Is it feasible to promise quality while slashing budgets?
Governmental entities throughout the United States continue to face tightening budgets, and public safety is facing increased scrutiny. EMS is the most vulnerable of the three public safety services, and this vulnerability has increased over the last two decades as large, for-profit ambulance conglomerates have swooped in and seduced elected officials with the promise of slashing budgets while improving quality. Sound too good to be true? That’s because it is.
It seems counterintuitive that a private company can replace a publicly-funded service, decrease costs, and improve quality—while still being able to make a sizeable profit for its executives and shareholders. Like many other sweetheart deals, to find out how this model works, we must follow the money. Although there are some high-quality, private, for-profit EMS services, a disturbing pattern of behavior has revealed itself over the last decade, and it explains how these companies can turn a profit while government-based services struggle.
UnderBidding the Contract
The initial lure of the transition to private, for-profit EMS services is the sticker price. The promise of a decrease in tax dollars spent, along with the assurance of continued quality, is very tempting for officials. Although the initial price is attractive, there are often hidden costs and consequences. Since 2000, there have been multiple instances where, in a effort to take over services from a government-run EMS service, companies underbid to win the contract.
In May of 2015, a lobbyist for American Medical Response (AMR) accused Rural/Metro, who they now own, of under- bidding the contract for Santa Clara County, stating that the company promised to be “cheaper and faster.”1 The result was two increases in funding for the company to the tune of $7 million—all paid for by the county taxpayers and patients.
In a government-run EMS service, the increased burden would be distributed among patients, with taxpayers helping to subsidize. In the for-profit model, the burden is often placed on the patient.
In San Diego, underbidding combined with increasing costs has created trouble for AMR, the city’s contracted for-profit ambulance service. AMR will be increasing its transport fees in San Diego to recoup these additional costs.2 ALS transport will range from $2,396 to $2,671, while BLS transport will cost the patient $2,022. With Medicare reimbursement standing at $434, the patient is left owing $1,500 to $2,000 out of pocket. These prices, in combination with ED and hospital bills, are a costly burden for our citizens.
The other strategy to make EMS more affordable to contracting entities is to cut the costs related to workforce and infrastructure. This translates to significantly lower pay for private providers compared to their public counterparts.
This can lead to increased turnover rates at private services who often hire freshly-minted providers at a lower pay. The providers use the opportunity to gain experience and become more competitive for other public safety jobs. Combined with cost savings on maintenance, fleet, and staff accommodations, this turnover can lead to an unfavorable work environment and concerns for patient and provider safety.
Over-Transport & OverBill
A recent study sheds important light on this long-suspected reality: There’s an increased emphasis on billable transport, despite medical necessity.3 The study, which reviewed 4.6 million 9-1-1 ambulance transports from 2009 to 2013, found that private, for-profit ambulance services were 4.5 times more likely to transport patients than the government-funded cohort.
The for-profit ambulances were approximately half as likely to allow patient refusals or treat and release options for patients. These practices, combined with larger bills, create a clear money trail that leads to patients, Centers for Medicare and Medicaid Services (CMS) and private insurers creating the profit margins for these private companies.
The study estimates that excess transports by private providers cost the Medicare system $25.2 million over the four-year study period. Considering that ambulance bills may be triple the Medicare rate, the excess charge left for consumers after coverage is likely more than $50 million.
Despite significant patient financial hardships associated with many for-profit ambulance providers, the greater concern is the loss of clinical quality. Even with mounting evidence that response times are a blunt tool for assessing EMS quality, the contract model often associated with these takeovers is focused on meeting response time metrics.
For some calls, response times matter. For every call, quality matters.
1. Kurhi E. (May 3, 2015.) Santa Clara County: $7 million in relief sought for financially troubled ambulance provider Rural/Metro. The Mercury News. Retrieved Dec. 4, 2017, from www.mercurynews.com/2015/05/03/santa-clara-county-7- million-in-relief-sought-for-financially-troubled-ambulance-provider-ruralmetro.
2. Garrick D. (Nov. 5, 2017.) San Diego exploring new emergency response model amid ambulance crisis. San Diego Union-Tribune. Retrieved Dec. 4, 2017, from www.sandiegouniontribune.com/news/politics/sd-me-ambulance-insurance-20171103-story.html.
3. Deziel J. Effects of emergency medical services agency ownership status on patient transport. Prehosp Emerg Care. 2017;21(6):729733.