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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, 1 of 6 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 001 . 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 3 of 6 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 4 of 6 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. 5 of 6 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 6of6 Reference: Resolution No. 10894 (CCS)