REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
June 27, 2023
FROM
WILLIAM L. GILBERT, Director, Arrowhead Regional Medical Center
SUBJECT
Title
Physician Services Agreements with Arrowhead Pediatrics Medical Group, Inc. for Pediatric and Neonatology Services
End
RECOMMENDATION(S)
Recommendation
1. Approve Physician Services Agreement, including non-standard terms, with Arrowhead Pediatrics Medical Group, Inc., to provide pediatric educational and medical services at Arrowhead Regional Medical Center, in an annual amount of $950,000 plus variable amounts, for the total amount of $2,850,000 plus variable amounts, for the period of July 1, 2023 through June 30, 2026.
2. Approve Physician Services Agreement, including non-standard terms, with Arrowhead Pediatrics Medical Group, Inc. to provide neonatology medical services at Arrowhead Regional Medical Center, in an annual amount of $651,273, for the total amount of $1,953,819, for the period of July 1, 2023 through June 30, 2026.
(Presenter: William L. Gilbert, Director, 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 cost of $2,850,000, plus variable amounts, over three years for Recommendation No. 1 and the cost of $1,953,819, over three years, for Recommendation No. 2 are funded by State Medi-Cal, Federal Medicare, private insurances, and other departmental revenue. Recommendation No. 1 includes fixed and variable amounts. Variable amounts are based on patient volume and the number of medical students that participate in a rotation in pediatrics. Funding sources for both recommendations 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 Arrowhead Regional Medical Center’s (ARMC) 2023-2024 recommended budget and will be included in future recommended budgets.
BACKGROUND INFORMATION
These Physician Services Agreements (Agreements) will allow Arrowhead Pediatrics Medical Group, Inc. (APMG) to continue to provide pediatric educational and medical services, and neonatology medical services at ARMC.
ARMC provides medical care and education programs for the hospital and the Family Health Clinics (FHC) through physician services agreements with various medical corporations. APMG has been providing highly and technically skilled, licensed physicians, nurse practitioners and allied health staff to provide pediatric health care services to ARMC patients since 2006 and neonatology health care services since 2020.
On June 23, 2020 (Item No. 14), the Board of Supervisors (Board) approved Agreement Nos. 20-479 and 20-482 with APMG to provide pediatric medical and education services in the amount of $2,649,972, plus variable charges, and neonatology medical services in the amount of $1,194,282, respectively, for the period of July 1, 2020 through June 30, 2023. The recommended Agreements will allow for continuation of these pediatric and neonatology services with APMG.
All physicians provided by the corporations are granted clinical privileges, which allow physicians to practice medicine at ARMC and are approved to serve in administrative roles in the same manner. Clinical department appointments are made in accordance with the bylaws of the medical staff. This is in accordance with Title 22 of the State of California, ARMC’s accrediting bodies, such as Center for Medicare and Medicaid Services and Joint Commission, and the academic affiliation agreements established between ARMC and various medical schools.
All active and provisional physicians provided by corporations must also complete an annual Statement of Economic Interests, as required by the County. The physicians are required to disclose ownership, investment or other financial interest which may present any conflict with performance of their duties under the Agreements.
The Agreements with APMG were negotiated by the parties and include the following non-standard contract terms:
1. The County is required to defend and indemnify APMG and its providers for medical malpractice and professional negligence, as well as claims that result from ARMC providing inaccurate and/or improper billing information to APMG.
• The County’s standard contract does not contractually require the County to indemnify its contractor under any circumstance.
• Potential Impact: By agreeing to indemnify APMG, the County could be contractually waiving the protection of sovereign immunity. Claims that may otherwise be barred against the County, time limited, or expense limited could be brought against APMG without such limitations and County would be responsible to defend and reimburse APMG for costs, expenses, and damages, which could exceed the total amounts of the Agreements.
2. The Agreements do not include many of the standard County insurance requirements, including the waiver of subrogation and naming the County as an additional insured.
• The County’s standard contract requires contractors to carry certain insurance coverage as determined by the County’s Department of Risk Management, and for contractors to add the County as an insured in their policies and to waive the right to subrogation.
• Potential Impact: The Agreements do not require APMG to carry any of the standard County required insurance policies. This means that the County has no assurance that APMG will be financially responsible for general liability claims that may arise from the Agreements, which could result in expenses to the County that exceed the total amounts of the Agreements. Having no waiver of subrogation may allow APMG’s insurers, if any, to bring suit against the County. Not being added as an insured to APMG’s insurance policies means that the County cannot directly turn to APMG’s insurers in pursuing a claim.
3. Either party may terminate the Agreements with 120 days written notice.
• The County’s standard contract provides that either party may terminate the contract with 30 days’ written notice.
• Potential Impact: ARMC will need to be mindful of the additional notice period required to terminate the Agreements without cause.
ARMC recommends approval of these Agreements, including the non-standard terms, to provide for the safety, health and social service needs of County residents for patient care by allowing for continued patient care in the areas of pediatrics and neonatology.
PROCUREMENT
Although the Government Code (GC) does not make an explicit exception to competitive bidding for professional physician services, Section 31000 provides the Board with the authority to contract with and employ any persons for the furnishing of “special services.” Section 31000 authorizes a county to contract for medical services without the necessity of advertising for bids.
It is in the best interest of ARMC patients to allow them to continue with the existing physicians for continuity of care.
The Purchasing Department recognizes the specialized credentials and supports the non-competitive procurement for these services, allowing for continuity of care for patients in these specialty areas, such as pediatrics and neonatology.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Charles Phan, Deputy County Counsel, 387-5455) on June 1, 2023; Purchasing (Ariel Gill, Buyer, 777-0722) on June 2, 2023; Risk Management (Victor Tordesillas, Director, 386-3165) on June 1, 2023; ARMC Finance (Chen Wu, Budget and Finance Officer, 580-3165) on June 2, 2023; Finance (Jenny Yang, Administrative Analyst, 387-4884) on June 8, 2023; and County Finance and Administration (Valerie Clay, Deputy Executive Officer, 387-5423) on June 8, 2023.