Houston schools trustee Larry Marshall set stage for doc's $600,000 no-bid contract with HISD

A Houston schools trustee who accepted an all-expenses-paid trip to Costa Rica last year to learn about "medical tourism" set the stage for a doctor on the trip with him to land a no-bid consulting gig with the school district worth up to $640,000.

Longtime Houston Independent School District trustee Larry Marshall met earlier this year with Dr. Kenneth D. Wells, HISD Superintendent Terry Grier and the school district's chief financial officer "about engaging Dr. Wells' company for health consulting and possible savings," according to e-mails and other documents released by the school district this morning.

In a phone interview Tuesday, Marshall said he arranged the meeting and introduced Wells to Garrett and Grier. 

A couple of months after that meeting, records show, HISD administrators set in motion the process of doing business with Wells' consulting firm, Alken -- and that process continued even though top administrators repeatedly asked each other just what Wells would do for the district, and whether his work duplicated that of HISD's existing benefits-management contractor.

The meeting and the still-being-negotiated contract with Wells is now being reviewed by HISD's inspector general.

Wells did not return a phone message for comment left earlier today.

An internal HISD e-mail from May says the district has negotiated a pay rate with Wells of $650 an hour for an estimated 80 hours of work a month. The $640,000 yearly maximum for Wells' firm approved by the school board in June would pay the salaries of 14 teachers on the lowest rung of HISD's pay ladder for the coming school year, who are paid $45,000 annually. The cash-strapped school district laid off more than 500 teachers earlier this year for budget reasons.  

"It would be inaccurate for you to say we have a $600,000 deal with Alken," HISD spokesman Jason Spencer said today, adding in an e-mail that "we anticipate that the final contract amount (for Alken) will be for substantially less than the maximum $600,000 approved by the Board of Education."

The specifics of the contract with Wells and Alken are still being worked out in negotiations, Spencer said, which will take a few weeks to a month.

He said Alken would make recommendations for how HISD could save money, in the same way a management consultant would. As examples, Spencer said the firm would determine the "best use of HISD's existing network of on-site clinics"; would deal with workers' compensation, saying HISD is "developing a network of local doctors to deal specifically with these claims"; and said Wells would develop "a priority care medical plan that identifies best practices for treating employees with chronic medical conditions. This small group of employees account for the majority of HISD medical costs."

Marshall and Wells were on the same flight and flight itinerary when they traveled to Costa Rica last November to a medical tourism "familiarization trip," school district records show. In medical tourism, American citizens travel abroad to have surgery or other medical procedures performed at costs lower than they would be charged at home.

The November Costa Rica trip consisted of a series of seminars, clinic visits and sightseeing trips arranged in part by a for-profit firm called International Healthcare Access, and the event program listed Wells -- a medical tourism advocate -- as a speaker with "ICHA" after his name. Wells' exact connection with the firm is not clear.

An option Marshall and district officials are considering is contracting directly with providers rather than using insurance companies, Marshall said in a phone interview this evening. Wells' mountain of experience and contacts throughout Houston’s healthcare community should make that change as effective as possible, Marshall said.

“We’re looking at reducing our costs by $10 million or more,” said Marshall, adding that the district spent more than $100 million on healthcare last year. He said the Mercer contract cost $4 million alone. “I’m looking at lowering costs.”

“Dr. Wells is a remarkable doctor,” Marshall said, citing Wells' medical and pharmacy backgrounds, after being asked whether he had a problem with the possibility of a no-bid $640,000 maximum payout for Wells.

HISD trustees -- including Marshall -- voted June 23 to approve negotiating and executing a contract with Wells' firm, Alken Health Resources, paying up to $640,000 to identify ways the district could cut its health care costs. The contract is still being negotiated, and Wells' company still hasn't been formally hired by the district, Spencer said today.

The spokesman stressed that the agreement with Wells "is not with an individual. It’s with a company.”

Alken Health Resources is an assumed business name for a professional association also called Alken, according to the HISD records released today. Wells is the president and sole director and member of Alken PA listed with the Texas Secretary of State's office. He's also the only employee of the firm listed on its promotional brochure on its own Web site.

As the nation's seventh-largest school district and with nearly 30,000 employees, HISD spends more than $120 million a year on health care alone, records show.

The school system has an annual budget of $1.6 billion and, like many Texas school districts, has felt the pinch of cutbacks in state and other funding sources this year.

Records show that in the weeks leading up to the trustees' vote, HISD's top benefits manager repeatedly pressed Wells for specifics on just what he would do and complained that Wells wasn't forthcoming.

Both benefits manager Brad Bailey and district CFO Melinda Garrett also questioned how Wells' work for the district would differ from HISD's existing multi-million-dollar contract with a benefits-management firm called Mercer.

"I have communicated several times with Dr. Wells for assistance in expanding the description of services and how (his) services are differentiated from that of Mercer," Bailey wrote in a June 7 e-mail to Garrett. " ... He did not expand on his services as I had asked him to do several times." In a separate e-mail that day, Bailey told Wells that Garrett wanted to know how Wells' work would not be "just a simple duplication of work" that Mercer was already performing.

Bailey e-mailed Wells on June 16 that he'd just "talked with Melinda and she wants some responses," he said, listing Garrett's questions as "Why do we need this service? What exactly will Dr. Wells be doing for HISD? How will we measure the success of this service? Aren't we paying Mercer to do this work?"

Wells' response e-mail a few days later didn't answer any of those questions.

"We have discussed the questions on several occasions," Wells wrote. "Perhaps you or Melinda feel the HISD needs are being met. If so, I understand (but don't agree) and feel it may be best that we not continue this process." Still, the process continued, and the school board voted a week later.

Reached by phone today, Bailey referred questions to Spencer. Neither Garrett nor Grier returned phone messages.

Spencer said the questions about whether Wells’ services might duplicate what Mercer already provides have been resolved.

“In general terms, he is able to come in and review your policies and procedures and practices from a doctor’s perspective,” the spokesman said. He added that  Wells has sat on the board of a major hospital -- Christus Health System -- and worked in the business. “That’s a perspective we feel like we’re lacking at the moment.

“Looking at healthcare costs from that standpoint, it’s just another angle of looking at how you’re spending your money ... It’s another perspective that might lead to cost savings. This whole thing, at the end of the day, is about saving money. At the end of the day, our goal is saving money. If we feel like we can’t accomplish that, then we won’t go forward with the contract," Spencer said, though he said he didn't anticipate that happening.

Trustees were told in a memo prior to their vote that Wells "provides unique services in medical cost containment as a licensed physician with extensive corporate health care plan management experience."

The district has undertaken many steps to help employees stay healthy and cut health care costs, the memo said, and “Alken Health Resources’ healthcare industry expertise as well as the knowledge of the medical community will provide key resources and strategies to integrate these programs, establish appropriate measurable goals, evaluate program effectiveness, and provide key support and intervention to ensure the success of these programs.”

Marshall has said he travelled to Costa Rica twice last year, once in April and once in November. He said at a recent school board meeting that he intends to keep making the trips.

Invitations for the Costa Rica trips were sent to Marshall and a majority of the HISD trustees last year by state Rep. Borris Miles, a lawmaker and an insurance agent who also services some of the school system's flood insurance policies. The CEO of International Healthcare Access, records show, is DiCarlos Davis, a business associate and campaign supporter of Miles; Davis was also on Wells and Marshall's November flight from Houston to Costa Rica, records show.

When news stories -- including reports in Texas Watchdog -- broke in late June about Marshall's Costa Rican travel, Bailey had also asked Wells about a possible connection with Costa Rica, e-mails show.

"I need to know if there is any relationship you might have with this trip or with (Borris) Miles or with any of our Board," Bailey asked Wells on June 21. "In the past I worked with (Borris) Miles and I am very familiar with the work he does in managing our flood insurance. However, it is important that I disclose to Melinda any possible connections which might exist."

The stack of documents made public by the school system today do not include a response to his query.

The district's inspector general is "to look at improprieties that are referred to him by the district administration. I’m not sure there’s too much clarity on that,” Marshall said. “He’s got no right to investigate in terms of recommendations the (chief financial officer) made. Melinda Garrett made the recommendation” that the district contract with Wells, Marshall said.

EDITOR'S NOTE: This story was most recently updated at 9 a.m. Wednesday to include additional comments from HISD trustee Larry Marshall.

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Contact Mike Cronin at 731-228-2850 or mike@texaswatchdog.org. Contact Jennifer Peebles at 281-656-1681 or jennifer@texaswatchdog.org. Follow her on Twitter at @jpeebles or @texaswatchdog.

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Sean Thursday, 08/04/2011 - 05:15AM What should really concern people. Is the fact that several stories has been written about this trip and how improper, if not outright illegal the Costa Rican trip was. It didn't slow any of them down in the least except Bailey. Who will soon find his job eliminated. These people are operating with impunity like the mob be-damning anyone who would criticize them and daring anybody to do something about it.