City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Human Resources
Meeting Date: April 14, 2025
Report #:2502-4229
TITLE
Approval of Contract Amendment Number 1 to Contract Number S22183286 with The Permanente Medical Group Inc in an Amount Not to Exceed $100,000 for Pre-employment and Other Occupation-Related Medical Services; CEQA Status – Not a Project.
RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or designee to execute Amendment No 1. to Contract No. S22183286 (Attachment A), with The Permanente Medical Group Inc., to provide on-going pre-employment and other occupation-related medical services in an amount not-to-exceed $100,000. This amendment results in a revised total contract not-to-exceed amount of $150,000.
BACKGROUND
Pre-employment medical exams assess an individual’s physical and mental ability to ensure they can safely and effectively perform the essential job duties. These exams confirm job fit, particularly for positions requiring specific health standards like heavy lifting, bending, or operating machinery. They also help identify restrictions that could increase the risk of injury or illness, as well as allowing for necessary accommodations. For high-risk roles in fields like construction or public safety, the exams ensure the employee's fitness and protect others in the workplace. Additionally, certain industries require these exams to comply with regulations, such as California Occupational Safety and Health Administration (CalOSHA) or Department of Transportation (DOT) standards, to reduce the risk of accidents.
ANALYSIS
This report recommends an amendment to the existing contract for pre-employment and other occupation-related medical services. This contract is critical to ensuring the continued provision of pre-employment medical services for ongoing and future hires in positions that require medical clearance. In compliance with employment laws, pre-employment medical exams must adhere to ADA and HIPAA regulations. These services are best administered by a team of third-
party qualified healthcare professionals. The proposed amendment to the contract with The Permanente Medical Group Inc. will extend the not-to-exceed amount to $150,000. This will cover services already provided in Fiscal Year 2025 and ensure the effective administration of pre-employment medical exams and other occupation-related medical services through June 14, 2026.
Using a third party to administer pre-employment medical exams and other occupational medical services is essential because qualified healthcare professionals have certified expertise to navigate medical guidelines and processes. Additionally, healthcare professionals stay up to date on new laws, medical procedures, and prescription drugs. Their day-to-day work is supported by established systems that manage exam administration and processing, minimizing the time a new hire employee needs to wait to get confirmation of employment with the City of Palo Alto. Human Resources (HR) staff has recognized the value of utilizing third-party certified healthcare professionals, and the continuation of these essential services is critical to effectively administer pre-employment medical exams for current and future new hires in classifications that require medical clearance. Human Resources is in the process of starting an RFP as required by the City’s municipal code. Human Resources will initiate the RFP process in parallel with this contract amendment to establish a new three-year contract starting in 2026, and seeks approval of an amendment to the current contract with The Permanente Medical Group Inc., starting in April 2025. The total amount of this contract was impacted by the increase in recruitments and need for pre-employment services. This amendment will compensate The Permanente Medical Group Inc. for services rendered from October 2023 to March 2025 as well as ensure effective administration of current and new pre-employment medical services through June 14, 2026. Once the RFP process is complete, the selected service provider will offer ongoing services.
•Duration: 12 months contract.
•Scope of Services: Administration of all pre-employment medical services, including but not limited to:
oAdministration and processing of pre-employment medical exams oDrug and alcohol specimen collection as required by specified job classifications oDOT drug and alcohol testing as required by specified job classifications
FISCAL/RESOURCE IMPACT
There is no fiscal impact as the fund has sufficient budget to cover the remaining FY 2025 and ongoing costs. The budget for these third-party services is included in the General Benefits Fund (Internal Services Fund) operating budget.
•Cost of 12-month contract amendment: $100,000
oAbout $50,000 is expected to be spent in FY 2025 and $50,000 in FY 2026.
STAKEHOLDER ENGAGEMENT
As part of the amendment to the existing contract and RFP process, key stakeholders including Human Resources, Administrative Services, the City Attorney’s Office, and third-party administrator collaborated to ensure current services have not been interrupted. Human Resources outlined requirements, while Administrative Services directed the contracting process and documentation. Human Resources is working with these stakeholders to complete a new contract for a third-party service provider and will continue to work with these stakeholders through the RFP process.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because adopting an amendment to this contract is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. CEQA Guidelines section 15378(b)(5).
ATTACHMENTS
Attachment A: Contract S22183286 Amendment No. 1 - The Permanente Medical Group, Inc.
APPROVED BY:
Sandra Blanch, Human Resources Director