To: Board of Supervisors
From: Dr. Ori Tzvieli, Interim Health Services Director
Report Title: Novation Contract #24-794-6(19) with BHC Heritage Oaks Hospital, Inc. (dba Heritage Oaks Hospital)
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
APPROVE and AUTHORIZE the Interim Health Services Director, or designee, to execute on behalf of the County Novation Contract #24-794-6(19) with BHC Heritage Oaks Hospital, Inc. (dba Heritage Oaks Hospital), a corporation, in an amount not to exceed $320,000, to provide inpatient psychiatric hospital services to County-referred children, adolescents and adults who are Medi-Cal beneficiaries, for the period July 1, 2025 through June 30, 2026, and a six-month automatic extension through December 31, 2026, in an amount not to exceed $160,000.
FISCAL IMPACT:
Approval of this Novation Contract will result in annual expenditures of up to $320,000 for FY 2025-26 and will be funded 100% by Mental Health Realignment funds.
BACKGROUND:
This Contract meets the social needs of County’s population by providing inpatient psychiatric hospital services to County-referred adults and adolescents. This Contractor has been a longstanding partner in previous projects, fostering a deep understanding of our organization's mission, values, and long-term objectives. The Behavioral Health Services Division (BHSD) has contracted with BHC Heritage Oaks Hospital, Inc. since November 2006.
This Contract is entered into under and subject to the following legal authorities: Welfare and Institutions Code, § 5600 et seq. (The Bronzan-McCorquodale Act); 5600 and 14053; California Code of Regulations (“CCR”), Title 9, § 523 et seq. (Community Mental Health Services); California Government Code §§ 26227 and 31000, and U.S. Code Title 42, Section 1396d, and has a direct impact on the health and safety of our community. The Behavioral Health’s Quality Management, Utilization Management and Contract Monitor Staff meet on a regular basis to ensure monitoring and performance measures in the contract are upheld. This Contract was approved by Health Services Personnel to ensure there is no conflict with labor relations. Per Administrative Bulletin 600.3 physician services are exempt from solicitation requirements.
In November 2024, the Purchasing Services Manager executed Novation Contract #24-794-6(18) with BHC Heritage Oaks Hospital, Inc., in an amount not to exceed $200,000, for the provision of inpatient psychiatric hospital services, for the period July 1, 2024 through June 30, 2025, which included a six-month automatic extension in an amount not to exceed $100,000 through December 31, 2025.
Approval of Novation Contract #24-794-6(19) replaces the automatic extension under the prior Contract and allows the Contractor to continue providing inpatient psychiatric hospital services through December 31, 2026.
CONSEQUENCE OF NEGATIVE ACTION:
If this Novation Contract is not approved, BHSD clients will not receive inpatient psychiatric hospital services from Contractor’s facility resulting in decreased availability of inpatient psychiatric care for patients experiencing severe and persistent mental illness.
CHILREN’S IMPACT STATEMENT:
This program supports the following Board of Supervisors’ community outcome: “Communities that are Safe and Provide a High Quality of Life for Children and Families”. Expected program outcomes include a decrease in the need for inpatient care and placement at a lower level of care.