City of Amarillo Selects One Hospital – Estimated Savings of $500,000


Baptist St. Anthony’s Health System was selected Tuesday to be the exclusive provider of hospital services to Amarillo municipal employees, a right held for more than two decades by the system’s chief competitor.

 The Amarillo City Commission unanimously voted to approve an acute care hospital services agreement with BSA, which narrowly bested Northwest Texas Healthcare System in competitive bidding for the work.

The city of Amarillo spent about $4.5 million last year on acute inpatient and outpatient hospital care for the estimated 4,300 employees, retirees and dependents enrolled in its self-insured medical plan, consultant Neal Welch said.

The proposal BSA tendered for an exclusive contract could result in a savings of $400,000 to $500,000 a year, said Welch, who spent the past two months assisting city administrators in evaluating the two hospitals’ offers.

The contract with BSA will take effect Friday and last one year, with the possibility of four subsequent one-year extensions.

Only 4.3 points separated the two hospitals’ proposals in scoring used by Welch and city staff to compare the proposals. The scoring method took into account such things as the prices the hospitals offered for types of services and the range of services to be included in the proposals, Welch said.

Northwest didn’t ask for exclusivity in its offer, Northwest representative Melanie Dennis said, in questioning the scoring method used to make the decision.

Rather, Northwest proposed that the city use both facilities and allow its medical coverage plan participants to choose which hospital they would use at the beginning of the health plan year.

“For a four-point value difference, you’ve chosen one hospital,” Dennis said.

“Also we’re looking at the savings too,” Commissioner Madison Scott replied.

BSA tendered both a nonexclusive offer and an exclusive offer, with the potential of exclusivity resulting in better proposed prices, said Welch said.

“We do not demand exclusivity in any way,” BSA Director of Managed Care Collin Hays told commissioners. “We had a nonexclusive proposal (submitted to the city), but it wouldn’t provide the savings.”

The nonexclusive contract offer from BSA still scored higher than the Northwest proposal in the evaluation.

Trauma services that Northwest provides that aren’t offered by BSA were accounted for in the scoring method, Assistant City Manager Dean Frigo said.

Northwest will continue to provide trauma services, but city health plan participants will be transferred to BSA if they are hospitalized or scheduled for outpatient services, Welch said.

“This has been a good process that we’ve gone through, with the two hospitals playing by the same rules, competing for the city’s business,” Commissioner Jim Simms said. “We appreciate greatly what the hospitals have done and the numbers that they put forward.”

Editor’s Note: The City of Amarillo is well known in the insurance industry as a trailblazer in stablizing their group medical costs. Jim Parrish, Dean Frigo, John Ward are three individuals who could teach the big insurance consulting firms a thing or two.  If those three ever decide to open up an insurance consulting firm, they would no doubt help other Texas political subdivisions millions of dollars.

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