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APIR 2 3 1991 "'."April 12, 1991 I TO: Indian River County ATTENTION: Mr. Jack Price FROM: Mary L' Stanford, CLU, ChFC RE: Preferred Provider Negotiations/ Stanford Assistance _ Stanford & Co. qq BOOKC::.� PALE 1 � Insurance Consultants In April, we recommended the County initiate direct negotiations with Indian River Memorial and Doctors' Clinic for preferred provider discounts. This recommendation was predicated on our recent analysis of the County's health plan, which revealed that payments to these entities by the health plan accounted for a substantial amount of the plan's total paid claims. During 1 /1 /90-12/31 /90, for example, the County's health plan paid approximately $545,000 to Indian River Memorial and approximately $200,000 to Doctors' Clinic. The total amount paid to these entities is a still greater sum when considering additional amounts paid by employees/dependents in accordance with deductible and co-insurance provisions of the benefit plan. The County's current health plan insurer/administrator offers a PPO program, but it does not include Indian River Memorial, and includes only very few physicians from Doctors' Clinic. The County is missing a significant opportunity for reduction of claims costs through the present arrangement. If the County proceeds to remarket the group health plan coverages via a formal Request for Proposals, it may possibly receive proposals from other insurers or claims administrators which include preferred provider arrangements with either or both Indian River Memorial and Doctors' Clinic. There is, however, no assurance that this will be the case. This consultant has represented other clients in direct negotiation with physicians and hospitals throughout Florida, and has been successful in achieving significant preferred provider discounts in behalf of those clients. For example, in one instance the preferred provider agreement between the 1 provider and our client resulted in a* discount which would otherwise not have been available at all (35%). In another instance, the result was a discount of greater magnitude than offered by the provider via a formal PPO arrangement with an insurer/administrator (i.e., the formal PPO discount was 25%, and we achieved for this particular client a 40% discount). We are offering our services to Indian River County to assist it with direct negotiations with Indian River Memorial and Doctors' Clinic for the reasons recited above. While we cannot guarantee the final outcome of such negotiations, we believe our experience in this area will significantly improve the County's opportunity to reduce claims costs in the health plan. Our best estimate of the consulting fees necessary to complete negotiations with Indian River Memorial and Doctors' Clinic is $5,500. Prepared by: Mary L Stanford, CLU, ChFC 16