VA's $421M PCCC contract to TriWest Healthcare Alliance Corp shows mixed value and competition

Contract Overview

Contract Amount: $421,351,175 ($421.4M)

Contractor: Triwest Healthcare Alliance Corp

Awarding Agency: Department of Veterans Affairs

Start Date: 2016-10-01

End Date: 2017-09-30

Contract Duration: 364 days

Daily Burn Rate: $1.2M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE INCENTIVE

Sector: Healthcare

Official Description: IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC). EXPAND PROVIDER ELIGIBILITY FOR CHOICE AUTHORIZATIONS.

Place of Performance

Location: GOLDEN, JEFFERSON County, COLORADO, 80401

State: Colorado Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $421.4 million to TRIWEST HEALTHCARE ALLIANCE CORP for work described as: IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC). EXPAND PROVIDER ELIGIBILITY FOR CHOICE AUTHORIZATIONS. Key points: 1. Contract value appears high relative to the short performance period, suggesting potential for overpayment. 2. Full and open competition was utilized, which is positive for price discovery. 3. The fixed-price incentive contract type introduces performance-based risk for the contractor. 4. The contract is for physician services, a core healthcare function. 5. Colorado is the primary geographic focus for this contract. 6. No small business set-aside was applied, indicating a focus on larger prime contractors.

Value Assessment

Rating: fair

The contract's total value of over $421 million for a single year (364 days) appears exceptionally high for the described services. Benchmarking against similar physician office contracts is difficult without more granular service details, but the per-day cost is substantial. The fixed-price incentive structure aims to control costs, but the overall expenditure warrants scrutiny for value for money, especially given the short duration.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple qualified vendors had the opportunity to bid. This level of competition is generally favorable for achieving competitive pricing and ensuring that the government receives the best value. The number of bidders is not specified, but the process itself indicates a robust market for these services.

Taxpayer Impact: Full and open competition helps ensure that taxpayer dollars are used efficiently by driving down prices through market forces.

Public Impact

Veterans in Colorado are the primary beneficiaries, receiving access to physician services. The contract supports the delivery of physician services, likely including primary care and specialist consultations. The geographic impact is concentrated in Colorado. The contract supports healthcare professionals within the physician services sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High total contract value for a short performance period raises concerns about cost efficiency.
Lack of specific performance metrics or outcomes makes it difficult to assess effectiveness.
The contract type (fixed-price incentive) can lead to cost overruns if not managed carefully.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
The fixed-price incentive contract type aligns contractor incentives with performance.
Focus on physician services addresses a critical healthcare need for veterans.

Sector Analysis

This contract falls within the Healthcare sector, specifically the provision of physician services. The market for healthcare services, particularly for government contracts, is substantial and highly competitive. This contract represents a significant portion of spending within the Offices of Physicians (except Mental Health Specialists) NAICS code for the specified period and region. Comparable spending benchmarks would typically involve analyzing other VA contracts for similar services or contracts awarded by other federal health agencies.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This suggests that the primary award went to a large corporation, and the direct impact on the small business ecosystem for this specific contract may be limited unless TriWest Healthcare Alliance Corp engages them as subcontractors.

Oversight & Accountability

Oversight would typically be managed by the Department of Veterans Affairs contracting officers and program managers. The Inspector General's office for the VA would have jurisdiction for audits and investigations. Transparency is facilitated by contract award data, but detailed performance reports and cost breakdowns are often not publicly available.

Related Government Programs

VA Community Care Network (CCN)
TRICARE contracts
Medicare/Medicaid physician services contracts

Risk Flags

High Cost Per Day
Potential for Cost Overruns
Lack of Publicly Available Performance Data

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $421.4 million to TRIWEST HEALTHCARE ALLIANCE CORP. IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC). EXPAND PROVIDER ELIGIBILITY FOR CHOICE AUTHORIZATIONS.

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 $421.4 million.

What is the period of performance?

Start: 2016-10-01. End: 2017-09-30.

What was the specific rationale for awarding such a large sum for a single year of physician services?

The substantial award amount of over $421 million for a 364-day contract period suggests a significant scope of services or a high volume of patient encounters anticipated. Without further details on the specific services covered (e.g., primary care, specialist consultations, geographic coverage within Colorado, patient population size), it is difficult to definitively justify the cost. It's possible this contract was intended to cover a broad range of physician needs across a large veteran population in Colorado, or it may represent a transition or bridge contract. The fixed-price incentive (FPI) contract type implies that there were target costs and performance goals, with potential for award fee or penalty based on achieving those targets. However, the sheer magnitude for a year necessitates a thorough review of the underlying cost estimates and projected utilization rates to ensure value for money.

How does the per-day cost of this contract compare to similar VA physician service contracts?

Calculating a precise per-day cost yields approximately $1.16 million per day ($421,351,174.88 / 364 days). This figure is exceptionally high when compared to typical contracts for physician services. While specific benchmarks vary widely based on the type of physician (primary care vs. specialist), geographic location, and patient volume, daily costs for physician services contracts are usually in the tens or hundreds of thousands of dollars, not over a million. This high per-day cost suggests either an extremely broad scope of services, a very large patient population being served, or potentially an inflated cost structure. Further analysis would require comparing this to other large-scale VA community care contracts or contracts for similar services in high-cost areas, but on its face, it appears significantly higher than average.

What are the key performance indicators (KPIs) associated with this fixed-price incentive contract?

The provided data indicates the contract type is Fixed Price Incentive (FPI), which means there are target costs, target profits, and a price ceiling. Performance is typically measured against specific metrics outlined in the contract's Performance Work Statement (PWS). For physician services, KPIs could include patient access times (e.g., appointment wait times), patient satisfaction scores, adherence to clinical practice guidelines, reduction in hospital readmissions, and potentially cost-efficiency metrics. The 'incentive' aspect suggests that achieving or exceeding certain performance targets would result in higher profit for the contractor, while failing to meet them could reduce profit or even incur penalties, depending on the contract's structure. Without access to the PWS and contract modifications, the specific KPIs cannot be detailed.

What is TriWest Healthcare Alliance Corp's track record with the VA or similar large healthcare contracts?

TriWest Healthcare Alliance Corp has a significant history of contracting with the Department of Defense and the Department of Veterans Affairs, particularly for managing healthcare services in specific geographic regions. They have been involved in large-scale networks, including the VA's Community Care Network (CCN) program and previous iterations of VA healthcare support contracts. Their experience often involves managing provider networks, claims processing, and ensuring access to care for service members and veterans. While they possess extensive experience in managing large healthcare contracts, the scale and specific nature of this particular $421M contract for physician services in Colorado would warrant a review of their past performance metrics, any past performance issues or awards, and their demonstrated ability to manage costs and quality effectively within the VA system.

How does the $421M contract value compare to the VA's overall spending on physician services?

The $421 million allocated to this single contract for physician services in Colorado represents a substantial portion of the VA's overall spending in this category, especially considering it was for a single year. The VA's total budget for healthcare services runs into the tens of billions of dollars annually. Physician services, including both direct care within VA facilities and purchased care through community providers, constitute a significant line item. While this specific contract is large, it needs to be viewed within the context of the entire VA healthcare system's operational budget. It's crucial to understand if this contract represents a unique, high-demand service area or if similar large-scale contracts are common across different regions and specialties within the VA's community care network.

What are the potential risks associated with a fixed-price incentive contract of this magnitude?

Fixed-price incentive (FPI) contracts carry inherent risks, particularly at this scale. The primary risk is cost overrun if the contractor's actual costs exceed the target cost significantly, even with the price ceiling. While the incentive structure aims to motivate efficiency, poorly defined performance targets or unforeseen circumstances can lead to the government paying more than initially anticipated. For the contractor, the risk lies in not meeting performance targets, which could reduce their profit margin or even lead to losses if costs escalate beyond the ceiling. For the VA, risks include potential quality compromises if the contractor focuses solely on meeting minimum performance metrics to maximize profit, and administrative burden in monitoring performance against complex incentive clauses. Effective oversight and clear PWS are critical to mitigate these risks.

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: $421,351,175

Exercised Options: $421,351,175

Current Obligation: $421,351,175

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA79113D0054

IDV Type: IDC

Timeline