Northwest Texas Healthcare System will provide hospital services for the City of Amarillo’s 4,500 employees and dependents for at least the next two years.
The Amarillo City Commission voted 3-1 Tuesday to accept Northwest’s hospitalization contract proposal, a five-year, $20.05-million deal that includes three one-year extension options.
Mayor Paul Harpole voted against the new contract with Northwest.
He instead lobbied for rejecting proposals submitted by both Amarillo’s hospitals — Northwest and Baptist St. Anthony’s Health System — in what he called a flawed formal bidding process.
City staff sought proposals for a long-term contract, to begin in 2012, because the previous City Commission recommended testing the market for an open contract after two years under the present exclusive contract with Baptist St. Anthony’s, City Manager Jarrett Atkinson said.
An open contract would have given employees a choice of which hospital to use for services.
The city crafted a request for proposals, with the involvement of hospital executives and with an eye toward weighting the ranking system more favorably for their returning plans that would allow city employees the option to choose hospitals.
Baptist St. Anthony’s proposed a $17.1-million, exclusive five-year contract.
Without exclusivity, the hospital’s five-year projected cost increased to $34.9 million.
That cost Baptist St. Anthony’s points under the proposal ranking system, according to city staff.
Northwest’s bid was the same price under either an exclusive or nonexclusive contract.
Baptist St. Anthony’s non-exclusive proposal showed it will charge the city higher rates for employees who go out-of-network from BSA for care, Commissioner Ellen Green said.
Green and Commissioner Brian Eades argued for honoring the bidding process because the city indicated to hospital executives that an open contract and pricing both would carry weight.
To reject the proposals and extend the current contract would be saying to the hospitals that the open contract wasn’t important, Green said.
The exclusive contract with Baptist St. Anthony’s will expire Dec. 31. It was adopted in 2009.
Before that, Northwest provided hospital services for city employees for 18 consecutive years, according to city staff.
A one-year extension of the current Baptist St. Anthony’s contract would have cost the city roughly $3 million, Assistant City Manager Dean Frigo said.
Commissioner Jim Simms voted for Nortwhest with Eades and Green.
Harpole preferred the extension because the new contract could cost the city an estimated $400,000 more a year, according to staff estimates based on hospital usage and billing in recent years.
However, the savings under the current Baptist St. Anthony’s contract would not have been guaranteed, because most trauma patients are transported by ambulance to Northwest, and those out-of-network costs can’t easily be predicted.
“A couple of traumas could wipe that ($400,000 savings estimate) out real easily,” Frigo said.
Commissioner Lilia Escajada recused herself from the discussion and abstained from voting.
She chairs the Northwest Texas Healthcare System board of governors.
Editor’s Note: The City of Amarillo has been proactive for years in controlling their employee health care costs. They self-administer claims in-house and have implemented innovative risk management techniques that have saved taxpayers money. All of this out in West Texas where residents are raised to be self sufficient and industrious. “If the cattle guard needs fixing, and we have the equipment and knowhow ourselves, why on earth would we pay someone else to fix it?’
Risk managers in Texas should pay a visit to the City of Amarillo and take notes. They are doing things right.