Kern County administrators are recommending a dramatic change in who will run the health care plan that serves 5,100 county employees and 1,250 retired workers, the subject of recent controversy.
The County Administrative Office suggestion is to replace Bakersfield-based Managed Care Systems with a trio of other companies that, combined, would save county government $4.1 million over three years in administration costs -- compared to MCS.
But more than money is in play in the recommendation.
The contract with MCS became controversial last year after the county refused to release a report that investigated the potential conflict of interest created by MCS' close financial relationship with the three local hospitals in the Dignity Health system -- Mercy, Bakersfield Memorial and Mercy Southwest -- that were providing services to plan members.
The county ultimately chose to submit the contract -- an extension of which expires in June -- to the marketplace in the hopes of getting a new partner corporation.
The new report to the Kern County Board of Supervisors -- to be discussed at its Tuesday meeting -- recommends against awarding the new contract to MCS and one other local bidder because both have business connections with physicians or hospitals to which their clients would be routed for services.
Instead the selection committee of two county officials and a state court human resources official, which reviewed proposals from nine separate companies, recommended three business that are headquartered outside California.
The report states the concerns over conflict of interest are "as important" as the financial savings.
"None of the committee members felt that the two local providers, MCS and Foundation, could provide the services without any real or perceived conflict of interest, based on either an economic interest in a provider group or through ownership or management/oversight of the entity by local physicians," wrote Assistant County Administrative Officer Elissa Ladd.
Michael Turnipseed of the Kern County Taxpayers' Association -- who has raised conflict-of-interest questions regarding the MCS contract-- noted the emphasis in an interview.
"The consultants and the selection panel were very concerned with conflict, so they did not select any of the locals," he said. "The conflict was a severe issue. I think they (in the county) want totally, totally clean hands."
Robert Severs, president and chief executive officer of GEMCare, the parent company of MCS, was not pleased Thursday.
"We're disappointed that the CAO has recommended sending 40 jobs out of the state," Severs said. "We'll be there on Tuesday."
The Board of Supervisors can accept the recommendation, stick with MCS or go with another vendor, said Ladd of the county administrative office. Her office's recommendation, she said, will be to approve the three vendors and direct it to negotiate a contract.
"I believe we've done a thorough and fair proces," Ladd said. "We've taken the time to throughly review the proposals and clarify any issues we weren't clear on with all of the proposals."
The recommendation proposes that the county hire Zenith American, based in Florida, to handle claims administration: the handling of payments for services to health care providers.
Clinix, from Columbus, Ohio, would help connect workers with specialists and other specific medical care.
And Burns Consulting -- which has its headquarters in Maumee, Ohio -- would negotiate contracts between the county health care plan and doctors and hospitals.
Splitting up the services, the report to the Board of Supervisors argues, will make it easier for the county to change out providers in the future.
A three-year contract with those three companies would cost the county $9.8 million. Managed Care Systems had offered its services to the county for $13.9 million over three years.