Unlike public emergency services, private EMS providers are subject to the whims of a changing economic landscape.
A few years ago, the emergency medical services system serving the 8,000 residents of four small communities in south central Wisconsin faced a dilemma.
Due to the retirement of one superstar emergency medical technician, the Marshall Area EMS system—which serves the village of Marshall and the towns of Medina, Sun Prairie, and York, comprising a seventy-two-square-mile area about thirty minutes northeast of the state capital, Madison—needed to be revamped.
The municipal commission charged with deciding the area’s EMS future saw a large expenditure coming. Initial estimates for hiring new EMS staff had an annual price tag of about $140,000. “Most governing bodies, when they’re not used to that large expense of paying salaries and benefits, they kind of get sticker shock,” says Scott Allain, the Marshall Area EMS director.
“One of the reasons we see a lot of people returning to municipal service is because of failures within the private industry.”
As time stretched on, no feasible plan presented itself. “Two years into this, we weren’t really coming to any resolution,” Allain says. “The morale among our on-call staff wasn’t the best because I don’t think people had a clear vision as to what we’re doing [or] if we were dissolving.”
Allain approached neighboring communities to see what they could offer. Ideas for consolidating or contracting out to other communities were floated. Ultimately, the commission in charge didn’t like those options because, Allain explains, “if you contract or if you consolidate, you have to give up a bit of control.”
The commission also explored going with a for-profit EMS provider, at an estimated cost of about $230,000 a year. But in the end, this option was rejected. Explains Allain, “They felt they would have no control over any increases, no control over any purchasing. And once you go that route, it’s hard to go back, because you sell off all your assets. What if ten years from now, [the for-profit EMS company] goes away?”
After negotiations that included teaming up with the local volunteer fire department, who would chip in for the salaries of emergency medical technicians, or EMTs, in exchange for their administrative support and help around the firehouse, Allain was able to strike a deal to hire two day-shift EMTs and retain his on-call, night-shift EMTs for a total of only $20,000 a year more than the commission was previously paying.
“That was a palatable cost and we get to maintain our local control,” he says.
It was a near-miss of a fate that more and more communities are facing: turning control of their most critical, life-and-death services, their EMS systems, over to profit-seeking providers.
For communities that choose to privatize their EMS system, there’s no shortage of options. While industry experts say the number of private EMS providers in America is unknown, for-profit companies range from single-ambulance operations in rural locations to huge multistate conglomerates.
The biggest player in the for-profit EMS market is Colorado-based American Medical Response, Inc., which operates in more than 2,000 communities across forty-six states and Washington, D.C., and is estimated to transport some five million patients each year through their EMS, nonemergency, and medical transport fleet of ground and air ambulances. The company, which is also the primary emergency response contractor for the Federal Emergency Management Agency, was sold by Envision Healthcare to the private equity firm KKR for $2.4 billion in 2017. American Medical Response did not respond to interview requests for this article.
Over the last several decades, the terrain has changed dramatically regarding the provision of emergency services. Improvements in fire prevention and protection—such as stricter fire codes, sprinkler systems, smoke alarms, and fireproof building and manufacturing materials—are credited with reducing the number of fire calls across the country from almost three million in 1980 to less than 1.4 million in 2016, according to the National Fire Protection Association.
But during that same time, emergency calls for medical aid—for everything from heart attacks and strokes to home accidents, sports injuries, car crashes, and violent crime—have skyrocketed from just more than five million to almost twenty-three million.
This has led to an explosion in the need for and reliance on skilled paramedics and EMTs, who regularly save lives on the scene of accidents and while racing to hospitals in ambulances.
The increasing privatization of these services has raised concerns, in part because private providers are driven by a need to make money and partly because, unlike government providers, they have no obligation to stay in business when the going gets tough.
While experts say that EMS system failure is not a regular occurrence, they also admit it’s not uncommon. Overall, EMS systems are “generally stable, but there have been instances of instability,” says Dia Gainor, executive director of the National Association of State EMS Officials. “Is it a widespread crisis? No, but it’s certainly not in a condition both of availability and quality that the public can rest assured in all places and all scenarios.”
At times, she notes, some private ambulance services “have failed to get out to their calls and then an adjacent ambulance service has had to come in to cover.”
One of the largest for-profit EMS closures took place in 2016. According to news reports about Trans-Care EMS’s sudden bankruptcy, “One day, cities and towns up and down the East Coast had TransCare services; the next, they didn’t.” In all, more than 1,000 TransCare employees, including paramedics and EMTs from New York, Maryland, and Pennsylvania, were instantly unemployed and emergency calls once answered by TransCare fell to neighboring communities.
Thomas Breyer, director of fire and EMS operations for the International Association of Fire Fighters, argues that publicly funded EMS systems are the most dependable.
“One of the reasons we see a lot of people returning to municipal service is because of failures within the private industry. At the end of the day, private industry is a business—its goal is to make money,” he says. In contrast, “public-based EMS is designed solely for the protection and well-being of its citizens, which is the core function of government.”
Breyer gives an example of how the two systems contrast. “Let’s say you need ten ambulances a day to meet demand and not have any wait times,” he says. “Private, for-profit EMS will try to do it with five.” Complicating matters further is that for-profit EMS providers also take nonemergency calls, which strains their availability. Says Breyer, “If you are out picking up someone for a dialysis appointment and a 911 call comes in, you’re already engaged in nonemergency work. Whereas the fire departments don’t do that, so we are available to respond to your emergency.”
Another part of any profit-making venture is the opportunity for fraud. And for-profit EMS has seen its share of that.
In Texas, two brothers who owned the EMS provider KMD Healthcare Services Inc. fraudulently used EMTs who weren’t their employees to pass state inspections while also filing false Medicare/Medicaid claims for more than $6 million. They were convicted in federal court on charges of conspiracy and each sentenced to serve more than four years in prison.
In Massachusetts, a company called MedStar Ambulance Inc. in 2017 agreed to pay $12.7 million to resolve Medicare billing fraud that included unnecessarily transporting patients. Since 2009, the U.S. Department of Justice has recovered more than $31.4 billion in fraudulent claims cases, with nearly $19.6 billion of that amount recovered in cases involving fraud against federal health-care programs.
Rob Lawrence, chair of the communications committee for the American Ambulance Association, a lobbying group that represents a range of EMS providers, including for-profits, says his organization has no tolerance for bad actors. In response to cases of for-profit EMS fraud, he says, “Obviously, it’s illegal and can’t be condoned. Those that are committing this should face the full weight of the law and the legal system.”
The prevalence of for-profit EMS providers is a by-product of a federal funding decision. In 1973, Congress passed the EMS Systems Development Act, which distributed some $300 million to set up regional EMS systems across the country, “which enabled our systems to transform into the kinds of ambulances you see today,” explains Gainor.
The prevalence of for-profit EMS providers is a by-product of a federal funding decision.
But then, in 1981, the federal budget dissolved that plan, leaving local communities to establish and finance their own EMS systems. This led many communities to hire for-profit emergency care providers, rather than create their own systems from scratch, because that is cheaper, at least initially. “The thought process is no different than those township or county officials thinking about garbage collection,” explains Gainor. “It’s largely a financial decision.”
American Ambulance Association spokesperson Lawrence agrees. “The delivery models are primarily economically based,” he says. “It comes down to the economic decision made at the very local level.”
Hiring a private provider, Lawrence argues, can be a smart and easy way for a municipality to limit its expenses. “We have to acknowledge that public sector purses are shrinking no matter which way you look at it,” he says. “To have a large municipal-employed [EMS system] can become very expensive, not only in terms of service delivery but also in terms of the pensions that go along with it.”
For-profit EMS providers, he adds, make money by charging a patient’s insurance or Medicare and Medicaid, “so it’s not usually a subsidy or fee paid by the municipality.”
But, as with every for-profit entity, the goal is to take in more money than what gets paid out for salaries, equipment, and upkeep. And for some third-party EMS providers, insurance and Medicare/Medicaid reimbursement at current levels isn’t cutting it.
“To have the ambulance arrive at your time of need, there is a cost of readiness,” Lawrence says. “So if you have a lesser reimbursement than it costs for readiness, the cost of standby, then some private companies will have to say that this is not economically viable.”
To remedy the reimbursement issue, the American Ambulance Association is advocating for new ambulance cost collection methodology, to be undertaken by the federal Centers for Medicare and Medicaid Services. Lawrence says this will involve gathering data that the association can use to lobby for higher reimbursement rates.
Currently, Medicare will cover 80 percent of approved ambulance services, leaving the patient to pay the remaining 20 percent. The costs for such services vary widely, but can easily run between $1,000 to $2,000 per transport.
Despite the dramatic shift in the nature of calls over the last four decades, emergency medicine experts, EMTs, and affiliated associations say there’s a widespread lack of attention, appreciation, and sense of importance given to emergency medical services.
“EMS is treated like a trade”—not an essential service like law enforcement, says Natalie Simpson, an associate professor at the State University of New York at Buffalo who researches emergency medical systems and their history. She argues these services provide “a large part of what’s maintaining our quality of life” and merit more attention.
Part of the reason EMS is often an afterthought is the infrequency of its use. “Most people wouldn’t have a regular brush with ambulance services,” Simpson says. “So they’re very happy to not think about it.”
Gainor allows that the field of EMS is partly to blame for this disregard. “I don’t think that EMS has organized itself well enough . . . to get the attention of government officials at all levels.” Gainor, who was a paramedic for twelve years in Idaho, points to “a cultural issue in EMS—that rescuer mentality—that really doesn’t lend itself to complaining or fist pounding.”
But there are plenty of problems facing the EMS community across the nation to complain about, from system failures that leave communities without EMS coverage, to the lack of national standards for best practices, to a decline in volunteer EMTs in rural areas. In many communities, the EMS safety net is worn, stretched thin, and tattered.
Many people still believe that all ambulances and EMTs are part of the community’s publicly funded fire department. While that is true in most urban areas, it’s largely not the case in rural areas. And services in non-fire-based systems, Gainor says, “can be everything from loosely knit unincorporated groups of volunteers to highly sophisticated, multi-state private sector organizations.”
And there is no national accounting of which communities have what kind of EMS system. “We’re not really energetic or scientific about the study of our own emergency services,” Simpson laments, “so that data is not readily available.” Even the federal Office of Emergency Medical Services—despite its stated mission to “advance a national vision for EMS [and] measure the health of the nation’s EMS systems”—doesn’t keep tabs on which communities have what kind of EMS systems, or how effective they are.
The office, part of the National Highway Traffic Safety Administration within the U.S. Department of Transportation, “does not have national-specific information on the variety of EMS systems throughout the nation,” says DOT spokesperson Derrell Lyles in an email. “That is a local issue and each jurisdiction decides what service best suits their needs.”
This lack of data makes it difficult to compare fiscal effectiveness among the many different types of systems. “Which one is more cost effective?” asks Gainor. “We have no idea whatsoever.”
In fact, it is impossible to give the true number of EMTs, paramedics, and EMS agencies in America today. The most recent data from the Office of Emergency Medical Services dates back to 2011. It estimated that there were more than 800,000 EMTs and paramedics in all.
Attempts to determine up-to-date figures only lead to more confusion. The federal Bureau of Labor Statistics, for instance, listed that there were 248,000 EMTs and paramedics in 2016, while, the National Registry of Emergency Medical Technicians puts the current total at about 405,000.
Whatever the actual numbers, it’s clear that a growing share of EMS providers are working for for-profit companies, not public entities. Again, reliable numbers are hard to come by, but the Journal of Emergency Medical Services, an EMS trade publication, found in 2004 that 42 percent of the country’s 200 most populous cities used fire-based EMS providers while 28 percent used for-profit companies. The journal’s 2012 survey, its latest, found that 37 percent of cities used fire-based EMS while almost 40 percent used private companies.
“The blurring lines between the private and public sectors are causing longtime allies to become adversaries overnight,” the journal stated in this latter report. “Many services, busy protecting their turf, fail to see the road signs of the future: the U.S. health care system changing, in part due to the Affordable Care Act and the real pressure that’s reducing reimbursement for hospitals, physicians, and EMS services. Rarely are providers able to maintain current levels of funding from Medicare or Medicaid.”
The result, it warned, is that changes like a downturn in the economy could lead to “cuts in staffing or discontinuation of a service altogether.”
Despite the instability and lack of national uniformity or local attention given to EMS coverage, there remains at least one bright point in the industry’s future: community paramedicine.
This relatively new approach uses EMTs and paramedics to provide both preventive and primary care to underserved populations, such as homebound elderly citizens.
There remains at least one bright point in the industry’s future: community paramedicine.
Examples of community paramedicine, Gainor explains, include EMTs visiting “recently discharged patients [or] newly diagnosed diabetics and interacting with them about their medicine, checking blood glucose [levels] and what their meals have been for the last two days.” And in communities with a high proportion of seniors, the visits may focus on injury prevention, because falls are a big problem for seniors. EMTs making visits for things like blood pressure checks can “look around for trip hazards.”
While there is no national tracking, Gainor estimates that about 300 EMS providers were practicing community paramedicine a couple of years ago and that “it could easily be 500 now—it’s really gaining momentum.”
Perhaps surprisingly, for-profit EMS providers also like this new model, which provides yet another revenue stream and allows them to take advantage of downtime. Lawrence sees nothing but upsides.
“It makes the patient happier because they’re in the place they want to be, which is home,” he says. “It probably makes insurance companies happy because they’re not investing in that pipeline to the [emergency room]. It also makes the emergency departments happy because they’re not being over-paced with demand.”
Community paramedicine will also help private ambulance services show “where we can be a part of the wider health care solution,” Lawrence says, because “the ambulance services of today are very much the last great health and social care safety net.”
Allain of the Marshall Area EMS says he sees where community paramedicine “could be a benefit to patients with home care,” but it’s not something he’s exploring at this point. “I think the biggest issue would be finding a funding source,” he says, adding that his small team of EMTs have plenty on their plate already. “Our specialty is emergency response.”