Craig Sullivan faces a difficult task: convincing government officials and the public to consider contracting out for a service that many North Carolinians think is something that local government does itself. Sullivan runs Watauga Medics, Inc., a for-profit ambulance service that provides 911 service under contract to Watauga County. His company is one of only two for-profit emergency EMS services in the state, an unusual situation, given the provider mix throughout the United States and a trend toward privatization nationally.
No single model
As a 2000 Journal of Emergency Medical Services survey of the 200 largest municipalities makes clear, there are many models for providing emergency medical services in the United States. In 188 of the 200 communities, fire departments act as first responders for medical emergencies. This is not surprising; the number of home and building fires is down 40 percent over the past two decades and fire departments in many areas are looking for expanded responsibilities. In certain cities, 90 percent of fire department calls do not involve extinguishing blazes.
The situation is more varied for emergency ambulance service. Private for- profit ambulances were the most common service type, though they only existed in barely one-third of the municipalities (34.5 percent) surveyed. Almost as many cities, 34 percent, relied upon fire departments using multirole personnel. Other emergency ambulance service types were third-service agencies (12 percent), private nonprofit agencies (5 percent), fire departments using single-role personnel (5 percent), public utility model (5 percent), hospital-based services (3 percent), and volunteer services (1 percent). In North Carolina, the only other private-for profit 911 ambulance besides Watauga Medics is in neighboring Ashe County.
Contracting out an answer
While different communities may have different solutions for providing 911 ambulance service, this does not mean the industry is static. Far from it, for nationwide EMS providers are facing a changing financial landscape. A recent change in federal policy is forcing EMS operators of all sorts — and the governments that fund them — to re-examine their procedures and cost structures.
Medicare, the federal health plan for senior citizens, spends more than $2.5 billion for nearly nine million ambulance trips per year. In an attempt to control these costs, Congress mandated in 1997 that a national fee schedule for ambulance trips be adopted. The new rate structure began coming into effect April 1, 2002, with full implementation scheduled for Jan. 1, 2006. The reimbursement that an ambulance service will receive may be substantially higher or lower with the new rate structure. In North Carolina, the new rates are often higher, a move that may allow local governments to reduce the amount they have to subsidize 911 ambulance service.
Medicare reforms are likely to push many communities to re-examine how they operate their EMS systems. As a recent Reason Foundation policy brief notes, using fire fighters as EMS personnel may not be the most cost-efficient means of ensuring quality care. Firefighters typically earn a higher salary than paramedics do, and fire engines are up to six times more expensive to acquire than ambulances.
Local governments contracting out for EMS services may be able to obtain superior service at a lesser cost. The Reason study noted the example of Pinellas County, Fla. In 2000, the county held a managed competition between public and private bidders for EMS services. The winner was a private firm that has brought quicker response times, and higher quality service to the county. Pinellas County projects that it will save $13 million to $21 million over 11 years.
Sullivan agrees that a private firm can provide quality service at lower rates. “It’s all about performance-based contracting… the county gets all the perks of owning its own ambulance system without the risk” he said. In Watauga County’s case, that means getting quality service at a fixed cost. The company’s contract with the county requires that it meet certain response time standards. In addition, an advisory board meets quarterly to review the company’s operations and recommend changes.
In addition, the efficiency of Watauga Medics allows it to charge among the lowest, if not the lowest fees in the state. The service charges $155 to $195 per trip plus $5 per loaded mile. By comparison, Sullivan is aware of EMS rates as high as $500 per trip plus $7.50 per loaded mile in the state.
Private ambulance services better-equipped
The JEMS study also suggests that private-for-profit agencies are often better equipped than fire departments that also provide ambulance services. More than two-thirds of private agencies had heart defibrillation devices, compared to only 40 percent of fire departments. Private agencies are also more likely to be subject to an external review and use advanced technologies such as automotive vehicle locators.
Sullivan believes that his county could not obtain better service than what his company provides were the county to take over providing EMS service itself. “In my mind, we offer the best quality for the money” he said. All but one of the company’s ambulance personnel are certified paramedics; the remaining crewmember is undergoing paramedic training. The company’s commitment to excellence of service shows in its training program, Sullivan said. The firm has made an extensive investment in education and is a certified to train paramedics just as many of North Carolina’s community colleges are. The company would be willing to provide services in other counties under the right circumstances.
Lowrey is associate editor for Carolina Journal.