The Reno City Council voted unanimously today to postpone a decision about a new, $2 million, three-year health contract with Renown for hospital services, a provider network, third-party administration service and a city employee health plan.
The contract drew controversy because of its exclusivity to Renown and its partner Hometown Health, which would take over city employee health plans, away from St. Mary’s Regional Medical Center, which has had the contract with the city for years.
After an hour-plus long discussion, it was clear the council and the Mayor had concerns with the Renown plan to provide health coverage for city employees. They said that they wanted more information before making a final decision.
“I wouldn’t support it,” Mayor Hillary Schieve said. “I’ve had great service at Renown, I’ve had great service at St. Mary’s — there’s wonderful physicians and facilities at both — (however), there’s a contract (here) that we have not read.”
Councilmember Paul McKenzie expressed concerns about plan’s exclusivity.
“This creates the image to me, at least in imaging, that they want a monopoly on services,” McKenzie said. He added that he wanted to selected his own providers that he likes. “We have a concern about monopolies — at least I do.”
Renown’s attorney said that it had offered different contract options, including a non-exclusive contract. City documents show that Renown’s cheapest tier was exclusive: “Renown offered rates in three tiers, with the most advantageous pricing being Tier One that includes pricing for exclusive use of the Hometown Health TPA services and the Hometown Health provider network.”
The City of Sparks and Washoe County School District both recently selected Renown and Hometown Health for their health plans.
Councilmember Neoma Jardon had questions about the city’s move to Renown.
“I don’t have enough information and numbers are critical to me,” she said in relation to how Renown would manage the new population of city employees.
Councilmember Naomi Duerr said that she also wanted the freedom to choose providers to ensure treatment consistency between patients and their existing physicians, which could change with the Renown plan.
Dr. Tony Slonim, president and CEO of Renown, defended the proposed contract.
“It’s important that we are here to serve others,” he said. He rejected the use of the word monopoly used to describe the contract.
“Monopoly has a really specific negative connotation. Renown is not a monopoly. We have provider networks that are growing.”
Renown is exploring additional contracting opportunities, he said, including discussions with Reno Diagnostic Center, which currently does not contract with Renown.
Jardon said that she’s not going to agree to the contract based on a promise of opening a dialogue.
St. Mary’s CEO Helen Lidholm was particularly critical of the proposed move to Renown. She called the contract with Renown “privatized bidding behind a smoke screen.”
“Patient are needs more important that one hospital’s bottom line,” she said. “We eagerly participated (in the proposal process) and followed all the rules. St. Mary’s is committed to you … and we want to serve the health care needs of the entire community. I wonder how these savings (proposed by Renown) were calculated.
“When St. Mary’s had the exclusive contract, we did not enforce exclusivity of the contract; however, you are now being asked to accept Renown’s demand for exclusivity,” Lidholm added. “To me, that smells a lot like monopoly. We are utterly unconvinced that these savings (proposed by Renown) are real.”
Lidholm said that St. Mary’s would match Renown’s bid and rates.
The City of Reno’s HR Director Kelly Leerman said that St. Mary’s initially did not appear interested in maintaining the contract.
“Why don’t they want our business? That was my impression of the tone of the presentation,” she said. “Two representatives came from St. Mary’s and (did not) have a lot of enthusiasm about working with (the City).”
City documents described the respective presentations like this:
Senior level management for Renown presented on behalf of their company. The presentation was thorough and enthusiastic, with the representatives answering the Coalition’s questions credibly and completely. The Coalition was impressed with the variety and quality of services offered by Renown, and by its commitment to the region as an employer, healthcare provider, and proactive partner in improving health outcomes in childhood obesity, cardiac health and trauma, among other issues.
The St. Mary’s presentation to the Coalition included fewer details regarding services, focusing on the importance of the confidentiality of the proposal, and emphasizing the need for an exclusive partnership….
Contracting with Renown and Hometown Health also provides an opportunity for the City of Reno to contract with a locally-based organization with a track record of supporting the community. The provider networks are growing, the medical services offered are expanding and being targeted to community needs.
The proposed contract with Renown would create significant financial savings to the city, Leerman added.
The City Council must make a decision about its health plan by October 28, 2015, according to City Manager Andrew Clinger.
The plan will change January 1, 2016. The city spent $25 million last year for its medical plan.
