Administrative
Report
H.16., File # 24-0074 Meeting Date: 2/6/2024
To: MAYOR AND CITY COUNCIL
From: DIANE STRICKFADEN, HUMAN RESOURCES DIRECTOR
TITLE
APPROVE A CONTRACT WITH OCCU-MED, LTD., FOR PRE-EMPLOYMENT PHYSICAL EXAMINATION SERVICES FOR A THREE-YEAR TERM BEGINNING JANUARY 23, 2024 THROUGH JANUARY 22, 2027 FOR AN AMOUNT NOT TO EXCEED $88,000 PER YEAR
EXECUTIVE SUMMARY
Occu-Med, Ltd. (Occu-Med) administers a full range of pre-employment medical exam services for the City, in order to ensure job candidates are found medically suitable for the position to which they are being hired. The services provided include scheduling medical examinations, obtaining medical histories, reviewing examination results, performing pre-employment drug screens, and providing the City with medical suitability determinations or potential requests for accommodation. These services currently cost about $75,000 per year for the administration of 180 pre-employment medical exams.
Due to generalized medical inflation, along with recent changes in pre-employment drug testing laws, the costs of pre-employment physicals are increasing. As the City’s existing Agreement with OccuMed has expired, it is necessary to establish a new agreement in order to continue to use OccuMed’s services. Staff recommends approval of an updated three-year agreement with Occu-Med, Ltd, for an amount not to exceed $88,000 per year. Funding for the services is available in the Human Resources Department annual budget.
BACKGROUND
Since 2003, the City has partnered with Occu-Med to provide pre-employment medical exams. In 2017, when the City changed risk pools, the City signed an independent agreement and contracted directly with Occu-Med in order to continue using their efficient, cost-effective, and HIPAA compliant pre-employment medical examination services. As that agreement has expired, staff is recommending a new three-year agreement be approved to accommodate updated pricing and changes to the pre-employment drug testing program. Human Resources staff recently conducted a survey of other public agencies and found that most agencies either use Occu-Med, or administer their pre-employment medical program in-house. As a result, Occu-Med is effectively a sole source provider, and staff recommends engaging them again for such services.
In January, 2024, the State of California adopted new legislation changing the pre-employment drug testing landscape, making it unlawful to discriminate against a person based upon use of cannabis off the job. As previous drug screen testing technology only could identify whether an applicant had used cannabis within the past few weeks, that technology became immediately non-compliant with the new law. In response, Occu-Med partnered with LabCorp, who provides a new testing method
H.16., File # 24-0074 Meeting Date: 2/6/2024
the new law. In response, Occu-Med partnered with LabCorp, who provides a new testing method that only screens for active cannabis usage, which carries an increased cost. It is necessary to deploy this new testing method for safety sensitive positions as the City has an ongoing obligation to comply with the Drug Free Workplace Act.
The City currently conducts approximately 180 pre-employment medical exams per year, for an annual cost near $75,000. In general, examination fees vary widely based on job classification and what tests are administered. Prices range from $300 for an administrative job to $1,000 for a public safety position. The “average cost” is about $418 per exam. To include the new drug screen method, the price will increase to an average of $493 for each exam, resulting in annual costs up to $88,000. Staff is working to evaluate which positions will require the new drug screen testing in an effort to minimize cost increases.
COORDINATION
This report was prepared by the Human Resources Department. The contract was approved as to form by the City Attorney’s Office.
FISCAL IMPACT
The attached three-year agreement will not exceed $88,000 per year, with an estimated total cost of $264,000 over three years. Funding is available in the Human Resources Department annual operating budget.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Agmt - Occu-Med, Ltd.
· Insurance - Occu-Med, Ltd.