Commodity Specialist S Name s3

Sole Source Determination Summary (Services)

Date: 09.07.17

Commodity Specialist’s Name: Sonya Schurtz

Commodity Specialist’s Recommendation: Approved Disapproved

If disapproved, agency contacted

Agency: Department of Health

Supplier Number: 418465

Supplier: McKinsey and Company

Sole Source ID Number: 30060

Estimated Dollar Amount: $1M-$5M

Federal Funds: Yes No

Services: Wide-range of data analytic services, financial modeling, and healthcare transformation planning and technical assistance for participating rural hospitals in the model.

Agency Summary: The Department of Health selected McKinsey, after a competitive ITQ contracting process, to assist the Department with Accelerating Health Care Innovation in Pennsylvania under contract 4400007410. As part of its work under this contract, McKinsey performed initial design work that assisted the Department in preparing to launch a new rural hospital global budget payment model (model), and in securing an up-to-$25M grant through 2020 from the federal Center for Medicare and Medicaid Innovation (CMMI) to continue the design of the model. The model furthers critical priorities for the commonwealth, including delivering better care and lower costs for residents while improving the financial stability of rural hospitals. The grant agreement with CMMI sets aggressive dates by which the Department must finalize and prepare for the launch of the model. If the Department does not meet these deliverable dates, CMMI can terminate the grant and Medicare’s participation in the model, both of which are essential to the model’s success. A sole source with McKinsey is necessary for the Department to meet the federal deliverable dates, because McKinsey is the only contractor that can immediately pick up the design work, with no transition period to get up to speed on the model, and deliver the required work to meet the CMMI deliverable dates in this compressed timeframe. McKinsey is the leading contractor for State Innovation Model states (CMMI grantees) who are implementing statewide innovative payment models. They have served ten such states, more than any other contractor, and have helped these states secure more than $350M in additional federal grant funding for implementation. As a result of this past work, McKinsey has a bench of more than 100 consultants with experience in the design, testing, and implementation of healthcare innovation efforts. McKinsey houses a Center for US Health System Reform dedicated to healthcare reform strategy, policy, and operations, and is recognized as a pre-eminent consulting firm in the field of healthcare systems and services. This depth of expertise specifically relevant to the model makes McKinsey uniquely qualified to assist the Department in meeting the federal deliverable dates required to prepare for the launch of the model. If this sole source contract is not entered into, receipt of federal grant funds and successful completion of the model will be put at serious risk. The grant agreement with CMMI sets aggressive dates by which the Department must finalize and prepare for the launch of the model. If the Department does not meet these deliverable dates, CMMI can terminate the grant and Medicare’s participation in the model, both of which are essential to the model’s success. A sole

Bureau of Procurement 555 Walnut Street, Forum Place 6th Floor | Harrisburg, PA 17101 717.787.5733 | F 717.783.6241 | www.dgs.state.pa.us Revision: 2-3-2011 Sole Source Determination Summary (Services) source with McKinsey is necessary for the Department to meet the federal deliverable dates, because McKinsey is the only contractor that can immediately pick up the design work, with no transition period to get up to speed on the model, and deliver the required work to meet the CMMI deliverable dates in this compressed timeframe. McKinsey is the leading contractor for State Innovation Model states (CMMI grantees) who are implementing statewide innovative payment models. They have served ten such states, more than any other contractor, and have helped these states secure more than $350M in additional federal grant funding for implementation. As a result of this past work, McKinsey has a bench of more than 100 consultants with experience in the design, testing, and implementation of healthcare innovation efforts. McKinsey houses a Center for US Health System Reform dedicated to healthcare reform strategy, policy, and operations, and is recognized as a pre-eminent consulting firm in the field of healthcare systems and services. This depth of expertise specifically relevant to the model makes McKinsey uniquely qualified to assist the Department in meeting the federal deliverable dates required to prepare for the launch of the model. If this sole source contract is not entered into, receipt of federal grant funds and successful completion of the model will be put at serious risk.

Procurement Summary:

DGS grants this procurement a one-time approval for this service. All future procurements, of this nature, are to be completed through the ITQ RFQ/RFP competitive pricing.

Bureau of Procurement 555 Walnut Street, Forum Place 6th Floor | Harrisburg, PA 17101 717.787.5733 | F 717.783.6241 | www.dgs.state.pa.us Revision: 2-3-2011