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Contract Heats Up HealthEast and South Metro Fire Relationship

The long-standing relationship between the South Metro Fire Department and HealthEast is on life support.

Contract negotiations over South Metro's ambulance transportation have hit a snag, with HealthEast making a demand that would be tough for the fire department to meet, said Kori Land, city attorney for South St. Paul and West St. Paul.

"We've definitely hit a brick wall," she said.

HealthEast holds the primary service license for the area but has allowed South Metro to perform basic life-support transports under a subcontract that expires Dec. 31.

If a contract is not renewed, all ambulance transports will fall entirely to HealthEast.

When a South St. Paul or West St. Paul resident makes a medical call, South Metro responds and begins basic patient care and transport, if needed. A HealthEast ambulance crew also shows up and performs advanced life-support care and transportation, if needed.

The working relationship, which dates to the 1980s, is not replicated anywhere else in Minnesota, Land said.

But Dr. John Kvasnicka, interim director of HealthEast's medical transportation, said this "dual-response system" comes at a cost.

"Only one of those ambulances is going to transport the patient," he said. "So you have two ambulances racing through the streets responding to every scene. It's obvious that it's going to cost more than only having one ambulance respond."

Under the HealthEast contract proposal, South Metro would not collect the transport fees from patients it carries, as the department does now. Instead, HealthEast would pay South Metro a flat fee of $236 for each.

South Metro currently collects an average of $650 per transport, or approximately $330,000 each year. That annual revenue would decrease $172,000 under the HealthEast proposal, Land said.

"This change is so drastic, and it means so much to the bottom line of South Metro that I don't see a way to get through it," she said.

The proposed flat fee is what it would cost HealthEast to do the transport itself, Kvasnicka said.

HealthEast would consider negotiating that rate, he said, "if there's some added value to be gained. But we would have to understand what additional value we'd be getting for paying more than it would cost HealthEast to do the transport."

Kvasnicka rejected an assertion by Land and South Metro fire officials that the quality of service would drop if HealthEast took over all ambulance transports.

Other conditions of the contract proposal would have HealthEast take over billing and would require South Metro to undergo HealthEast training. The department also would be required to purchase a computer system compatible with HealthEast's system and buy road safety equipment -- at an estimated cost of $20,000.

HealthEast first informed South Metro of the new conditions last month, and two negotiations this month went nowhere, Land told the West St. Paul City Council on Monday night.

"Their terms are very, very set in stone," she said.

In April 2009, HealthEast made two claims about South Metro's billing practices and demanded it perform an audit, Land said.

The first claim was that, as a subcontractor, South Metro is not eligible to bill Medicare and Medicaid programs. It also asserted that the vendor that does the fire department's billing was incorrectly billing emergency and nonemergency calls.

An audit later found South Metro's billing process was appropriate, Land said.

The South Metro Fire Board will hold a special meeting Nov. 3 to further discuss the proposed two-year contract.


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