This article originally appeared in the January 2002 issue of EMS World Magazine.
Economics wonks seem to agree: The United States is headed for (or is already in) a recession. Times were getting tight even before the terrorist sucker punch of September 11; in its aftermath, the American economy, like the Americans who fuel it, seemed depressed and sluggish. With an imminent war unlike any fought before, people weren’t sure how to react.
The EMS economy, unlike that of many industries, in some ways transcends the economic winds that buffet other professions. However hard times are, people don’t stop getting sick and injured. However, neither is EMS fully immune. If a department’s revenue shrinks, big-ticket purchases become important decisions to be weighed with care. In some places, it’s already happening. Departments that think they’re exempt, experts say, are deluding themselves or are rare departments indeed.
“EMS is vulnerable on a couple of fronts,” says Bob Holdsworth, president of EMS consulting firm Holdsworth Pelton, who has been advising clients on girding for the coming economic storm. “As more people are laid off, there will be more uninsured patients. There will be personnel shortages at the insurance companies. Then there is the Medicare fee schedule. These are all things I’m telling our clients to be prepared for. They should have enough credit line, cash reserves or a combination of the two for a minimum of 90 days of operation.”
Stretching the Net
As the ‘safety net’ of American healthcare, EMS is depended on to catch those who fall through the cracks. As the U.S. economy contracts, that number is likely to rise.
“As people are laid off, many are opting not to take their COBRA insurance with them because they have to pay for it,” says Holdsworth. “That means there are more people who might need to use an ambulance who are going to have problems paying their bill.”
Another factor is the new Medicare fee schedule, which will reduce revenue for most providers, in some cases dramatically.
“The fee schedule is going to be a nightmare,” says Holdsworth. “What I’m seeing around the country is that carriers are not uniformly prepared to implement it. We’re already seeing claims being denied under the new codes. Our carrier has asked us to start using them so they can get a handle on it, and they’re denying claims under these new codes, saying ‘It’s not medically necessary’ using new rules that aren’t in effect yet!”
Finally, to this increasingly volatile equation, add the combustible variable of terrorism. The attacks of September 11 left the nation jumpy and vulnerable to the anthrax assaults that followed. Many Americans had police, fire and EMS virtually on speed dial, and emergency responders were rushing responses to just about every bit of white dust in the country.
“We’re seeing an increased use of 9-1-1 by municipal leaders who expect it to be the safety net when all these scares come through,” notes Holdsworth. “People will call, hysterical that they just got talcum powder in the mail and think it’s anthrax. Some of the departments we work with are doing two and three false alarms a day. The call volume’s going up.”
While the heroic rescue efforts in New York City certainly galvanized Americans’ appreciation for their emergency responders, any boost it provides to EMS is likely to be transient. Donations may be up for now, but when the family finances tighten, they won’t stay there. And while cops and firefighters are in line for unprecedented largess from a grateful Congress, EMS, never as adept at playing the political game, is, as usual, a step behind.
“I’m so frustrated that the general public and governmental officials do not know what we do,” says Holdsworth. “They don’t know enough to separate what the ambulance industry does. Some think we’re the fire department, some don’t know the difference. I think ambulance providers now, if they’re not well-connected with their local leaders, have the potential to be left behind in the funding.”
The Parsimony Plan
With income down and more being asked of them, EMS agencies are in a pickle. The solution? There is one, and it’s easy in theory but hard in practice and not at all glamorous: More financial discipline, top to bottom.
“It’s the same thing you’d do with your household budget if somebody were to lose a job or have their hours cut back,” says Holdsworth. “In a program we do, we call it ‘Hitting the Reset Button.’ It means everything you’ve done up until today is history, and from the moment we ‘hit the reset button,’ here are the new rules we’ll play by. And those rules are basically, ‘Let’s go back to the basics with our policy manuals and make sure we’re enforcing them. Let’s make sure we’re doing things to maximize revenue. Let’s make sure we’re getting every billable trip into the system.’ I’ve had services where we’ve found 10%–15% of calls going unbilled because nobody was able to verify they actually happened!”
Financial discipline starts with accurate record-keeping. Beyond that, it can include such steps as leasing vehicles instead of buying, and entering into buying consortiums with other agencies.
“Leasing has become very popular, even with smaller equipment such as breathing apparatus, clothing and hoses,” says Gerald Halpin III, president of the Fire and Emergency Manufacturers and Services Administration (FEMSA), a trade group of manufacturers and distributors of equipment and supplies to EMS and the fire service. “It all boils down to money—people don’t have the dollars available to purchase what they need. Most of the large organizations have lease programs now, and they are used.”
Collective buying by allied agencies, often under the umbrella of some regional government entity, is another way to save. It allows bulk purchasing, which means lower prices. The drawback, of course, is getting each participant’s needs aligned so that everyone wants to buy the same thing.
“If people could actually agree on what they want for units or equipment, they could form consortiums,” says Holdsworth. “The problem is, most people can’t agree. One agency wants a Type III with all the bells and whistles, while the other wants a van that’s just basic transportation.”
Obviously, compromise is necessary. The recommendation is to buy simple, and let agencies that want to gussy their purchases up do so later on their own dime.
It’s a two-way street, of course, the business of EMS, and for every buyer who buys less, there’s a seller who’s losing money too. So it certainly behooves manufacturers to maximize the value of what they offer. To that end, emergency services have seen an increase in the development of combination and multipurpose equipment.
“Manufacturers are developing pieces of equipment that do more than one thing,” explains Halpin. “For instance, they already have on the market a hazmat truck, with a certain amount of hazmat equipment for decon, that can also be used to fight traditional fires, transport patients, be used as a triage center—it does a lot of things, and you get a good bang for your buck.”
In EMS, companies are developing combined monitors and other devices with the same premise. In the fire service, manufacturers are even working on integrating communications capabilities into fire hoses.
“We’re going to begin seeing fiberoptics woven into the hoses to transmit information,” says Halpin. “The engineers are ready; we just need to figure out what information will be put into that cable for use not only at the rescue ground, but also back at the command center.”
Concordantly with streamlining operations and maximizing their buying power, agencies must continue to work their communities as well. Local governments can help mitigate shortfalls, and citizens, if they’re made aware of the needs, can often be persuaded to help out with donations and in-kind assistance. One agency that has done this with great success is the Seymour Volunteer Ambulance Association (SVAA) in Seymour, CT. The National Association of EMTs’ 2000 Volunteer Service of the Year, Seymour has a paid management staff of just four, supplemented by 80 volunteers, yet has a presence in its area that far outstrips its size.
“We have one of the only EMS-based Safe Kids programs in the country,” says Seymour’s Executive Director, Frank Marcucio. “We have the only EMS-based Safe Communities program in the world. We’ve done a lot of work with NHTSA, and we’ve done a lot with the community here to get grant money and funding.
“We teach all 400 kids in our middle school first aid and CPR as part of their curriculum. We train people in business—we’ve recently picked up a big construction company in town. We just completed MRT training for one company’s security guards. We handle training for the convalescent homes in the area, CPR for their nurses and nurses’ aides. We do everything across the board. Our community outreach program has been a significant source of funding for us.”
A key element of Seymour’s approach is that it transcends traditional EMS and ventures into the realm of injury prevention. Besides training people in first aid and CPR, SVAA gives out car seats and bike helmets, and stays active and visible in many ways.
This has not only endeared them to their community, it has galvanized donations.
“It’s created a definite link to philanthropics and much greater grant opportunities,” says Marcucio. “At the same time, donations from the business sector have increased significantly. I think it’s because it’s not just focused on EMS; it’s focused on injury prevention, it’s focused on children, it’s focused on education and those types of things.”
Association membership also has its privileges. The Safe Kids and Safe Communities programs allow bulk-purchasing and insurance discounts, and membership in two other organizations, the Valley Health and Human Services Organization, a consortium of 42 non-profits, and the Connecticut Association of Non-Profits (CAN), provides avenues for group buying, grant-seeking and charitable donations.
“We just had, for example, $7,000 in furniture donated to us from businesses that are moving out of the area or just replacing furniture,” says Marcucio. “[This membership] also allows us to group-purchase safety devices and equipment and things and make them available to the public for a lot cheaper. And then we can use them for fundraising efforts too.”
Seymour’s is exactly the right strategy, says Holdsworth:?Make sure the people you serve know you and know what you do for them.
“When we advise people to do their fund drives,” he says, “we advise them to communicate the need: Tell potential donors how many calls you did, how many people were trained, community stuff you did. We try to get people to change their view from ‘It’s the ambulance service’ to ‘It’s our ambulance service.’ The more you market yourself in your community, the more likely you are to be supported when you need things.”
With the twin spectres of recession and terrorism looming for the foreseeable future (not to mention the new Medicare fee schedule), EMS agencies will have to be fleet afoot to keep their heads above water. Belt-tightening appears inevitable, and those who don’t embrace a more disciplined approach may end up letting their communities down.
“I’ve been telling our clients, ‘Live within your means. Don’t get extravagant with your spending. Make sure you put money away in cash reserves. Keep renewing your credit lines and staying in good graces with your banker,’ ” says Holdsworth. “The services that have paid heed are in good shape. I have a couple of clients that have a ton of money, they’re running with reasonably new stock, they’re able to pay stipends to their people. They’re in good shape because they were fiscally responsible.”