Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Colleen Chawla, Chief, San Mateo County Health
Chester J. Kunnappilly, MD, Chief Executive Officer, San Mateo Medical Center
Subject: Third Amendment to General Surgery Agreement with Sutter Bay Medical Foundation, a California Nonprofit Public Benefit Corporation dba Palo Alto Medical Foundation for Health Care, Research, and Education
RECOMMENDATION:
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Adopt a resolution authorizing a third amendment to the general surgery agreement with Sutter Bay Medical Foundation, a California Nonprofit Public Benefit Corporation dba Palo Alto Medical Foundation for Health Care, Research, and Education (PAMF), extending the agreement by 9 months through December 31, 2025, and increasing the maximum amount payable of the agreement by $710,896.50, to an amount not to exceed $4,265,392.50.
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BACKGROUND:
San Mateo County is responsible for providing necessary medical care to its medically indigent population. This care includes general surgery and the management and supervision of the service. PAMF has provided surgery services at San Mateo Medical Center (SMMC) for the past 16 years. General surgery is a basic service required to maintain SMMC’s hospital license under Title 22 of the California Code of Regulations. The original term of the party’s current contract began July 1, 2021 through June 30, 2024 in an amount not to exceed $2,843,595. On June 25, 2024, PAMF requested an extension through December 31, 2024 so that it could collect data before commencing negotiations with the County on a renewal of the contract. This first extension increased the “not to exceed” amount to $3,317,529 without any change in compensation rate or formula. On December 20, 2024, the parties agreed to a further extension of the term through March 31, 2025, with another proportionate increase in the contract’s “not to exceed” amount to $3,554,496. The purpose of the extension was to update the list of physicians providing services, accommodate negotiations, and allow the County’s consultant, VMG Health, to issue an updated custom report evaluating the fair market value of the services.
DISCUSSION:
During the negotiations in late 2024, the County commissioned a fair market value study by VMG Health to provide updated market data for general surgery services in the San Francisco Bay Area. VMG Health’s assessment was that the existing contract rate was at the high end of the fair market value range for San Mateo County, functionally leaving the parties with the option to either continue the agreement without additional cost increase or terminate the agreement. Accordingly, the County provided PAMF with a proposed contract restating the existing compensation terms. Three months later, after new physicians joined PAMF, PAMF requested a 25% increase in compensation. The County reminded PAMF that the current fair market value assessment did not support any increase in cost. In response, PAMF agreed to extend the current agreement through December 31, 2025 without any change in compensation terms.
County Attorney has reviewed and approved the resolution and agreement as to form.
The resolution contains the County’s standard provisions allowing amendment of the County fiscal obligations by a maximum of $25,000 (in aggregate).
It is anticipated that surgical site infection rates for general surgeries will be less than the higher of 2.5% or the SMMC Department of Surgery Average (excluding PAMF), 100% of the time.
PERFORMANCE MEASURE:
|
Measure |
FY 2024-25 Estimated |
FY 2025-2026 Projected |
|
Percentage of times when surgical site infection rates for general surgeries will be less than the higher of 2.5% or the SMMC Department of Surgery Average (excluding PAMF) |
100% |
100% |
EQUITY IMPACT:
PAMF’s continued general surgery coverage positively impacts equitable health outcomes for SMMC’s patients by specifically addressing the surgical needs of the County’s most medically and financially vulnerable patients. SMMC’s patients span a wide spectrum of races, ethnicities, gender, and gender-identities. Within the past 18 months, the largest cohorts of specialty care patients at SMMC were female (53%), Hispanic or Latino (57%), and primarily Spanish-speaking (54%). SMMC strives to eliminate bias in the medical profession by providing culturally competent training to its physicians and by following up with patients to ensure that they continue to have access to specialized care. SMMC specifically tracks physician satisfaction survey results and requires PAMF providers to meet with SMMC and discuss patient feedback to improve patient satisfaction and remove potential barriers to care.
FISCAL IMPACT:
The term of the amended agreement is presently July 1, 2021 through December 31, 2025. The amendment increases the amount payable under the agreement by $710,896.50 to an amount not to exceed $4,265,392.50 for the 54-month term. Funds in the amount of $236,965.5 are included in the SMMC FY 2024-25 Adopted Budget. Funds in the amount of $473,931 are included in the SMMC FY 2025-26 Recommended Budget.
Expenses at SMMC are covered by fees for services or third-party payors whenever possible. The portion of expenses for services provided to the medically indigent or to those covered by programs that do not meet the full costs of care is covered by the County’s General Fund contribution to SMMC and is within the existing annual appropriation.