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HomeMy WebLinkAboutAgenda 05-19-2026; 8-d - Renewal of Health Services Agreement with Southern Health Partners for Medical Services at the Orange County Detention Center 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: May 19, 2026 Action Agenda Item No. 8-d SUBJECT: Renewal of Health Services Agreement with Southern Health Partners for Medical Services at the Orange County Detention Center DEPARTMENT: Sheriff's Office ATTACHMENT(S): INFORMATION CONTACT: Renewal Letter Dated March 19, 2026, Sheriff Charles S. Blackwood, for Contract Period July 1, 2026 — 919.245.2900 June 30, 2027 Jennifer Galassi, Legal Advisor to the Sheriff, 919.245.2952 PURPOSE: To approve a renewal of the Health Services Agreement with Southern Health Partners for medical services at the Orange County Detention Center. BACKGROUND: Since 2009, the County has contracted with Southern Health Partners (SHP) to provide a structured and comprehensive medical program for inmates housed in the Orange County Detention Center (OCDC). SHP is experiencing wage inflation and competing agencies offering substantially higher pay, leading to its decision to impose a four percent (4%) increase on the base fee and per diem rate. FINANCIAL IMPACT: Upon approval of the renewal, the monthly contract price will increase $17,887.80 per year. The new contract price will be $465,081.96 annually ($38,756.83 per month). If the average daily population (ADP) exceeds 140 inmates, the compensation payable to SHP shall be increased by a per diem rate of $1.82 for each inmate over 140. As in the previous two (2) fiscal years, SHP has continued the restructuring of the contract to shift the costs of medical supplies, over-the-counter medications, and labs, applying them toward the cost pool accounting totals to accrue against the annual pool limitation. If these costs were to exceed the annual cost pool limit, SHP would seek reimbursement from the County for the excess amount. The first tier of the annual outside cost pool is $60,000, and the second tier is $140,000. ALIGNMENT WITH STRATEGIC PLAN: This item supports: • GOAL 2: HEALTHY COMMUNITY OBJECTIVE 1. Improve harm reduction, prevention, and support services for adults and children experiencing behavioral health issues, substance use disorder, and intellectual or developmental disability OBJECTIVE 4. Reduce impacts and barriers for justice-involved children and adults through deflection, diversion, therapeutic interventions, and re-entry support, including housing. 2 RECOMMENDATION(S): The Manager recommends that the Board approve the renewal of the Health Services Agreement with Southern Health Partners for medical services at the Orange County Detention Center; and authorize the Chair to sign on behalf of the Board. Southern Health s `llr Partners March 19, 2026 Sheriff Charles Blackwood Orange County Sheriff's Office 106 East Margaret Lane Hillsborough, NC 27278 Re: Health Services Agreement Dear Sheriff Blackwood: I hope this letter finds you well and pleased with the program of services at the Jail provided by Southern Health Partners (SHP). I am writing to acknowledge annual pricing/terms for continuation of the inmate medical program for the July 2026-2027 contract period. We continue to see unprecedented wage inflation and competition for skilled nursing staff, commonly contending with local hospitals, facilities and agencies offering wage rates far in excess of our site budgets. This is making it necessary for us to account for now-current costs of providing competitive salaries/benefit packages to keep good nurses and maintain contract staffing levels. Labor costs are one very substantial area of our operating budget, among many other ever-increasing costs of doing business in correctional care. Therefore, SHP will need a rate adjustment on the contract this year. Additionally, with many of our existing contracts, there is a need for restructuring along the same lines as how our newer contracts are priced considering the now-current industry standard, with certain service items covered by SHP for inclusion in the cost pool, rather than under the base fees. For Orange County's contract, there is a need to shift the cost of medically generated hazardous waste to the cost pool. Going forward under the new arrangement, the costs for this item will still be paid for by SHP, with the County continuing to receive the benefit of SHP's bulk pricing discounts from our various vendors, but the amounts will be applied toward the cost pool accounting totals to accrue against the annual pool limitation. Only if the annual cost pool limit is used up fully for any given contract period, then at that point SHP would begin to seek reimbursement from the County for any costs in excess of the cost pool limit, as is done under our current normal practice. Costs for medically generated hazardous waste have run approximately a total of $440.00 over the last twelve months. Under this new structure, we can limit our annual increase to four percent (4%) on the base fee and per diem rate for the July 2026-2027 period, making use of the cost pool to help offset an otherwise higher annual adjustment that would be needed to get all operating cost-items and expenses adequately accounted for under the site budget if we were to continue under the existing terms. Be assured we take into consideration site-specific circumstances in reviewing each customer contract individually before formulating renewal pricing. Despite being faced with rising costs, we absorb as much as we reasonably can in an effort to support minimal annual adjustments for customers. 203 0 Ha rn 1 Ito n PI ace Blvd,Ste.140 Southern Health 4 Partners Sheriff Charles Blackwood Orange County Sheriff's Office Page 2 March 19, 2026 A summary of the renewal pricing and amended terms is listed below: Contract Period: July 1, 2026 through June 30, 2027 Annual increase on contract with change to move costs of medically generated hazardous waste to costpool: 4% on the base fee and per diem rate Base annualized fee: $465,081.96 ($38,756.83 per month) Per diem rate greater than 140 inmates: $1.82 $60,000.00 (first tier); Annual outside cost pool limits: $140,000.00 (second tier) For the historical contract record and to confirm the renewal of our Health Services Agreement with Orange County, I will ask you to keep this letter and return a signed copy to me on or before May 19, 2026 either by email at Jeanette.rod rig uez(a)southernhealth partners.com or by fax at 423-305-6964. If this letter is not signed in a timely manner, then billing will be prorated back to the contract inception date. Except as modified above, or as may be further amended or modified by mutual agreement between the parties, all provisions of the contract will remain in full force and effect during the renewal period. If you would like to discuss any aspects of our services or have any questions, then please feel free to reach out to me at any time by email at Jeanette.rodriguez(absouthernhealth partners.com or by telephone at 423-553-5635, ext. 922, and I would be happy to assist. Sincerely, SOUTHERN HEALTH PARTNERS, INC. ORANGE COUNTY, NC BY: �PiG�v�Qi �OG�LLd�'ttPit, Jeanette Rodriguez OO Contracts Administrator cc: Chief Deputy Tina Sykes Jennifer Galassi, Legal Advisor 203 0 Ha rn 1 Ito n PI ace : . Ste.140