SR-07-14-2015-3OCouncil ID
tma City
City of
Santa Monica'
City Council Regular Meeting: July 14, 2015
Agenda Item: -1-S°0
To: Mayor and City Council
From: Donna Peter, Director, Human Resources Department
Subject: Agreement for Occupational Medical Testing Services
Recommended Action
Staff recommends that the City Council:
1) Award RFP# 17 to Westchester Medical Group, a California -based company for
Occupational Medical Testing Services;
2) Authorize the City Manager to negotiate and execute a professional services
agreement with Westchester Medical Group, in an amount not to exceed
$1,250,000 over a five year period with future year funding contingent on Council
budget approval.
Executive Summary
The City recently solicited proposals for medical testing services needed to support the
Occupational Medical Testing Program (OMTP). The purpose of the City's OMTP is to
protect employees from on- the -job health and safety risks through physicals, testing,
and preventive health measures. Staff recommends a five -year agreement with
Westchester Medical Group and a follow -up RFP with a limited scope of services to
attract a second medical provider located closer to Santa Monica. If the latter effort is
successful, staff will return to Council for authorization to contract with a second OMTP
provider and adjust the Westchester contract accordingly.
OMTP services are estimated to cost up to $1,250,000 over five years. The contract(s)
would be paid out of the Workers' Compensation Self- Insurance Fund, which is
financed with contributions from all City departments.
Background
The purpose of the City's OMTP is to protect employees from on- the -job health and
safety risks through physicals, testing, and preventive health measures. Examples
include pre - employment physicals, drug and alcohol screens, vaccinations, commercial
driver exams, and firefighter physicals. The program covers all City employees, but is
most frequently used in connection with employees holding job classifications
considered physically demanding and /or safety sensitive (e.g., Motor Coach Operators,
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Heavy Equipment Operators, etc.)
The Human Resources Department manages the OMTP with assistance from operating
departments and relies on private medical providers to carry out the testing required by
the program. The City's current OMTP provider, Westchester Medical Group, has
served in this capacity since December 2009, after being selected through a competitive
process. They are currently operating on a month -to -month contract basis until a vendor
is chosen through the 2015 OMTP competitive selection process.
Discussion
Prior to issuing the RFP, staff conducted a review of the City's current occupational
medical testing practices to ensure all testing requirements and protocols comply with
State and Federal safety, disability management, and medical privacy regulations, as
well as, City safety policies. This review yielded a variety of changes to testing program
requirements and protocols, all of which were incorporated into the RFP for OMTP
services. For the most part, the program changes are expected to be cost neutral. The
only exception to this relates to hazmat physicals.
Starting in FY 2015 -16, hazmat physicals will be provided annually to all members of
the Fire Department's Hazmat Response Team. These exams are mandated by Cal
OSHA and necessary to detect health issues caused by exposures to hazardous
substances. Staff estimates these physicals cost approximately $20,000 annually.
The agreement to be awarded to Westchester Medical Group will not exceed
$1,250,000 over the five year period. This figure is based on historical expenditures
adjusted to reflect the addition of hazmat physicals. It also provides a 20% contingency
to address fluctuations in the number and type of new hires that will occur over the life
of the contract. Any unexpended funds will be returned to fund balance at the end of
year fiscal year. Further, if the follow -up RFP generates a viable proposal from a Santa
Monica -based OMTP provider, staff will return to Council for: authorization to enter into
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a second OMTP services agreement, and approval of a modification to the Westchester
Medical Group's agreement lowering its total compensation in an amount equal to the
new agreement, thereby ensuring total OMTP expenses will not exceed $1,250,000
over the five year period.
Responsibility for OMTP management and funding has historically resided in Human
Resources. Come FY 2015 -16, program management will remain in Human Resources,
however, funding will be transferred to the Finance Department's Workers'
Compensation Self- Insurance Fund. Departments will then be assessed their share of
these costs through annual Workers' Compensation charges. Consistent with this
approach, $250,000 has been requested in account 59235.555060 in the FY 2015 -16
budget.
Vendor /Consultant Selection
On January 8, 2015, the City published an RFP for occupational medical testing
services. The RFP was posted on the City's online bidding site. Further, notices were
published in the Santa Monica Daily Press (per City Charter and Municipal Code
provisions) and personalized letters were sent to Santa Monica -based medical clinics
advising of the RFP's availability. Vendors were provided with a little over a month to
submit proposals.
The City received one response to the RFP and it came from Westchester Medical
Group. This was not surprising to staff in light of the limited pool of medical providers
located in or near Santa Monica that possess the combination of staff expertise,
regulatory certifications, and facility requirements to fulfill the scope of the RFP. That
said, staff confirmed that 63 vendors received notification of the RFP through the City's
online bidding site, and of those, 15 downloaded the RFP. Further, the listing of vendors
notified contained a representative sampling of those staff would have expected to
respond to the RFP. The limited pool, coupled with confirmation on the RFP's
distribution, led staff to conclude that reissuing the RFP was not likely to generate
additional proposals and we should move forward with evaluating Westchester's
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proposal.
It is important to note staff also queried vendors as to why they did not respond to the
RFP. This only yielded one response. Kaiser Permanente indicated that timing
precluded a submittal, and if the RFP was reissued, they would respond. Data from the
City's online bidding site, however, confirmed that Kaiser received timely notification of
the RFD's availability.
A selection panel composed of Human Resources, Finance (Risk Management
Division), Big Blue Bus, Fire, and Public Works (Resource Recovery and Recycling
Division) was subsequently convened to evaluate Westchester Medical Group's
proposal. Based on this review, the selection panel determined that Westchester
satisfied the requirements set out in the City's RFP and offered several advantages due
to its experience, qualifications, understanding of the City's needs, and reasonable
contract pricing. The latter was determined by comparing Westchester's proposed
pricing structure against the current contract and the workers' compensation medical
services fee schedule prescribed by the State (i.e., which represents the lower end of
medical fee reimbursement schedules).
The selection panel's only reservation with Westchester's proposal related to the
inconvenience of getting to its medical facility in El Segundo, CA during peak commute
hours. During these periods, travel time to and from the facility can easily increase from
twenty minutes in each direction to over an hour. Most City departments subject to
OMTP requirements have been able to mitigate this problem through scheduling testing
during non -peak commute hours. However, it has posed a significant challenge for
several City operations that lack this flexibility.
For example, the Big Blue Bus and the Resource Recovery and Recycling Division of
Public Works employ over 400 workers who operate commercial vehicles (e.g., bus
drivers, sanitation truck operators, street sweeper operators, etc.), all of whom are
required to undergo a state mandated physical exam every two years to maintain their
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Commercial Driver Licenses. Accommodating this volume of testing while maintaining
the staffing necessary to support the complex scheduling requirements of the City's bus
system and sanitation service is extremely difficult. Consequently, these operations are
often left with no choice but to schedule exams during peak traffic times and incur the
associated overtime and lost productivity.
The selection panel carefully considered these pros and cons. Panel members
acknowledged the value of contracting with a single, proven OMTP provider like
Westchester is significant, particularly when it comes to ensuring testing consistency
and quality, as well as, compliance with complex safety, medical privacy and disability
management laws and regulations. At the same time, the panel felt its recommendation
should provide City departments with a convenient and efficient option for satisfying
OMTP mandates. Lacking a single provider capable of meeting both objectives, the
panel recommends the City pursue a five -year agreement with Westchester Medical
Group for primary OMTP provider services and release a follow -up RFP for mandated
commercial vehicle operator testing services only.
This recommendation represents a sensible compromise that allows the City to maintain
the majority of its OMTP with a single provider and best positions the City to attract a
medical provider in or near Santa Monica capable of satisfying the needs of
departments most impacted by Westchester's location. This will also provide Kaiser
Permanente with an opportunity to demonstrate its interest in working with the City and
establishing a presence in or near Santa Monica.
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Financial Impacts and Budget Actions
The agreement to be awarded to Westchester Medical Group is for an amount not to
exceed $1,250,000 over a five -year period. Funds in the amount of $250,000 are
included in the FY 2015 -16 budget in the Finance Department. The agreement will be
charged to 59235.555060. Future year funding is contingent on Council budget
approval.
Prepared By: Donna Peter, Director
Approved Forwarded to Counci.
Donna Peter, Director 6/2912015 Elaine M Polachek, Asst. City Manager 7/6/2015
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Reference:
Resolution No. 10894
(CCS)