To: Board of Supervisors
From: Anna Roth, Health Services Director
Report Title: Ratify Contract #23-861 with Alvarez & Marsal Healthcare Industry Group, LLC
☐Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
RATIFY the execution of a contract with Alvarez & Marsal Healthcare Industry Group, LLC (“Alvarez & Marsal”), a limited liability company, in an amount not to exceed $6,139,200 to provide interim Chief Financial Officer services, including management of all day-to-day financial operations of the Health Services Department for the period October 1, 2024 through September 30, 2025.
FISCAL IMPACT:
Approval of this Contract will result in an amount not to exceed $6,139,200 and will be funded as budgeted by the department (20% Hospital Enterprise Fund I, 80% Contra Costa Health Plan Enterprise Fund II).
BACKGROUND:
On September 10, 2024, the Board of Supervisors approved Contract #23-861 with Alvarez & Marsal Healthcare Industry Group, LLC, in an amount not to exceed $6,139,200 to provide interim Chief Financial Officer services, including management of all day-to-day financial operations for the Health Services Department, for the period October 1, 2024 through September 30, 2025. Following the September 10, 2024 Board meeting, the Health Services Department engaged in significant negotiations with the contractor, primarily regarding the allocation of risk between the County and Alvarez & Marsal. Approval of this Board Order will ratify the execution of the contract with the following provisions related to indemnification and liability:
a.The County shall indemnify the Alvarez & Marsal employees acting as officers (Brian Buchanan and Ceci Arriera) to the same extent as the most favorable indemnification it extends to county employees;
b.The County agrees to indemnify and hold harmless each Alvarez & Marsal, its affiliates and their respective shareholders, members, managers, employees, agents, representatives and subcontractors against any and all losses, claims, damages, liabilities, penalties, obligations and expenses, including the costs for counsel or others in investigating, preparing or defending any action or claim, whether or not in connection with litigation in which any Indemnified Party is a party, or enforcing the contract (including these indemnity provisions). This indemnification obligation applies to actions or claims incurred, caused by, relating to, based upon or arising out of (directly or indirectly) Alvarez & Marsal’s performance or nonperformance under the Contract, except for such actions or claims that result primarily and directly from Alvarez & Marsal’s gross negligence or willful misconduct, as determined by a final court judgment.
c.The County acknowledges that Alvarez & Marsal may utilize the services of third party service providers to assist in performing certain services. Under this contract, the County agrees that no Contractor affiliate, subcontractor, nor their respective partners, principals or employees who perform work under the contract will have any liability to County in connection with the services or this contract.
d.The contract limits Alvarez & Marsal’s total liability to the fees Alvarez & Marsal receives under the contract. Alvarez & Marsal will also not be liable for any special, consequential, incidental or exemplary damages or loss, or any lost profits, savings, or business opportunity.
e.The contract also requires the county to maintain public officials errors and omissions liability insurance for Contractor’s personnel performing CFO Duties and Deputy CFO Duties services. Such insurance coverage will be primary coverage to any insurance available to these personnel by Alvarez & Marsal.
f.Lastly, under the contract’s Business Associate Addendum (BAA), Alvarez & Marsal has no obligation to save, hold harmless, or indemnify the County in the event there is a privacy breach or unauthorized access, use, or disclosure of protected health information by Alvarez & Marsal. The County will be responsible for any penalty or fine assessed against County arising from Alvarez & Marsal’s failure to comply with the BAA.
CONSEQUENCE OF NEGATIVE ACTION:
If this contract is not approved, Contra Costa Health may not be able to provide strategic leadership to support existing finance operations as the current Chief Financial Officer/Chief Operational Officer has announced his retirement. Additionally, CCH cannot strengthen and enhance its finance functions to more efficiently support its operations, meet its future challenges and advance the organization’s mission to deliver high-quality healthcare services.