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Vero Beach officials skip bidding for city employee health clinic Seek to award $500,000 contract to hand-picked vendor
BY MARY BETH MCDONALD - COLUMNIST (Week of April 16, 2009)

Vero Beach city officials, bypassing the customary procedure of putting major contracts out for bid, are seeking to launch a part-time health clinic for municipal employees by negotiating a half-milliondollar contract – without public scrutiny — with the company that submitted the most costly proposal.

The city officlals recommended to the City Council on April 7 that the city negotiate a contract with Crown Consulting and CareHere to operate the clinic, which would provide basic medical services and prescriptions to those city employees and their families who chose to use it rather than their regular doctor.

While officials estimated that the clinic would save the city of Vero Beach $267,000 in the first year, municipal employees would not be required to use the clinic and may still use their insurance policies provided by the city. The $267,000 in savings assumes 100 percent participation by the 503 city employees and their family members, which appears rather optimistic.

The City Council, which at its April 7th meeting approved negotiation of the contract on a 4-0 vote with little discussion, was told that 12 health care groups had submitted proposals and was apparently unaware that no formal bidding process was at play in the choice of Crown Consulting and CareHere.

In recommending that the city negotiate a contract with CareHere and Crown Consulting to operate the clinic, city officials based their decision on what is known as a Request for Information — a non-binding agreement to provide information and estimates for public officials to gauge a company’s ability to provide the services rendered – rather than a Request for Proposal in which vendors provide a formal bid to provide the services requested.

“We did not go out for a formal bidding proposal,” said Risk Manager Barbara Morey. “We published an ad in the paper for a Request for Information. Our purchasing agent, John O’Brien, spoke with the Gehring Group (the city’s lead consultant). The Gehring Group contacted 11 vendors that they were familiar with and who specialize in clinics like this and they made the recommendation to us.”

Morey said staff chose this route because they were worried the City Council would quash the proposed clinic if they had to spend too much taxpayer money.

“We didn’t break any rules,” she said. “We followed the law because we put an ad in the paper and that is all we are required to do. We didn’t go out for a formal bid because if the costs came back and were too expensive, the Council would have rejected it.”

City Attorney Charlie Vitunac defended the steps taken by Morey, Human Resources Director Robert Anderson and Purchasing Manager John O’Brien in considering the proposals.

“There was no requirement for this to go out for bids,” he said. “It’s just a good practice to get competition.

“You can base the awarding of contract just on an RFI if the information was in essence a proposal of what they would do and how they would do it, not just information about their company. The human resources department was satisfied it had enough information to make an informed decision.”

At least one local doctor disagrees. Dr. Samuel Sadow, a board certified cardiac surgeon and CEO of University Medical Clinics, which operates six walk-in clinics, three of which are in Indian River County, tried to speak at an April 7 City Council meeting when the health clinic contract was discussed, but was rebuffed by Mayor Sabe Abell because the time for public speaking had passed.

Dr. Sadow alleges that the bidding – or non-bidding — for this project was, at a minimum, an unfair process. “The Human Resource Director and the Risk Manager for the City of Vero Beach along with their consultant (the Gehring Group), had already decided who was to get this bid before the bids were even sent out,” Saddow told Vero Beach 32963. “It was done quietly, without the City Council’s knowledge or the public knowing about it.”

There does appear on the surface an effort to keep the Council out of the loop in making the decision to open the clinic, though Council members had every right to ask for more information before voting to go forward with the recommendation.

The information the Council acted upon to proceed with the CareHere and Crown Consulting negotiations consisted of a brief presentation by Anderson and a one-page document provided ahead of the April 7 council meeting which did not break down how bids were evaluated or how an estimated cost-savings of $267,000 was to be achieved.

That memo, dated March 31, 2009 from Anderson and signed off on by Gabbard to the Mayor Abel and Council Members, stated:

“City staff has been researching means to control increasing costs associated with employee health insurance. One of the means that has been successful in other municipalities is the opening and operation of an employee wellness center.

“Such a center is able to provide basic medical services and generic prescriptions at a lower cost to the City than urgent care or emergency room facilities and traditional office visits.

“Based on experience in other municipalities, we estimated the cost to operate the Health Center 24 hours a week during the first year, including the renovation of a City-owned building to be $579,000.

“Taking these expenses into account, the City estimates a reduction in future costs of $267,000 the first year compared to the costs if we do not open a clinic.

“We also project a reduction of projected costs of approximately $2.4 million over a three-year period. We believe we can reduce future costs even more with a joint City-County venture, which will allow longer clinic hours and shared costs.

“On August 7, 2008 City staff issued a Request For Information from providers as to the costs and service provided for an employee health center.

“The Human Resources Director and Risk Manager also made site visits to Health Centers in the Cities of Port Saint Lucie and Palm Bay. The City received twelve proposals for providing these services.

“The Gehring Group evaluated these proposals and provided their findings to the City.

“After reviewing all the proposals to determine the best combination of services, costs, and provider experience, the Human Resources Director, the Risk Manager and I (City Manager Gabbard) recommend that the City award the contract to implement and operate the Health Center to Crown Consulting and CareHere.”

There was very little discussion – and even fewer questions – prior to the vote.

What the Council might not be aware of is the cozy relationship that appears to exist between the city’s West Palm Beach health care consultant, the Gehring Group, and CareHere. Of three cases Vero Beach 32963 is aware, Gehring has recommended CareHere in each instance – Vero Beach, Port St. Lucie and Charlotte County.

In documents received by Vero Beach 32963 the CareHere bid to operate in Vero Beach was for $503,000, while there was a low bid from a company called HealthStat for $347,335. The CareHere proposal was the highest of the 11 received.

“That’s nuts” said Don Winders from Care ATC, another vendor whose bid was rejected despite being $100,000 dollars less than the bid from CareHere. “The Gehring Group approached our company and asked us to give a bid which was going to be sent to three or four different places in Florida including Charlotte County, Palm Beach and Vero Beach. This was last September.

“It was not tailored for Vero Beach. Listed were general questions such as do we have electronic medical record capability; will we do annual physicals and drug testing.

“I heard that the only reason that we lost in Charlotte County to CareHere was because one of the questions was ‘Do you presently have clinics in the state of Florida.’

“We have clinics everywhere, but having a clinic in the state of Florida should not have lost us the contract. Our organization has been in business for years; we have a track record.

“CareHere has only been in business three or four years. That’s shocking really.”

Winders was surprised that he also lost the Vero Beach bid to CareHere. “They should have at least let us know, but we never did find out about Vero Beach. I thought it was a dead issue,” he said.

Sadow, whose bid came in higher than all the others when it was eventually considered by the city after the process had closed, offered this critique of how CareHere might operate the clinic.

“The county is interested in obtaining the best health care system for their employees,” he said. “The city should be interested in that too, but it doesn’t appear to be that way.

“Clinics such as the one the city chose are often run by virtual physicians. They don’t even have a medical doctor in the office. Our clinic by the Indian River Medical Center is already set-up, in operation and we are open 40 hours per week. The city would have no startup costs.”

What also seems problematic with the recommendation is how the officials reached the cost-savings figure of $267,000 in the first year. The Assistant Human Resource Manager for Port St. Lucie, Sharon Park, said her city employees do not utilize their city-run health clinic enough for the city to make any money from the venture. “Only 25 percent of our employees even use the clinic,” she said.

What also remains an open question is if the county or school board will partner with the city to help defray costs. The city of Sebastian has also expressed an interest in operating a health clinic with the city.

However, none of those entities are willing to move forward until they see more financial information.

In fact, when the subject of the health center was first raised publicly last December, the Council’s only instruction to the city manager was to see if the school board or county was interested in joining with the city in operating the health clinic.

To the surprise of some, at the April 7 meeting the Council was asked to vote on entering contract negotiations with no assurance that anyone was interested in partnering with the city.

“This was a back-door deal from start to finish,” said former Mayor Bill Jordan. “This type of thing has got to stop. We (Jordan and Dr. Saddow) went to the county commission and she (Morey) and the city’s consultant were pushing for the same group the City Council had voted on. They aren’t even local. That group is out of Nashville.

“We need to keep business here in Indian River County where we know who the doctors are and how well-qualified they are and whether or not they are board certified. Right is right and the whole thing is just not right.”

Despite voting to go forward with the CareHere negotiations, the City Council seems to want to have some of these questions answered before committing any more money toward the project.

“We should be able to trust the staff in making recommendations to us,” said Council Member Fromang after the April 7 meeting. “In any case, they were supposed to make their recommendations based on a partnership with the county and the school district.”