From
Bryce Davis, Purchasing Manager
Title
Ratify the city's previous contract year’s expenditure for our contract with Employer Direct Healthcare, LLC ("EDH" also known as Surgery Plus) for administrative service fees and procedure costs to access their network of surgeons and facilities in the amount of $229,509.61 between August 2018 and July 2019, which was through a Master Interlocal Agreement with the City of Fort Worth; and approve the renewal of the contract in the increased amount of $350,000 for a modified seventeen month term between August 2019 and December 2020 to better align our contract dates with the City of Fort Worth’s contract; and authorize the City Manager to execute a single renewal option in future years between January 2021 and December 2021 in the estimated annual amount not to exceed $250,000 so long as sufficient funding is appropriated by the City Council to satisfy the City’s obligation during the renewal term
Presenter
Lisa Norris, Human Resources Director
Recommended Action
Approve
Analysis
In July of 2017 Council approved the City to enter into a one year interlocal service agreement for administrative service fees to access their network of surgeons and facilities offering bundled pricing beginning in August 2017 for an annual cost not to exceed $100,000, through a Master Interlocal Agreement with the City of Fort Worth for one year with the option to renew for four additional one year periods totaling $500,000 if all extensions are exercised.
This contract allows the City of Grand Prairie to utilize EDH (also commonly referred to as "SurgeryPlus") for bundled pricing on many surgical procedures at certain authorized facilities within their network. We pay administrative fees as well as the procedure costs to access their network and bundled pricing contracts. This bundled pricing is through high quality and care providers/surgeons at substantially reduced bundled rates for our employees, retirees and their covered family members on our plan. The administrative fees paid includes the production of marketing materials, meetings onsite to advertise the product, summary analytics/reporting on a regular basis to the city regarding utilization and marketing material effectiveness, etc. This contract through Fort Worth was generated from the North Texas Coalition efforts in which Grand Prairie sits on the Executive Committee for that group, along with Plano, Fort Worth, and Dallas.
While staff initially projected cost to be $100,000 per year for services, the program was highly popular in the contract’s second year among employees helping them to save through the bundled pricing ultimately saving the higher cost that the City and employees would have paid for regular priced surgeries. Administrative fees have stayed well below $100,000 per year, however, becuase the procedure costs are also paid to SurgeryPlus, this has caused the contract value to be exceeded.
Because of this popularity, staff requests Council authorize the renewal of this contract at the increased annual amount of $250,000, however, due to the misalignment of our contract to the City of Fort Worth’s contract, we request a modified seventeen month term at $350,000 to mirror Fort Worth’s January through December contract period. Additionally, this will align the one remaining renewal of this contract for 2021 at the estimated amount of $250,000.
Contract Term Contract Value Term length Expenditure
Aug17’ - Jul18’ $100,000.00 12 months $94,094.89
Aug18’- Jul19’ $100,000.00 12 months $229,509.61 *ratify
Jul19’ - Dec20’ $350,000.00 17 months *approve
Jan21’ - Dec21’ $250,000.00 12 months *approve
Contract Total: $929,509.61 if all extensions are exercised
Below is a recap of the savings versus the fees. Remember, we are paying the procedure costs and fees directly to SurgeryPlus (they do not go through claims) so below indicates what we saved (hard numbers). Additionally, SurgeryPlus has saved some procedures from being done altogether via a second opinion.
|
|
2017 |
2018 |
2019 |
Cumulative |
|
Savings |
$16,570 |
$159,252 |
$208,032 |
$383,854 |
|
Less: Fees |
$15,945 |
$47,961 |
$49,164 |
$113,070 |
|
Net savings |
$625 |
$111,291 |
$158,868 |
$270,784 |
|
Return On Investment |
1.04x |
3.32x |
4.23x |
3.39x |
|
|
|
|
|
|
|
Average savings per procedure |
|
53.30% |
53.60% |
|
Financial Consideration
Funding was available due to the offset by claims savings in Employee Insurance HLTH Budget (213010); Funding for fees in future years will be allocated in the FY 2020/2021 Employee Insurance HLTH Budget (213010), but offset by claims savings.