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<br /> <br /> <br />April 13, 2023 <br /> <br /> <br />Sheriff Charles Blackwood <br />Orange County Sheriff’s Office <br />106 East Margaret Lane <br />Hillsborough, NC 27278 <br /> <br /> <br />Re: Health Services Agreement <br /> <br />Dear Sheriff Blackwood: <br /> <br />Southern Health Partners has been proudly partnering with Orange County since 2009. With our <br />contract anniversary approaching, I want to welcome you to reach out with any questions or needs. I <br />would be happy to speak with you if there were any areas of the contract you would like to discuss. <br /> <br />Being on the front lines caring for patients and serving our customers’ correctional health care needs, <br />SHP has repeatedly confronted a range of financial and operational challenges since the outset of <br />the pandemic, including substantial growth in expenses across labor, drugs, and supplies, let alone <br />higher economy-wide inflation. Labor costs have presented a dramatic and extended wave of <br />challenges. Quality staffing is central to the care process and represents a significant portion of our <br />operating budget. With nursing shortages being what they are nationally, we have continued to <br />experience considerable issues with recruitment and retention of nurses, especially in perspective to <br />correctional work. <br /> <br />As we strive to ensure coverage at our facilities, we have become increasingly reliant on utilizing <br />current staff, Operational managers, travel nurses and agency staffing as resources for providing <br />coverage until we can bring on permanent team members to fill open positions. We have increased <br />recruitment efforts as well as added higher pay rate scales, sign-on on bonuses, and other benefits <br />to help attract applicants. These coverage and recruitment practices, of course, come at a much <br />greater cost to SHP than originally budgeted for in our contracts, as the parties could not have <br />foreseen such an unprecedented hike in healthcare labor costs. <br /> <br />Professional lines of insurance and employee benefits costs have continued an upward trend, as well <br />as expenses for prescription drugs. Medical supply costs are another area which has hit hard over <br />the past few years, considering supply chain disruptions and infection control practices/procedures <br />put in place to comply with governmental regulations and to assure the health and safety of patients, <br />and facility/medical staff. A major driver in increased medication costs has been the continued spike <br />in drug prices, coupled with increased utilization, treating sicker patients in the correctional <br />environment during and since the pandemic. <br /> <br />Despite persistent cost pressures, SHP has tried to price annual contract adjustments modestly over <br />the history of the contract. Unfortunately, our direct and indirect costs have escalated to the point of <br />being unsustainable without an adequate annual increase for the new contract year. We have <br />incorporated a 5% adjustment on the base fee and per diem rate based on continuation of the <br />program at the current level of staffing/services for the 2023-2024 period. The new rates are provided <br />for you below. <br /> <br /> <br />DocuSign Envelope ID: 39CA041E-C9A4-49D0-8261-188EE7582528