TITLE
Recommendation to declare ordinance making findings and determinations regarding contracting for work usually performed by City employees and authorizing City Manager to negotiate and enter a contract with Managed Health Network for employee assistance services, read and adopted as read. (Citywide)
DISCUSSION
Employee Assistance Programs (EAPs) are employer-sponsored programs designed to assist employees and family members with mental health, substance abuse, health/wellness, and work/life issues. Early EAP programs began with employer-sponsored counseling and substance abuse monitoring programs, such as the Department of Transportation (DOT) Drug and Alcohol testing program. However, the standards of EAP resources have been expanded to include those that address marital/family issues, elder care, child care, financial planning, legal services, identity theft remediation, stress/grief counseling, and home management referrals. Such services are considered beneficial resources that promote employee retention and productivity in the workplace.
Additionally, many EAPs include organizational management amenities. These include organizational development and leadership seminars, supervisor training, crisis response services, and conflict-prevention workshops. Collectively, offering a wide breadth of EAP services advances long-term organizational performance and employee well-being.
The City's EAP is currently managed by the Risk Management and Occupational Health Bureau of the Human Resources Department. The program is budgeted for 2.5 full-time employees (FTEs), comprised of one Public Health Professional III, one Public Health Associate II and 0.5 of.an FTE for clerical support. All positions and associated program costs are funded by the Internal Services Fund (IS 390). The City's in-house EAP provided a basic level of service for all employees and eligible dependents, including counseling sessions, Critical Incident Stress Debriefings (CISD) during office hours, employee referrals to community-based program resources, basic counseling related to work/life issues, and Department of Transportation (DOT) Drug and Alcohol referrals.
In March 2013, Management Partners was asked to evaluate the EAP. Their assessment found that, although EAP services have been provided for years, no tracking of cases, counseling sessions or other workload measures occurred prior to October 2012. Approximately 25 new employee cases were initiated during the first six months of FY 13. It is estimated that this volume is a valid sample representation and, accordingly, it is estimated that only 50 cases are initiated on an annual basis. Additionally, Management Partners' assessment concluded that the level of services provided by the City's in-house EAP fell far short of industry standards for an organization the size of the City of Long Beach, and recommended the City evaluate private sector opportunities for the provision of EAP services to its employees.
Limited employee use was linked to the inability of existing EAP staff to execute large scale citywide campaigns to engage employees in the use of EAP services, and some concern that a real or perceived conflict exists because the services were provided by City employees. Furthermore, the small size of the EAP staff complicated the ability to provide services on a year-round basis. During employee vacations, holidays, and time spent at off-site trainings, no other City staff or unit were able to perform these functions on a substitute or acting basis.
Request for Proposals
In an effort to provide a more comprehensive, full-service program, a Request for Proposals (RFP) for employee assistance services was developed. The scope of services in the RFP was based on existing service levels and practices, in addition to services that are considered an industry standard based on the comparative assessment performed by Management Partners.
The contract term associated with the RFP is three (3) years. Contract terms vary greatly among government agencies, but terms up to five (5) years are considered a common practice.
The City's RFP and was released on September 13, 2013. The RFP was advertised in the Press-Telegram on September 18, 2013, and 2,779 potential bidders specializing in professional services were notified of the RFP opportunity. Of those proposers, 43 downloaded the RFP via our electronic bid system. The RFP document was made available from the Purchasing Division, located on the seventh floor of City Hall, and the Division's website at www.longbeach.gov/purchasing. An RFP announcement was also included in the Purchasing Division's weekly update of Open Bid Opportunities, which is sent to 30 local, minority- and women-owned business groups.
Five proposals were received on October 15, 2013. Of those proposers, none were Minorityowned Business Enterprises (MBEs), none were Women-owned Business Enterprises (WBEs), none were certified Small Business Enterprises (SBEs), and none were Long Beach businesses (Local). The proposals were reviewed for conformance with the terms of the RFP, references were checked, and financial statements were reviewed and deemed appropriate.
Local Business Outreach
In an effort to align with our outreach goal, Long Beach businesses are encouraged to submit bidslRFPs for City contracts. The Purchasing Division also assists businesses with registering on the Bids Online database to download RFP specifications. Through outreach, 329 Long Beach vendors were notified to submit proposals, of which six downloaded; however, none submitted a proposal. The Purchasing Division is committed to continuing to perform outreach to local vendors to expand the bidder pool.
Proposal Evaluation
The top four firms submitting proposals were interviewed by a panel that consisted of the Manager of Risk & Occupational Health Services, Administrative Officer of Public Works, Acting Occupational Health Services Officer, and Human Resources Officer - Employee Benefits. The panel unanimously selected MHN, of San Rafael, CA (not an MBE, WBE, SBE, DBE or Local), as the preferred provider based on demonstrated competence, experience in the performance of comparable engagements, expertise and availability of key personnel, and cost proposal.
MHN, a behavioral health subsidiary of Health Net lnc., has been providing employee assistance services for over 38 years and is a provider for over 350 government agencies. MHN utilizes a local provider network that includes 2,000 providers in Los Angeles County. This includes 686 psychologists and 1,069 Master's Degree level counselors. The MHN network of providers includes 118 providers within five miles of the 90802 zip code, 327 providers within 10 miles and 963 within 20 miles. Additionally, the network provides culturally sensitive services, including offering resources in a variety of languages and offering availability during evenings and weekends. MHN provides employee assistance services to a number of cities in southern California, including the City of Los Angeles, as well as the State of California, Long Beach Community College District, Los Angeles Unified School District, Port of Oakland and the City of Phoenix. The City's Human Resources Department staff contacted several of these other agencies to verify the quality of MHN's services and overall performance.
The Financial Management and Human Resources Departments have determined that the proposed MHN employee assistance services are superior in scope and breadth compared to those provided through the in-house program. Additionally, MHN's contract provides services equal to the level received by peer agenCies that utilize contract service providers. These services include, but are not limited to bilingual counseling capacity, 24/7 telephone hotline, greater accessibility to a larger counseling networking, customized communication materials and online resources.
Comparative Cost Analysis and Proposition "l" Finding
The Financial Management Department was asked to analyze the proposal of the recommended vendor and determine whether the findings required by Charter § 1806 can be made. To that end, the Financial Management Department conducted a review of the cost savings by comparing current and proposed employee assistant services and associated costs. A copy of the comparison of services and associated costs has been attached (Attachment A).
Based on MHN's level and cost of services, the finding is made that contracting employee assistance services with MHN meets the test for efficiency and effectiveness as required by Charter §1806 (commonly referred to as "Proposition L"), which requires (1) that the work or services to be contracted for can be performed by a private contractor as efficiently, effectively and at an estimated lower cost to the City than if said work or services were performed by employees of the City; and (2) that the performance of said work or services by a private contractor will not be detrimental or adverse to the best interests of the citizens of the City.
The cost analysis found that the annual employee assistance program costs under the City's current service delivery approach are $283,254, while the annual cost for contracting the service is $101,161, which represents a savings of $182,193. This savings would be partially offset by Citywide ongoing costs associated with the redistribution of various overhead charges which includes health facility rent that would no long be necessary, resulting in a revenue loss to the Health and Human Services Department. These amounts total $46,021 that will be reallocated to other funds. This is a result of the normal allocation of overhead charges using historical methodologies to all funds, including the Internal Services Fund. Therefore, from a Proposition "L" perspective, contracting with MHN for employee assistance services is projected to result in an ongoing annual Citywide savings of $136,072 (or 48 percent).
Staff has also identified transition costs that will be incurred in FY 15. These costs are estimated to be $49,290 and will only be applicable during FY 15. Appropriation for these costs will be removed from the EAP program budget in FY 16 and will contribute to the total Citywide savings of $136,072.
The attached Ordinance contains the findings required by Charter §1806 (Proposition "L"). The Ordinance, upon adoption by the City Council, authorizes the City Manager to negotiate and execute a contract with MHN for a period of three years.
Staff Impacts
In FY 14, the Occupational Health Services Officer met with the potentially impacted employees to apprise them of the RFP process. There are two (2) budgeted FTEs associated with the in-house program, a Public Health Professional III (classified) and a Public Health Associate (unclassified). Additionally, this program is budgeted for 0.5 FTE that provides parttime temporary clerical support through a staffing agency. This position was budgeted for $11,611 in FY 13 while actual expenditures were $6,701. The City's contract for this parttime temporary support was eliminated.
Presently, both positions are vacant due to a transfer and a retirement, and no layoffs will occur. In the absence of an active in-house program, employees with assistance needs are being referred to their medical provider.
Human Resources met and conferred with the lAM in FY 2015. Their concerns were addressed and the Meet and Confer process was concluded.
Contract Award and Quality Assurance
The City Manager will, per the Council action, have the authority to negotiate and execute a contract with MHN. Based on the costs presented in the MHN proposal, City Management is recommending awarding the contract to provide EAP services that meet best practices and the standards exhibited by peer agencies. It is currently envisioned that MHN would assume all employee assistance services responsibilities on the first day of the contract.
Assuring that a contractor can provide employee assistance services efficiently and effectively is of paramount importance. To that end, a number of controls have been established. Existing management staff within the Benefits Division of Human Resources Department will manage the contract, ensuring that MHN meets all requirements and expectations.
This matter was reviewed by Deputy City Attorney Gary Anderson on April 20, 2015 and by Budget Manager lea Eriksen on April 21 ,2015.
TIMING CONSIDERATIONS
City Council action to adopt Specifications No. RFP HR13-057, authorize the City Manager to negotiate and execute a contract, and declare the Proposition "L" Ordinance concurrently is requested on May 12, 2015 in order to begin implementation of a more comprehensive, full-service EAP for City employees and their families, and to begin realizing the associated cost savings as soon as possible.
FISCAL IMPACT
After the program is fully implemented in FY 16, the Insurance Fund (IS 390) would realize savings in the amount of $182,093 offset by $46,021, which would be reallocated to other funds resulting in ongoing annual Citywide savings in the amount of $136,072 and will be included in the FY 16 budget process. The estimated savings are based on the cost analysis performed by the Budget Office, which concludes that contracting with MHN for EAP programming needs will result in a superior level of service.
The cost of the contract, estimated to be $101,161 per year, would be funded from appropriation currently budgeted for the in-house EAP program. This amount includes the option of adding up to five (5) percent (or $4,817) above the base contract amount of $96,344. These funds are budgeted in the Insurance Fund (IS 390) in the Human Resources Department (HR). There is no local job impact associated with this recommendation.
SUGGESTED ACTION
Approve recommendation.
BODY
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LONG BEACH MAKING FINDINGS AND DETERMINATIONS REGARDING CONTRACTING FOR WORK USUALLY PERFORMED BY CITY EMPLOYEES AND AUTHORIZING THE CITY MANAGER TO NEGOTIATE AND ENTER A CONTRACT WITH MANAGED HEALTH NETWORK FOR EMPLOYEE ASSISTANCE SERVICES
Respectfully Submitted,
DEBORAH R. MILLS
DIRECTOR OF HUMAN RESOURCES
JOHN GROSS
DIRECTOR OF FINANCIAL MANAGEMENT
APPROVED:
PATRICK H. WEST
CITY MANAGER