requirements, including naming the County as an additional insured on Philips’ Cyberliability insurance, changes to the severability requirements, and no periodic review requirements.
• The County standard contract requires contractors to carry appropriate insurance at limits and under conditions determined by the County’s Risk Management Department.
• Potential Impact: Philips’ insurance obligations are unique to Philips’, and out of compliance with County policy 11-07. The County has no assurance that Philips will be financially responsible for claims that may arise from the County’s use of the software, which could result in expenses to the County that exceed the total contract amount.
2. Philips limits its and its affiliates’ total liability to the County to the annual price for the service giving rise to the liability, but excluding (a) third party claims for bodily injury or death caused by Philips’ negligence, (b) the actual cost of repair of replacement for property damage caused by Philips’ negligence or a proven product defect; (c) County’s out-of-pocket expenses to notify patients, as required by law to the extent the notices are cause by Philips’ unauthorized disclosure of Protected Health Information (PHI); (d) fines or penalties levied against the County by government agencies citing Philips’ unauthorized disclosure of PHI as the basis of the fine or penalty; and (e) Philips’ intellectual property indemnification obligations.
• 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. Payment terms are net 30 days with a late penalty of 1% per month and Philips may, at its option, (i) withhold performance under until a reasonable time after all defaults have been cured; (ii) declare all sums due; (iii) commence collection activities for all sums due or that become due hereunder, including, but not limited to, costs and expenses of collection; (iv) terminate this Agreement with 30 days’ notice; and (v) pursue any other remedies permitted by law.
• County standard payment terms are Net 60 days with no interest or late payment penalties.
• Potential Impact: The County standard processing time is 60 days or more. Failing to pay any undisputed amount within 30 days will result in default of the Agreement, which would allow Philips to undertaken any or all of the actions identified, including charging the County interest at a rate of 1.5%, which would exceed the Agreement amount.
4. The Agreement is non-cancelable and the County may not terminate the Agreement for convenience.
• The County standard contract gives the County 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: There is no termination for convenience without penalty. If the County terminates the Agreement for any reason other than those reasons permitted under the Agreement, the County will be in breach of the Agreement. Any attempted termination by County without cause would result in payment liability for the full contract amount, 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 Agreement, including the non-standard terms, to provide for the health and safety of County residents by providing software upgrades and clinical education for every software upgrade to nursing staff.
PROCUREMENT
Purchasing supports this non-competitive procurement based on the proprietary nature of the software service as only Philips can upgrade and update the Philips IntelliSpace software.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Bonnie Uphold, Deputy County Counsel, 387-5455) on June 29, 2022; Purchasing (Ariel Gill, Buyer III, 777-0722) on July 1, 2022; Risk Management (Victor Tordesillas, Director, 386-8623) on July 7, 2022; ARMC Finance (Chen Wu, Finance and Budget Officer, 580-3165) on July 1, 2022; Finance (Jenny Yang, Administrative Analyst, 387-4884) on July 5, 2022; and County Finance and Administration (Diana Atkeson, Deputy Executive Officer, 387-5423) on July 5, 2022.