In a continuing push to privatize city services, Baltimore's Board of Estimates hired a hospital and a management company yesterday to examine injured city employees and handle workers' compensation claims.
The move will save an estimated $18 million during the next five years, close a city-run health clinic and cut 42 employees from the public payroll, city officials said.
The cost of the contracts - a $2 million-a-year deal with Mercy Medical Center and a $4 million-a-year agreement with CompManagement Inc. - is more than what the city pays to run its clinic and workers' compensation program. It costs the city $1.6 million a year to run the clinic and $3.7 million to manage workers' compensation.
But city officials say the deals will save money, in large part because the contractors will do a better job of detecting fraud and getting injured employees back to work. They also say employees will receive better care.
"Workers' comp has been a big problem, growing costs, growing claims. And we haven't been doing a very good job of it," Mayor Martin O'Malley said. "We have been seeing the cost rise every single year. The amount of money the city loses in both direct and indirect costs was unacceptable."
The contracts, which take effect early next month, pleased business leaders who see privatization as a way to increase efficiency and accountability in city government.
"This kind of management sends a very strong message to supporters of the city ... [that] the city is being accountable," said Gene Bracken, spokesman for the Greater Baltimore Committee, a business group.
The move upset union officials who have tried and failed to stop O'Malley from privatizing 217 custodial and security guard jobs in the past two city budgets.
"It doesn't take a genius to know that private companies will make [medical] decisions on the bottom line," said Glenard S. Middleton Sr., president of the American Federation of State, County and Municipal Employees Local 44.
Though the union does not represent the clinic and workers' compensation employees, Middleton said he is concerned about privatization in general and is worried that injured union members will be forced back to work before they are healed.
City workers file an average of 4,500 claims a year.
The idea for privatizing the clinic stemmed from a May 2001 study by the Greater Baltimore Committee and another business group, the Presidents' Roundtable.
The study found that the clinic's 22-member staff - including a full-time physician, physician assistants, nurses and nurse practitioners - interpreted workers' compensation regulations too liberally. It also found that the city clinic cost more to run and provided poorer service than one Mercy operated with half as many employees under a city contract for police and fire personnel.
At the time of the study, the city clinic had a $1.46 million budget, was open from 8 a.m. to 2:30 p.m. and on an average day saw 72 patients who each spent three hours in the waiting room, the study found. The Mercy clinic operated with a $1.4 million contract, had 24-hour coverage and saw an average of 86 patients a day who each waited 45 minutes.
CompManagement will improve service and save the city money by establishing managed care practices, bolstering fraud detection efforts, employing claims adjusters to monitor cases, and strengthening safety programs to help prevent injuries, city officials said.