LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          April 23, 1995



 TO:     Honorable Judith Zaffirini, Chair      IN RE: Committee Substitute
         Committee on Health & Human Services   for
         Senate                                                Senate Bill
         Austin, Texas                          No. 406










FROM: John Keel, Director

In response to your request for a Fiscal Note on Senate Bill No.
406 (Relating to health care purchasing by state agencies.) this
office has determined the following:

The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.


The bill would require a state agency to purchase goods and
services in support of the agency's health care programs by the
method that provides the greatest volume discount for the goods
or service, including group purchasing programs, state agency
purchasing consortiums, or competitive sealed proposals. 


The bill defines "state agency purchasing consortium" as a group
of three or more state agencies acting pursuant to a written
agreement to receive discount prices from vendors based on volume
purchases of goods and services.  The bill would exclude the
state Medicaid program from the health care purchasing
requirements.


The bill requires the central administration of the University of
Texas System to report to the Seventy-fifth Legislature about the    




health care purchasing activities of state agencies.


 It is assumed that no additional staff or administrative costs
would be required to implement the provisions of this bill.  It
is assumed that savings will accrue to the State with improved
purchasing practices for health care goods and services.  The
savings estimates incorporated into this estimate were developed
by the Comptroller of Public Accounts and published as HHS 1 in
Gaining Ground. 


Savings anticipated by agency for each year of the fiscal note
include:
    Commission on Alcohol and Drug Abuse: $76,100
    Department of Health (non-Medicaid):  $6,480,400              
        
    Department of Human Services:  $3,235,900
    Department of Mental Health and Mental Retardation: 
$2,898,200
    Texas Rehabilitation Commission:  $109,200




The probable fiscal implication of implementing the provisions of
the bill during each of the first  five years following passage
is estimated as follows:



            Fiscal  Probable Savings 
             Year     to  General    
                    Revenue Fund 001 
                                     
          1996            $12,799,800
          1997             12,799,800
                                     
          1998             12,799,800
                                     
          1999             12,799,800
          2000             12,799,800
                                     
                                     
                                     
       Similar annual fiscal implications would continue as long as the
provisions of the bill are in effect.

The fiscal implication to units of local government cannot be
determined.


Source:   Comptroller of Public Accounts, University of Texas    




System
          LBB Staff: JK, AZ, DF