Local News

Tuesday, Feb 19 2013 05:47 PM

Supervisors postpone decision on controversial health contract

BY JAMES BURGER Californian staff writer jburger@bakersfield.com

County supervisors on Tuesday were persuaded to delay a decision on whether to dump and replace the manager of its employee healthcare program, which has been accused of operating with a conflict of interest.

The Kern County Board of Supervisors agreed to revisit the issue at its March 12 meeting at the request of the current provider, Bakersfield-based Managed Care Systems.

MCS representatives argued that all the bidders should have a chance to review the proposed award and provide more information about why they should get the contract.

At stake is control of the county's main health care plan for some 7,500 current and retired county employees.

Assistant County Administrative Officer Elissa Ladd, using an analysis of bids from nine companies, recommended splitting the work MCS currently does among three out-of-state vendors.

The county would pay MCS $13.9 million to administer the plan but only $9.8 million to the three vendors.

Representatives of Managed Care Systems attacked Ladd's recommendation Tuesday.

In a letter to the county, MCS Chief Executive Officer Brent Boyd accused the county of creating a biased bidding process, stacking the results of a grading system against his company and failing to give MCS credit for years of good work for Kern.

Robert Severs, CEO of MCS parent-company Golden Empire Managed Care, said the plan would send 40 jobs out of state, increase county health care costs and land the county in trouble.

Supervisor Leticia Perez worried that he was right and made the motion to delay the decision.

Severs said his company will use the extra three weeks to research its competitors and prove they can't do the job.

The County Administrative Office didn't tell supervisors the truth about what those vendors could do, Severs said.

"We're going to get copies of the other proposals and demonstrate those organizations don't have the programs they say they have," Severs said.

It's something, MCS attorney Richard Monje reminded the board, that has worked for the company before.

In 2009, when county officials recommended another vendor for the initial contract, MCS challenged the decision, reviewed the proposals and convinced supervisors that its primary opponent was not qualified to handle the contract MCS wanted, Monje said.

Tuesday's decision didn't please everyone.

Representatives from Foundation for Medical Care, San Joaquin Community Hospital, the Bakersfield Heart Hospital and a number of other local groups cheered the county's work on the RFP as fair and accurate.

They urged the board to approve the recommendation from Ladd. Foundation, which also bid on the contract, supported the process despite losing out.

But supervisors said they wanted to err on the side of caution and delay a decision.

Tuesday's meeting was the latest twist in a controversy that has swirled around Managed Care Systems, parent company GEMCare, and GEMCare's part-owner Dignity Health, which also owns Mercy, Mercy Southwest and Bakersfield Memorial hospitals in town.

Doctors and other critics have accused MCS of shifting business away from other hospitals to its business partners in the Dignity network.

The county hired the Segal Group to investigate the charges and then proposed a new, competitive bidding process for the contract.

Monje called the conflict of interest fiction, drummed up by competitors like San Joaquin Community Hospital.

"We all know that anyone can gin up a controversy. Once the controversy is in existence, it's hard for people to make a decision that seems to fly in the face of that conflict," he said.

Dr. Donald Cornforth, a critic of MCS, said the conflict of interest is real.

Just after MCS secured the county contract in 2009, it merged with Dignity Health. That, Cornforth said, resulted in a decrease in referrals for doctors and other hospitals outside the Dignity network -- as MCS shifted business to its own hospitals.

It was a clear conflict of interest, he said.

"The county employees and the taxpayers of Kern County will both benefit from this recommendation," Cornforth said of the staff proposal.

"I'm confident that there has been no conflict of interest," Supervisor Mick Gleason said.

But he said he thought the RFP process was fair and focused on the best value for the county.

Perez said the RFP process placed a lot of weight behind firms that didn't have a local conflict of interest.

"I am heavily inclined to local contract administration," she said, adding the heavy weight given to the conflict of interest issue makes it impossible for a local vendor to earn the contract.

A total of nine firms bid for the contract to administer the county's largest employee health care plan -- which serves 5,100 county employees and 1,250 retired workers.

Five firms, including Bakersfield firms MCS and Foundation, got interviews.

In his letter to the board, Boyd said the review committee gave MCS zero of the 35 points that could be earned by a firm capable of administering the contract without a conflict of interest. But at the same time, he said, the county was telling MCS that it had done nothing wrong.

That category was the largest single block of points any of the competing firms could earn.

Ladd's proposal to the board was to hire Zenith American of Florida to pay the health care bills of county employees. Clinix, from Columbus, Ohio, would handle county employees' needs for specialty medical care.

And Burns Consulting of Maumee, Ohio would develop contracts with doctors and other health care providers serving county employees.

None of those businesses' representatives spoke at Tuesday's meeting.

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