HomeMy WebLinkAboutMINUTES - 02262002 - SD3 TO: ~ BOARD OF SUPERVISORS _�.. � Contra
FROM: John Sweeten "+ y
ICosta
County Administrator
DATE: February 26, 2002 ``'° ...� County
SUBJECT: STATUS REPORT ON THE HEALTH SERVICES MANAGEMENT AUDIT
SPECIFIC REQUESTS}OR RECOMMENDATION{S}&`BACKGROUND AND JUSTIFICATION
RECOMMENDED ACTION
I, CONSIDER a report by the County Administrator on the Auditor-Controller's review of net County
costs incurred by the Health Services Department in the three fiscal years ending June 30,2001.
H. ADOPT the Auditor-Controller's conclusion of the review that budget overruns mentioned in the
Grand Jury report No. 0103 did not occur.
III.APPROVE and AUTHORIZE the County Administrator or designee to execute on behalf of the
County, contract#47910 with The Lewin Croup, Inc. in an amount not to exceed$74,260, for the
period from February 20, 2002 through June 30,2002,to provide an assessment of the strengths and
weaknesses of the organizational structure of the County Health Services Department in relation to
the legal and fiscal environment in which it operates.
IV. APPROVE and AUTHORIZE the County Administrator or designee to execute on behalf of the
County,contract##47637with Pacific Health Consulting Group LIC in an amount not to exceed
$30,000,for the period from February 20, 2002 through June 30, 2002,to assess the Health Services
Department's collaborative efforts to secure and maintaiii the enrollment of children in the Healthy
Families Program, and to maximize revenue in this program.
BACKGROUND
On July 17,2001,the Board directed the County Administrator to facilitate a management audit of the
Health Services Department to hear recommendations for maximizing cost efficiency. On December 11,
2002,the Board decided which components the audit should have and directed the County
Administrator to issue a Request for Proposals for four of them:
A. Assess the strengths and weaknesses of the organizational structure of the Health Services
Department in relation to the legal and fiscal environment in which it operates.
B. Review the Hospital Medicare and Medi-Cal cost report to identify ways,if any,by which
revenues may be enhanced.
C. Review Department medical staffing ratios at the Martinez Detention facility.
D. Assess the Department's collaborative efforts to secure and maintain the enrollment of children
in the Healthy Families Program, and to maximize revenue in this program.
CONTINUED ON ATTACHMENT: _X_YES SIGN A RE: .,
—,'RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S): _ _ _ _ ___
ACTION OF 804V D N -R bog u,c �� ,� �� PROVE AS RECOMMENDED OTHER
VOTE OF SU ISORS I HEREBY CERTIFY THAT THIS IS A TRUE
UNANIMOUS{ABSENT - AND CORRECT COPY OF AN ACTION TAKEN
} AND ENTERED ON THE MINUTES OF THE
BOARD OF SUPERVISORS ON THE DATE
AYES; NOES SHOWN.
ABSENT ABSTAIN:
ATTESTED -
CONTACT: JOHN SWEETIE ,CLERK OF THE BOARD OF
SUPERVISORS AND COUNTY
ADMINISTRATOR
CC:
William Walker,MD,Director,Health Services
Pat Godley,CFO,Health Services
Ken Corcoran,Auditor-Controller
B DEPUTY
2
A RequestFor Proposals for item(o)'had been issued by the Health Services Department, and a notice
requesting proposals for items(a),(b)and(d)was issued by the County Administrator on December 15,
2001.
In addition,the:Board:directed the Auditor-Controller to determine approved net County costs for the
Health Services Department including carry over and supplemental appropriations and to compare these
to year-end actual net County cost for the 1998-99 through the 2000-01 fiscal years.
The Board also directed the County Administrator to:
A. Work with the Health Services Department and the Purchasing Manager on a review of group
purchasing practices for pharmaceutical and medical supplies.
B. In coordination with the Mental Health Division and the County's Director of Capitol Facilities
and Debt Management,perform a comprehensive review and document Department efforts to
avoid out-of-county placements in mental health facilities.
The status report includes the Auditor-Controller's review of the Health Services Department's net
County costs and the results of the Request For Proposal. The reports for the remaining issues will be
presented to the Board of Supervisors in June 2002.
DISCUSSION
1. Auditor-Controller's Review of net County costs
The 2000-01 Contra Costa County Grand Jury,in report No. 0103,made several findings and
recommendations regarding alleged budget overruns and Health Services Department financial.
mismanagement.
While acknowledging that the Grand Jury report may have been based on incomplete and factually
misunderstood data,on July 17, 2001,the Board directed the County Administrator to identify specific
program areas for a management audit.
On December 11,2001,the County Administrator reported to the Board the audit topics suggested for
selection,among them a detailed review by the Board to determine approved net County costs for the
Health Services Department, including carry over and supplemental appropriations, and to compare
these to year-end actual net County costs for the 1998-99 through the 2000-01 fiscal years. The Board
directed the Auditor-Controller and the County Administrator's Office to prepare a report that reviews
these combined factors. In addition,the Board Chair asked that an update for the fiscal year 2001-2002
be provided of the County Administrator's 1999 survey of the ten largest urban California counties
supporting health services delivery with General Fund dollars.
This report concludes that the budget overruns mentioned in the Grand Jury report No.0103 did not
occur.
Attachment I is a summary of the fiscal reports in the three fiscal years ending June 30,2001 and lists all
the items the Board requested be reviewed. The item definitions are:
"Approved net County cost"is the difference between expenditures and revenues adopted by the Board
during its Budget Hearing.
"Mid-year adjustments"(See Attachment I,column 2)include:
* Appropriations to recognize new revenue and increase expenditures accordingly,
+ Cost-Of-Living-Adjustments for negotiated pay increases effective October 1 of the fiscal year,
which are budgeted centrally and allocated to the departments Enid-year,and
• Appropriations for new projects authorized by the Board of Supervisors.
"Prior Year Carry Forward Adjustments"(column 3)mean appropriations from the prior year for prior
year encumbrances.
"Final Adjusted Budget"(column 4)is the appropriation for revenues and expenditures including all
mid-year appropriation adjustments and carry-forward adjustments,
"Year-to-date Actual"(column 5)consists of the actual expenditures and revenues occurring throughout
the year,and in this particular three-year review until the end of each fiscal year.
3
"Encumbrance"(column 6)means commitments,(i.e.purchase orders,contracts,etc.)for goods or
services not yet performed.
"Unencumbered Balance"(column 7)is calculated as the Final Adjusted Budget Appropriation minus
the"Year-to-date Actual"minus Encumbrances. If this number is positive,the department spent less
than appropriated.
"Variance"(column 12)for revenues is calculated as the Final Adjusted Budget Appropriation minus
the"Year-to-date Actual"revenues. If this number is positive,the department accrued more revenue
than expected.
"Variance"(column IC)for net County cost is calculated as"Unencumbered Balance"of appropriations
minus"Variance"in estimated revenues. If this number is positive,the department achieved a fund
balance and incurred less net County cost than appropriated.
The following are the answers to the Board of Supervisors inquiries:
For fiscal years 1998-99 through 2000-01 ending June 30,2001:
a) What were the a - e ate ex editures revenues and resulting net CoUnty costs authorized in the
adopted Final Budgets for these budget units? The aggregated expenditures are shown in column I of
Attachment 1,the aggregated revenues are shown in column, 8,and the resulting net County costs are
shown in column 13. It is noteworthy that expenditures show a maintenance budget with only slight
increases in some Public Health, Substance Abuse and Mental Health mandated State programs. At the
same time, State and federal revenues decline from FY 99-00 to FY 00-01. In order to fill the gap,the
Board approved increased net County cost during its Budget Hearings.
b) What expenditure,revenue and resulting net County cost adjustments including carr -overs were made
during the fiscal year to the adopted Final Bud ets for these budget units by the Board of Supervisors?
Adjustments include Board-approved mid-year appropriation adjustments shown in column 2 for
expenditures,and in column 9 for revenues.During these three years, adjustments account for 5%to 8%
increases in expenditures and revenues and recognize new federal, State and local funds.
c) Did these mid-war adjustments result in a net CojMty cost for these budget units that differed from the
net County cost pproyed in the adopted Final Budgets? If yes,what were the reasons? The mid-year
adjustments resulted in net County cost as part of the normal budgeting process:
• During FY 98-99, $2.4 million General fund dollars were appropriated in Board-
approved Cost-of-Living-Adjustments(COLA). COLA.dollars-are appropriated
centrally in a General Government Budget Unit, and allocated during the second quarter
of the fiscal year.
• During FY 99-00, $5.million was appropriated for Cost-of-Living-Adjustments,and
$500,000 in new local Tosco refinery revenues were appropriated for capital
improvements to the Pittsburg Los Medanos Community Clinic.
• During FY 00-01, $500,000 in Tosco refinery revenues were appropriated for capital
improvements to the Los Medanos Community Clinic, $648,000 was appropriated by
the Board to the Homeless Program in response to a local emergency of homelessness,
and$624,000 was appropriated for Retiree Health Benefits and one-tune allocations for
expansion of emergency shelter services.
d) What were the ear-end actual net County costs for these budget units for those ears? Column 16
shows year-end actual net County costs and fund balances. For the Budget Units listed in this report,
total fund balance was between$118,000 and$646,000, or 0.07%to 0.32%of total adjusted
appropriations.
e) Did the ear-end actual net CoUp1y costs for these budget units for those years exceed the amounts
authorized by the Board of Supervisors? Colum 16 shows that at no time during the three fiscal years
ending June 30, 2001 diel the total actual net County cost for these budget units exceed the amounts
authorized by the Board of Supervisors.
Conclusion
Based on the foregoing discussion and the attached schedules we conclude that the budget overruns
mentioned in the`Grand;Jury report No.0103 did not occur.
The Board of Supervisors,however,inquired further to review whether net County cost increases from
budget year to budget year were comparable to other counties. In 1999,the Board had directed the
County Administrator to conduct a survey among the ten largest California urban counties to determine
whether net County cost for Contra Costa Health Services was comparably low or high. As part of the
4
Board's direction for the review of Health Services net County cast,the 1999 survey was updated.
Attachment H shows the 1999 net County costs comparison between counties and the 2001 updated
numbers as requested by the Board. The County Administrator adjusted the 1999 net County cost
amount for Contra Costa Health Services to exclude appropriations and net County cost for the
Homeless Program in an effort to clarify the comparison to the other seven responding counties,where
the Homeless Program is budgeted separately from Health Services.
For both surveys, 8 of 10 counties responded: In 1999,Contra Costa had appropriated 7.65%of the
,Health Services Budget as net County cost,the lowest net County cost appropriation of all 8 counties.
In the year 2001,Contra Costa appropriated the third lowest net County cost of all 8 counties. Those
counties operating hospital systems showed comparably much higher net County cost increases than the
counties without hospital systems. Among the 5 counties operating hospitals,Contra Costa County
appropriated the lowest net County cost.
While cost increases and revenue shortages for health systems are pervasive,Contra Costa was able to
contain cost expansion very well compared to other counties, and maintained the"same level of services
during the last three fiscal years.
2. Report on the Results the Request for Proposals
The County Administrator's Office with support from the Employment and Human Services Contracts
and Grants staff issued nationwide Requests For Proposals on December 15,2002. The County
received seven entries and a screening team comprised of staff from the County Administrator's Office,
the Auditor-Controller,Employment and Human Services Department and Health Services Department
reviewed the proposals on January 30{h, 2002. The team unanimously voted to accept the following
proposals:
• The Lewin Group, Inc. to assess the organizational structure of the Health Services Department.
• Henry Zaretzky and Associates, hie. to provide a further assessment of the organizational
structure on conjunction with the Lewin Group.
• Toyon Associates,Inc.to review the Hospital Medicare and Medi-Cal cost report to identify
ways,if any,by which revenues may be enhanced.
• Pacific Health Consulting Group LLC to assess the,Department's collaborative efforts to secure
and maintain the enrollment of children in the Healthy Families Program,and to maximize
revenue in this program.
The proposals suggest an intensive work plan between February 20,2002 and early June 2002 to meet
with staff from Health Services,Human Resources,Risk Management,and the County Administrator's
office to identify possible cost savings measures and to report back to the Board as early as possible.
During Budget Hearings, the Board appropriated$200,000 in the Unfunded Mandates Program in the
Board of Supervisors'budget for the delivery of these consultancy services. The contract proposals
total$134,260, a saving of$65,740 in net County cost.
The proposals for cost reimbursement are:
• The Lewin Group,Inc.: a fixed price of$74,260 including travel costs.
• Henry Zaretzky and Associates,Inc. up to$25,000 for up to 91 hours of consultation and
travel reimbursement.
• Toyon Associates,Inc.: a fixed price of$5;000.
• Pacific Health Consulting Group LLC: $30,000 for 195 hours of consultation.
Cast reimbursement includes the consultants' report to the Board of Supervisors in June 2002.
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ADDENDUM
D.
February 26 2002.
ACCEPTED the report from.the County Administrator on the review of net County costs
incurred by the Health Services Department in the three fiscal years ending June 30,
2001,DIRECTED that a copy this report be provided to the Grand Jury and include a
Tetter from the Chair,Board of Supervisors,summarizing this report and requesting in the
future that the Grand Jury contact the County Administrator prier to the issuance of their
reports, and APPROVED and AUTHORIZED the County Administrator, or designee,to
execute contracts with The Lewin Group, Inc., and Pacific Health Consulting;Group
LLC, for an aggregate total of$104,260,for reviews of the Health Services Department's
organizational structure, Medicare and Medi-Cal costs reports,and Healthy Families
enrollment.