VA's $276M patient care contract with TriWest Healthcare Alliance Corp shows fair value, but competition could be stronger

Contract Overview

Contract Amount: $276,071,711 ($276.1M)

Contractor: Triwest Healthcare Alliance Corp

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-10-01

End Date: 2018-09-30

Contract Duration: 364 days

Daily Burn Rate: $758.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE INCENTIVE

Sector: Healthcare

Official Description: IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC). OY4 RENEWAL

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85053

State: Arizona Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $276.1 million to TRIWEST HEALTHCARE ALLIANCE CORP for work described as: IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC). OY4 RENEWAL Key points: 1. The contract's value appears reasonable when benchmarked against similar healthcare services. 2. While a full and open competition was conducted, the number of bidders was not specified, impacting price discovery. 3. Performance risk appears low given the established nature of the services and contractor. 4. This contract is a key component of the VA's strategy to expand community-based healthcare access. 5. The services provided are critical for veterans in Arizona, supplementing direct VA care. 6. The fixed-price incentive contract type aims to balance cost control with performance quality.

Value Assessment

Rating: fair

The contract's total value of approximately $276 million over one year suggests a significant investment in community care. Benchmarking against similar large-scale healthcare service contracts awarded by the VA and other federal agencies indicates that the pricing is within a reasonable range. However, without detailed cost breakdowns or comparisons to specific unit costs for services rendered, a definitive assessment of 'excellent' value is challenging. The fixed-price incentive structure implies an expectation of cost efficiency, but the ultimate value realization depends on performance outcomes and negotiated incentives.

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 achieving competitive pricing. However, the specific number of bidders and the details of the bidding process are not provided in the summary data. A robust competition typically involves multiple qualified bidders submitting proposals, leading to a more rigorous evaluation and potentially lower prices. The absence of this detail makes it difficult to fully assess the effectiveness of the competition in driving down costs and ensuring the best value for the government.

Taxpayer Impact: A full and open competition is generally beneficial for taxpayers as it encourages a wider range of providers to compete, potentially leading to more cost-effective solutions and better service delivery. This process helps ensure that taxpayer funds are used efficiently by selecting the most qualified and competitively priced offer.

Public Impact

Veterans in Arizona benefit from expanded access to healthcare services outside of traditional VA facilities. The contract facilitates the delivery of physician services, including primary and specialty care, to eligible beneficiaries. This initiative aims to reduce wait times and improve patient satisfaction by leveraging community healthcare providers. The program supports the VA's mission to provide comprehensive healthcare to its service members and their families.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific bidder count limits assessment of competitive intensity.
Limited insight into specific performance metrics and incentive achievement.
Potential for scope creep or unmanaged cost increases if incentives are not carefully structured.

Positive Signals

Awarded through full and open competition, suggesting broad market engagement.
Fixed-price incentive contract type aligns contractor incentives with performance and cost goals.
Contract duration of one year allows for periodic review and adjustment of services.
Focus on patient-centered community care addresses a critical need for veterans.

Sector Analysis

This contract falls within the Healthcare sector, specifically the provision of physician services. The market for federal healthcare contracts is substantial, with agencies like the Department of Veterans Affairs being major purchasers. Comparable spending benchmarks for large-scale healthcare service contracts often run into hundreds of millions of dollars annually, reflecting the complexity and demand for these services. This contract represents a significant portion of the VA's strategy to utilize community providers to supplement its direct care capabilities, particularly in regions where VA facilities may be geographically dispersed.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions or subcontracting requirements for this contract. As a large-dollar award, it is possible that subcontracting opportunities may exist for smaller firms within the healthcare delivery network. However, without explicit details on subcontracting plans or goals, the direct impact on the small business ecosystem remains unclear. Further analysis would be needed to determine if small businesses are being effectively integrated into the service delivery chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs' contracting officers and program managers. The Inspector General's office for the VA would have jurisdiction to investigate any potential fraud, waste, or abuse related to the contract's execution. Transparency is facilitated through contract award databases, but detailed performance reports and audits are typically internal or subject to specific disclosure rules. The fixed-price incentive structure itself serves as a form of oversight by linking payment to performance outcomes.

Related Government Programs

VA Community Care Network (CCN)
TRICARE Prime Contracts
Medicare Administrative Contracts
Federal Employee Health Benefits Program (FEHBP)

Risk Flags

Potential for reduced competition in future contract renewals.
Risk of service disruption due to contractor performance issues.
Limited transparency on specific performance metrics and cost drivers.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $276.1 million to TRIWEST HEALTHCARE ALLIANCE CORP. IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC). OY4 RENEWAL

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 $276.1 million.

What is the period of performance?

Start: 2017-10-01. End: 2018-09-30.

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

TriWest Healthcare Alliance Corp has a significant history of managing large-scale healthcare contracts, notably with the Department of Defense's TRICARE program and the Department of Veterans Affairs. They have previously administered regional networks for VA community care programs, demonstrating experience in coordinating care delivery across a broad geographic area and managing provider networks. Their experience includes handling claims processing, provider credentialing, and ensuring access to care for beneficiaries. While their track record generally indicates capability in managing complex healthcare logistics, specific performance metrics and any past issues or disputes related to contract execution would require a deeper dive into performance evaluations and contract history.

How does the pricing of this contract compare to similar VA community care contracts awarded in the same period?

Benchmarking the pricing of this $276 million contract requires comparing it to similar large-scale VA community care contracts awarded around the 2017-2018 timeframe. Contracts for regional healthcare services, especially those involving broad networks of providers and comprehensive care management, often represent substantial investments. Without access to detailed unit costs for specific services (e.g., per-visit costs, procedure rates), a precise comparison is difficult. However, the overall contract value, when considered as a per-beneficiary cost or as a percentage of total healthcare spending for the covered population, can be assessed against industry averages and other VA contracts. Given the scale and scope, the annual cost appears substantial but potentially aligned with the market for such extensive service provision.

What are the key performance indicators (KPIs) and incentive structures within this fixed-price incentive contract, and how were they measured?

The provided data indicates a 'FIXED PRICE INCENTIVE' (FPI) contract type, which means the final price is determined by adjusting the target price based on the contractor's performance relative to target costs. For an FPI contract, there are typically target cost, target profit, minimum/maximum profit, and a sharing ratio. The 'incentive' aspect means that if the contractor performs better than the target cost (i.e., saves money), both the government and the contractor share in the savings. Conversely, if costs exceed the target, both share in the overruns, up to a ceiling. Key performance indicators (KPIs) would likely relate to access to care (e.g., appointment wait times), quality of care metrics, patient satisfaction, and potentially administrative efficiency. The specific KPIs and how they were measured and linked to the incentive structure are not detailed in the summary data but are crucial for understanding the contract's value and effectiveness.

What is the historical spending trend for similar VA community care contracts over the past five years?

Historical spending on VA community care contracts has shown a significant upward trend, particularly following legislative changes like the VA MISSION Act of 2018, which aimed to expand veterans' access to care in the community. Prior to and around the period of this contract (FY2018), the VA was already increasing its reliance on purchased care. Spending in this category has grown from tens of billions annually to potentially exceeding $100 billion in recent years across various community care programs. This specific contract, valued at approximately $276 million for one year, represents a component of that broader trend. Analyzing year-over-year spending on similar regional network contracts would reveal the scale and growth of this outsourcing strategy.

What are the potential risks associated with relying on a single large contractor like TriWest for a significant portion of community care in Arizona?

Relying on a single large contractor like TriWest for a substantial portion of community care in Arizona presents several potential risks. Firstly, there's a risk of reduced competition and potentially higher costs in future contract renewals if alternative providers are not cultivated or if TriWest's market position becomes too dominant. Secondly, service disruptions could occur if the contractor faces financial difficulties, operational failures, or labor disputes, impacting veterans' access to care. Thirdly, there's a risk of vendor lock-in, making it difficult and costly to switch providers or bring services back in-house. Finally, a lack of robust oversight or performance management could lead to a decline in the quality of care or inefficient use of funds if the contractor does not meet expectations.

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: $276,073,265

Exercised Options: $276,073,265

Current Obligation: $276,071,711

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA79113D0054

IDV Type: IDC

Timeline