HomeMy WebLinkAbout108367 MERCER HEALTH AND BENEFITS - CONTRACT - GENERAL CORRESPONDENCE - 8852536MERCER
i MARSH MERCER KROLL
.1� GUYCARPENTER OLIVERWYMAN
April 22, 2008
Ms. Amy Sharkey
Comp, Benefits, and HRIS-Manager
City or Fort Collins, Human Resources
215 N. Mason Street
Fort Collins, CO 80522
Via Email (revised, as per email dated 11412008)
Subject: On -Site Clinic Cost -Benefit Analysis
Dear Amy:
Wendy Stone
1225 17th Street, Suite 2200
Denver, CO 80202
303 376 5655 Fax 303 376 0087
wendy.stone@mercermm
mm.merceccom
As per our email exchanges in`eairly January 2008, you had requested that!Mercer prepare
a Cost -Benefit Analysis'for a proposed on -site clinic based on the model developed by
.Hays, the employee benefits broker that serves Larimer County.
It is our understanding that you currently have approximately 1,300 employees and that you
have already established an overall strategy for the proposed clinic. That strategy is outlined
below:
• You would like the clinic to initially be available to employees only, with the intent over
time to open eligibility to dependents as well
• You envision the service mix to initially cover preventive care/screenings,
urgent/emergent and minor acute care, along with providing support for chronic condition
management
• You desire the initial staffing to be with a full-time nurse practitioner and support staff as
necessary
• The clinic will also have the capability to do blood draws for health screening and chronic
disease monitoring (such as lipids and HbA1c, etc). Blood will be sent to a commercial
lab for analysis
In addition, it Is our understanding that your intent is to partner with the Larimer County to
establish this as a joint clinic. However, you desire this Analysis to be done for City of Ft.
Collins employees and claims, not including Larimer County employees and claims.
Proposal Overview
As per Mercer's email on January 4, 2008, Mercer agrees to a reduced pricing option that
utilizes the "Hays model' for this on -site clinic analysis. Please note that we do not feel that
Consulting. Outsourcing. Investments.
Page 2
this model provides as complete of an analysis as we would recommend. Based on the
I -lays model, the savings projections may be understated and expenses overstated.
A Cost -Benefit Analysis will start with an evaluation of existing claims for the proposed
service mix that are now being provided within the community. This provides a baseline
current cost of services. Assumptions will then be made regarding projected clinic utilization.
Mercer has found that utilization is directly related to both the current employee culture,
convenience of the clinic and services, cost/incentives, and a robust communication
campaign. We also find that, with proper incentives, communication and positive user
experiences, utilization increases overtime.; clearly, the higher the utilization, the greater the
benefit from both a cost and clinical outcome standpoint. Utilization projections will be based
on employees only.
In determining costs, Mercer will assume that the clinic will be staffed by nurse
practitioner(s) and appropriate support staff. Mercer will prepare a 5 year projection for costs
that will include staffing, operating expenses and amortized start-up expenses. Savings
projection will include avoided direct medical costs and productivity savings from clinic
utilization vs. time away from work for physician office visits.
The completed Cost -Benefit Analysis will provide data to be used in development of a
business case to justify an on -site clinical facility and will also be utilized as the baseline
target for discussions with clinic vendor candidates.
Key Steps
• Obtain summary level claims data from Great -West
• Analysis of summary level claims, as per the Hays model
• Final document preparation
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Key Deliverables
Cost -Benefit Analysis document with supporting documentation
Fees and Timeline
Final Cost -Benefit Analysis — 3 weeks from receipt by Mercer of all claims data
Total Fees
$9,000
We have found that clarifying our terms of engagement in advance helps to prevent any
misunderstandings later on. Consequently, this letter (with the "Terms and Conditions"),
once accepted by both of us by our signatures below, will reflect our full and complete
understanding and agreement of the terms of our relationship.
We look forward to working with you on this important project. If you have any questions
about these terms, please do not hesitate to call me. If not, please indicate your agreement
to the terms of this letter by signing the enclosed copy of this letter and returning it to us.
PV ¢cat
Page 4
MERCER HEALTH & BENEFITS LLCC
Name: Wendy Stone
(Please Pnnt)
ACCEPTED AND AGREED
MACTEC, Inc.
By:
Name: O k w le5 A- $`
(Please Point)
Copied:
Seth, Serxner, Mercer
Kristen Vener, Mercer
Date: 8pril21 2008
Date: (/<S�6 Ag