VA's $136M contract with TriWest Healthcare Alliance Corp for patient care services shows mixed value and competition

Contract Overview

Contract Amount: $136,180,371 ($136.2M)

Contractor: Triwest Healthcare Alliance Corp

Awarding Agency: Department of Veterans Affairs

Start Date: 2014-10-30

End Date: 2015-09-30

Contract Duration: 335 days

Daily Burn Rate: $406.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE INCENTIVE

Sector: Healthcare

Official Description: IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC) ADDITION OF VETERANS ACCOUNTABILITY AND CHOICE ACT (CHOICE) REQUIREMENTS.

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85053

State: Arizona Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $136.2 million to TRIWEST HEALTHCARE ALLIANCE CORP for work described as: IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC) ADDITION OF VETERANS ACCOUNTABILITY AND CHOICE ACT (CHOICE) REQUIREMENTS. Key points: 1. The contract's value proposition appears fair, with a per-unit cost benchmark that is not explicitly detailed but implied to be within a reasonable range for the services provided. 2. Competition dynamics indicate a full and open process, suggesting a robust market engagement that should theoretically drive competitive pricing. 3. Risk indicators are moderate, with the fixed-price incentive contract type potentially aligning contractor and government interests but requiring careful performance monitoring. 4. Performance context is limited by the provided data, but the contract duration and delivery order structure suggest a defined scope of work. 5. Sector positioning places this contract within the healthcare services industry, specifically focusing on physician offices and community care for veterans. 6. The contract was awarded to TriWest Healthcare Alliance Corp, a significant player in veteran healthcare services, indicating a focus on established providers.

Value Assessment

Rating: fair

Benchmarking the value of this contract against similar agreements is challenging without more granular data on specific services rendered and their associated costs. However, the fixed-price incentive (FPI) contract type suggests an attempt to balance cost control with performance incentives. The total award amount of over $136 million for a one-year period indicates a substantial investment in veteran healthcare infrastructure. Further analysis would require comparing the per-patient cost or cost-per-service against industry averages and other VA contracts for similar community care programs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is a positive indicator for price discovery and value for money. This implies that multiple qualified vendors had the opportunity to bid, and the contract was awarded to the vendor offering the best value. The specific number of bidders is not provided, but the 'full and open' designation suggests a competitive environment that likely pressured bidders to offer competitive pricing.

Taxpayer Impact: A full and open competition process generally benefits taxpayers by fostering a competitive environment that can lead to lower prices and better service quality compared to sole-source or limited competition awards.

Public Impact

Veterans in Arizona (ST: AZ, SN: ARIZONA) are the primary beneficiaries, gaining access to community-based healthcare services. The contract facilitates the delivery of physician office services, aligning with the Veterans Accountability and Choice Act (Choice) requirements. Geographic impact is concentrated in Arizona, providing localized healthcare solutions for the veteran population in that state. Workforce implications include potential job creation within TriWest Healthcare Alliance Corp and its network of healthcare providers in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if incentive targets are not carefully managed within the FPI contract structure.
Dependence on a single large contractor (TriWest) for a significant portion of veteran care in Arizona could limit future flexibility.
Ensuring consistent quality of care across all providers within the TriWest network requires robust oversight.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that should yield fair pricing.
The contract aims to improve veteran access to care by leveraging community providers, addressing potential VA facility capacity issues.
The fixed-price incentive structure can align contractor performance with government objectives if well-defined.

Sector Analysis

This contract falls within the Healthcare sector, specifically focusing on the provision of medical services through community-based networks. The market for such services is substantial, driven by government programs like the VA's efforts to expand healthcare access for veterans. Comparable spending benchmarks would involve analyzing other large-scale contracts for healthcare services awarded by federal agencies, particularly those focused on community care or specific patient populations. The trend towards outsourcing certain healthcare services to private providers is common across government healthcare initiatives.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract (SS: false, SB: false). Therefore, the primary impact on small businesses would be through potential subcontracting opportunities with the prime contractor, TriWest Healthcare Alliance Corp. The extent of small business subcontracting is not detailed, but large prime contracts often include clauses requiring a certain percentage of work to be subcontracted to small businesses, which can foster ecosystem growth.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs (VA). Given the nature of healthcare services, the VA would likely implement performance monitoring, quality assurance reviews, and financial audits to ensure compliance with contract terms and service standards. The Inspector General's office for the VA would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract. Transparency would be enhanced through regular reporting requirements from the contractor.

Related Government Programs

Department of Veterans Affairs Community Care Programs
Veterans Health Administration (VHA) Contracts
TRICARE Program Contracts (DoD)
Medicare and Medicaid Services Contracts (HHS)

Risk Flags

Potential for cost creep due to FPI contract structure.
Reliance on a single large contractor for regional care.
Need for robust quality assurance and performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $136.2 million to TRIWEST HEALTHCARE ALLIANCE CORP. IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC) ADDITION OF VETERANS ACCOUNTABILITY AND CHOICE ACT (CHOICE) REQUIREMENTS.

Who is the contractor on this award?

The obligated recipient is TRIWEST HEALTHCARE ALLIANCE CORP.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $136.2 million.

What is the period of performance?

Start: 2014-10-30. End: 2015-09-30.

What is the historical spending pattern for similar patient-centered community care contracts awarded by the VA to TriWest Healthcare Alliance Corp?

Analyzing historical spending patterns for similar contracts is crucial for understanding the VA's long-term investment in community care and TriWest's role. While specific historical data for this exact contract addition is not provided, the VA has significantly increased its spending on community care over the years, particularly following the implementation of the Choice Act and subsequent legislation like the MISSION Act. TriWest has been a major contractor for the VA's community care network in various regions, including the Western United States. Examining prior contract values, durations, and scope changes for TriWest's VA contracts would reveal trends in program expansion, cost evolution, and the VA's reliance on this specific provider for fulfilling healthcare access mandates. This historical context helps in assessing whether the $136 million award represents a typical investment or a significant escalation.

How does the per-unit cost of services under this contract compare to other VA community care contracts or private sector benchmarks?

A direct per-unit cost comparison is difficult without specific service line data (e.g., cost per physician visit, cost per procedure) and the associated volumes. However, the contract type (Fixed Price Incentive) suggests that the VA aimed to establish a baseline cost and incentivize TriWest to perform efficiently. Generally, VA community care contracts aim to be cost-effective compared to private sector benchmarks, leveraging economies of scale and negotiated rates. The 'full and open competition' award mechanism should theoretically drive pricing towards market competitiveness. If the per-unit costs are found to be significantly higher than comparable VA contracts or private sector rates for similar services in Arizona, it would raise concerns about value for money. Conversely, if they are competitive or lower, it indicates efficient procurement.

What are the key performance indicators (KPIs) used to measure the success of this contract, and how has TriWest performed against them?

The success of this contract hinges on specific Key Performance Indicators (KPIs) that would be defined in the contract's Performance Work Statement (PWS). These typically include metrics related to access to care (e.g., appointment wait times), quality of care (e.g., patient outcomes, adherence to clinical guidelines), patient satisfaction, and administrative efficiency (e.g., timely claims processing, accurate billing). For a contract like this, KPIs would likely focus on ensuring veterans receive timely appointments with qualified providers in the community, that the care meets VA standards, and that patient satisfaction is high. Performance against these KPIs would be monitored by the VA contracting officer's representative (COR). Without access to performance reports or audit findings, it's impossible to definitively state how TriWest has performed, but consistent reporting and potential incentive adjustments would reflect their adherence to these metrics.

What is the track record of TriWest Healthcare Alliance Corp in managing large federal healthcare contracts, particularly with the Department of Veterans Affairs?

TriWest Healthcare Alliance Corp has a significant and long-standing track record of managing large federal healthcare contracts, most notably with the Department of Defense (TRICARE) and the Department of Veterans Affairs (VA). They have been a major regional contractor for the VA's community care network, responsible for serving veterans in multiple states across the Western United States. Their experience includes managing vast networks of healthcare providers, processing claims, and ensuring access to care. While generally considered an experienced provider, like any large contractor, TriWest has faced scrutiny and challenges in the past related to network adequacy, administrative processes, and patient access issues in certain regions or contract periods. Their ability to secure and manage substantial contracts like this $136 million award suggests a continued confidence from the VA in their capabilities, albeit with ongoing oversight requirements.

What are the potential risks associated with the Fixed Price Incentive (FPI) contract type used for this award?

The Fixed Price Incentive (FPI) contract type introduces specific risks that require careful management by both the contractor and the government. For the government, the primary risk is that the final contract price could exceed the target price if the contractor incurs higher costs than anticipated, although the incentive structure aims to limit this. The government must ensure that the target cost, target profit, and ceiling price are realistically established. For the contractor, the risk lies in managing costs effectively to achieve the target profit; if costs exceed the target significantly, their profit margin will be reduced, potentially impacting their financial stability or willingness to bid on future contracts. A key risk for the VA is ensuring that the incentive targets are well-defined, measurable, and truly drive desired performance outcomes without encouraging the contractor to cut corners on quality to meet cost targets. Effective oversight is critical to monitor cost accumulation and performance achievement.

How does this contract contribute to the VA's broader strategy for addressing veteran healthcare access and capacity challenges?

This contract is a direct component of the VA's strategy to expand healthcare access for veterans by leveraging the community care network. The Veterans Accountability and Choice Act (CHOICE) and subsequent legislation were enacted to allow veterans to receive care from non-VA providers when VA facilities are unable to provide timely services or are geographically inaccessible. Contracts like this one with TriWest enable the VA to tap into a broader pool of healthcare providers, reducing wait times and increasing patient choice. By outsourcing certain services, the VA aims to alleviate pressure on its own infrastructure and personnel, ensuring veterans can access necessary medical attention more readily. This approach is critical for meeting the healthcare needs of a large and diverse veteran population across the country.

Industry Classification

NAICS: Health Care and Social Assistance › Offices of Physicians › Offices of Physicians (except Mental Health Specialists)

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 16010 N 28TH AVE, PHOENIX, AZ, 85053

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $136,180,371

Exercised Options: $136,180,371

Current Obligation: $136,180,371

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA79113D0054

IDV Type: IDC

Timeline