Childrens Hospital Los Angeles has signed a five-year, $13 million contract with IBM to manage and support the hospital's financial, human resources, materials management and grants-tracking systems.

The contract completes the hospital's transition from outsourcing its information technology support to a single vendor and instead using multiple vendors, each a specialist in their fields. IBM will provide outsourced services in Canada and at the hospital for the PeopleSoft applications that manage medical supplies, inventory, general ledger, accounts payable, purchasing, budgetary controls, asset management, payroll and benefits.

"We were looking for a more nimble, best-in-breed vendor relationship," said Rod Hanners, the hospital's chief operating officer. He noted that another company, Cerner Corp., supports the hospital's in-patient medical records systems.

The hospital is hoping to save $2 million to $3 million, Hanners said, around 10 percent of its IT operating budget, with the vendor changes.

For IBM, the contract is its first outsourcing support agreement with a California hospital and a significant step toward beefing up its healthcare industry practice.

The company last year acquired Healthlink Inc., a respected healthcare consulting group in Houston, and Corio, a Silicon Valley-based application hosting services company that specializes in medium-sized companies.

The company already provides consulting services to some area hospitals, including Cedars-Sinai Medical Center. Most of IBM healthcare contracts in the state have been with managed care companies, such as Blue Cross of California parent WellPoint Inc.

"IBM has been on a tear both in outsourcing and targeting the healthcare market," said Jim Jacobson, health care industry attorney and partner at the Holland & Knight law firm.

Hospitals traditionally kept their IT services in-house with the rationale that their applications were too complex and specialized to outsource. That has changed as facilities migrated to using more industry standard software such as PeopleSoft's.

"Hospitals are realizing that their core competency is the care of patients, and to the extent that they can offload things to people who do that routinely, they can achieve better reliability and service for their clinicians at a reasonable cost," said Dana Sellers, a healthcare industry consultant for IBM Global Business Services.

SCAN Expands

Long Beach-based SCAN Health Plan, a senior-focused specialty health plan, has significantly expanded its Westside L.A. provider network.

With the addition this month of the UCLA Health System, SCAN members will have access to the UCLA Medical Center, Santa Monica-UCLA Medical Center and the 100-physician UCLA Medical Group.

"SCAN's membership in West Los Angeles continues to grow," said Sherry Stanislaw, SCAN's senior vice president of operations. "Likewise, our provider network in the area is also growing."

SCAN earlier announced that it had beefed up its provider network in other parts of Los Angeles County with the addition of Bright Medical Associates, comprised of 23 primary care physicians in Whittier, Norwalk, La Mirada and Hacienda Heights, and Presbyterian Intercommunity Hospital, which works with many of those doctors. Prior to the new additions, there were 10,862 physicians and 92 hospitals in SCAN's provider network.

SCAN serves 90,000 Medicare-eligible individuals in Los Angeles, Orange, Riverside, San Bernardino, Ventura and Kern counties, and this month expanded into San Diego County through a partnership with Scripps Health.

In addition, the plan continued its out-of-state expansion efforts by signing a three-year contract with the Arizona Health Care Cost Containment System to provide long-term care services in Maricopa County.

The state's fourth largest Medicare Advantage plan, SCAN is known for its "social HMO" model that offers members in-home care services not traditionally covered by Medicare. Its social workers arrange for personal care and in-home care services by outside contractors, such as cooking or light housekeeping, that a frail senior can't perform.

This & That

Cerritos-based PMI Dental Health Plan, one the largest prepaid dental plans in California, has merged with parent company Delta Dental of California. The merger is expected to have little impact on customers and enrollees, but will streamline administration and eliminate the need for duplicative regulatory approval. PMI, which offers the DeltaCare USA prepaid dental plan in California, had been operating under a separate health care license since Delta acquired it in 1985. State managed care regulators had earlier signed off on the merger.


Sangamo Biosciences Inc. has signed an exclusive intellectual property agreement with Duarte's City of Hope to co-develop treatments involving genetically modified T-cells whose chimeric immunoreceptor may be useful in treating cancer. Both parties plan to develop a cell therapy to treat a usually fatal brain cancer called gliobastoma multiforme. Sangamo is to pay City of Hope, which operates the City of Hope National Medical Center and Beckman Research Institute, an upfront license fee and annual maintenance fees, with the institution also eligible for future milestone and royalty payments. Financial details were not disclosed.

Staff reporter Deborah Crowe can be reached at (323) 549-5255, ext. 232, or at .

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