FIRE DEPARTMENT,INC.
What’s this, a public fire department with a $126,000 radio, TV, newspaper, billboard, and direct-mail advertising budget? Chief officers in pin-striped suits driving unmarked sedans? A department that sends bills to customers to raise half of its $5.8 million budget? It does sound a little different, but to one Western Oregon fire department, it’s just business as usual.
The Springfield (OR) Department of Fire & Life Safety wasn’t always this way. In fact, it wasn’t even known by this name. In 1981 the Springfield Fire Department (SFD) was a traditional government, tax-supported agency. That was before the new financial reality of cuts in general fund support. The story of what has become of the department serves as a glimpse into one of several possible “futures” for the fire service as it struggles to survive tough financial times. It’s an interesting case history, and studying it may help you consider alternatives when making important planning decisions.
CONTRIBUTING FACTORS TO CHANGE
On May 4, 1981, the department provided fire suppression, fire prevention, and basic emergency medical services first response to a population of 49,900. The service area included a largely blue-collar industrial city and surrounding suburban businesses and neighborhoods, encompassing 18.5 square miles. Four pumpers and a part-time truck company were staffed by 51 paid and 12 volunteer line personnel operating out of four stations. Including administrative and prevention personnel, there were 62 paid positions. Statistical reports showed 1,712 runs the previous year.
Increased services. Within 24 hours, the department was rocked by one of several major events that drastically would change its future. Overnight, the SFD began serving 73,800 people—stretched out over nearly 2,000 square miles—with advanced life support and ambulance transportation. In partnership with the nearby city of Eugene, the two cities accepted responsibility for replacing a private ambulance company that had ceased operations without warning. Using equipment borrowed from other fire departments and seven temporary employees hired from the private ambulance company, two full-time paramedic transport units were placed in service. Because of a downturn in the local economy, the city council decided that all additional expenses for operating the ambulance service would be paid by user fees that were set 25 percent lower than those of the private company. The SFD had entered a new “business.”
The first of several impacts was felt immediately. Although only seven employees were added, the run-related workload more than doubled. Since only approximately half the number of personnel required to fully staff two medic units on a traditional 24 hours on/48 hours off shift were hired, medic unit drivers were “borrowed” from the truck company. This resulted in the need to drop a pumper to staff the truck when needed. Everyone assumed this would be a temporary condition until the ambulance service could get on its feet and additional people could be hired and trained for paramedic duty.
Initially, some personnel opposed adding ambulance service. Even though the temporary’ ambulance personnel later were put through the department’s hiring process, crosstrained for fire suppression, and given permanent status, they still were viewed as outsiders from a different organizational culture and were not fully accepted until much later. The idea of charging a fee for ambulance service also was a foreign concept and was equally as slow to be accepted.
Continued economic woes. As a part of its strong ties to the boom-andbust cycle of a timber-based economy, local hard times worsened. It soon became apparent that the temporary situation with the ambulance would not be temporary at all. Ambulance rates were not producing enough revenue to meet expenses for higher wages and benefits of the public sector workforce, and rates were raised to the level of those of the former private company.
A new revenue-producing orientation began to develop, as SFD administration struggled to produce enough money to avoid layoffs. Nonemergency ambulance transfers that were to be shifted to the private sector were retained, as the city became the sole provider of all ambulance services.
New chief from “outside.” As economic pressure increased, the department’s long-term, up-from-the-ranks chief announced his retirement. After a prolonged search, a new chief from outside the organization was hired. Facing the immediate closure of one station and the city manager’s orders to streamline fire administration, the chief reassigned several personnel and demoted others, resulting in several hastened retirements. I ndaunted by rising criticism from the line, the new chief established the attitude that the department would continue to provide high-quality services despite cutbacks in resources. The chief also showed early enthusiastic support for developing EMS as a revenue-producing enterprise.
W hen an effort to revitalize the department’s volunteers with a budget increase for up-to-date equipment and training failed, the new chief promptly cancelled the program. In addition, a new effort to develop a highly skilled, highly motivated workforce was begun w ith the announcement that knowledge, skills, and abilities (KSAs) would become the predominant criteria for promotion. Standards for advancement in key positions were upgraded, and competition was opened to the outside. Seniority-based considerations were minimized by giving greater weight to the KSAs. Personnel responded by increasing their level of preparation for advancement, and some received “fast-track” promotions because of their qualifications.
Multiskilled, multiple-role personnel. When several firefighter positions were eliminated by retirement attrition in 1983, one of four engine companies was shut down. Rather than close the station and relocate a medic unit, the station was kept open by having the medic crew also staff a two-person, mid-sized engine. Depending on the alarm, the crew would respond in the engine or medic unit. In recognition of their role in fire suppression, EMS/ambulance, special rescue, and hazardous-materials response, the crew was dubbed “multiskilled, multiple-role.” The more common fire service term “dual-role, cross-trained.” which recognizes only the primary fire suppression and EMS roles, was consciously rejected.
EVOLUTION OF A NEW PARADIGM
Gradually, a shift toward a corporate business model began. A bottomline attitude toward efficiency, productivity. innovation, customer service. revenue generation, and competitiveness emerged. The tendency to view the department as limited by general fund financial resources gave way to the more entrepreneurial attitude that “anything can happen when we provide the resources ourselves.”
New image. The department adopted a new name in 1983 to reflect the change in orientation away from a single-function, fire-suppression-only service. The name Springfield Fire & Life Safety (SFLS) was thought to be more representative of a changing organizational mission that also included fire prevention, EMS, and environmental (haz-mat) protection.
As roles changed, so did the expectations of the department’s chief officers. Officers above the level of battalion chief (division chiefs, fire chief) worked a 40-hour week and spent most of their time communicating with civilian department heads, outside agencies, and business people. Financial, planning, and policy issues occupied the bulk of their day. As a result, most chief officers were not viewed as emergency responders. Business suits and unmarked business sedans were the normal “uniform of the day.” Their use of duty uniforms was primarily ceremonial. Although these chief officers sometimes responded to large incidents, battalion chiefs were recognized as the highest ranking “hands-on” commanders.
Labor issues. The department’s International Association of Fire Fighters local was instrumental in the department’s efforts to manage rapid change successfully. Part of that change involved the ability to increase call load to the point that the same number of people as in 1981 were handling 217 percent more runs in 1991.
Of the five Oregon cities used for comparison. Springfield had the highest productivity and the lowest cost per call. L;nion personnel became known as “king of the comparables.” As part of the cost of such performance, increased EMT and educational incentive pay was added and the entry level rank of firefighter was abolished. All new employees were hired as firefighter/paramedics to allow better duty rotation from ambulance to engine. Firefighter/paramedics promoted to engineer or captain were permitted to retain their paramedic rating and incentive pay. As a result, nearly half of all line personnel became paramedics and all engines were equipped to deliver advanced life support.
Because of the increased demand for training and the high run volume per unit. EMS training was done offduty. All personnel temporarily were relieved of their shifts and placed in an academy-style program of eighthour days for annual recertification classes.
Money, money, money’. With the new paradigm came the realization that decreased reliance on general fund support with increased emphasis on outside revenue generation was the wave of the future. An increasing amount of administrative time was turned from “pinching a penny” to “making a dime.” In fiscal year (FY) 1980-1981, the department generated $376,300, which amounted to 16 percent of its $2,327,200 total budget. By FY 1992-1993, it will have generated $2,810,300 in outside revenue, or 47.3 percent of the $5,919,900 total budget.
Without losing sight of its primary mission to “protect life, property, and the environment,” the SFLS began to weigh the profit-loss potential of its services. The concept was simply that it takes money to deliver services, and given that general fund revenue was not keeping pace, a profit would be needed elsewhere to turn the corner and rebuild the department. I’he “elsewhere” turned out to be the EMS enterprise fund.
By raising ambulance fees to those of private companies, adjusting them periodically, and doing a good job of bill collecting, the program began to more than pay its own way. Additional positions were funded by EMS revenue, avoiding layoffs planned as a result of reductions in general fund support. However, a consumer survey conducted by the department showed that fees had risen to a level that made some citizens reluctant to access the system.
Advertising and marketing. To counter this situation, the SFLS succeeded in getting a law passed in 1983 to provide ambulance service for $33 per household per year. The concept included an annual marketing and advertising campaign to convince voluntary potential subscribers (members) to join. In return, members received ambulance service whenever needed at no additional cost. A bill was sent to insurance companies to collect whatever was normally allowed, and any unpaid balance was written off. Those without insurance also were allowed to join at the same price. The program, known as FireMed, was an overnight success and spread to 76 cities in Oregon and California. By 1991, more than 23 percent of households had joined. Paid radio, TV, newspaper, billboard/bus board, and direct-mail advertising ran during May and June, as FireMed became the leading advertiser in the community during these months. FireMed programs throughout the state banded together to care for each other’s members, making it the largest geographic area served by any such program in the nation. Not only had the high cost of ambulance service been countered and additional revenue raised, but FireMed had developed a new sense of customer loyalty from many thousands of members.
Selling services to government and businesses. In addition to selling EMS to the public and the insurance companies, the SFLS also sold services to other governments and businesses. As the suburban area around the city grewr over a 10-year period, contract income from fire protection to neighboring water districts rose 103 percent, from $369,600 to $731,300. When a new hazardous-materials control program was begun, fire code permit fees for businesses that stored and handled these materials funded one-third of the haz-mat budget. Management services for the FireMed and ambulance billing programs were sold to the city of Eugene.
Customer services. As the department grew increasingly dependent on the sale of services for its budget support, it w’as natural to become more aware of the need for good customer service. Moving away from a traditional fire department program of public relations, the SFLS spon| sored customer service training for all personnel and implemented a “quickresolution system” (QRS) for custom: er complaints. I’he QRS requires that the appropriate staff member resolve the issue within 24 hours or inform the complainant exactly when the issue will be resolved. If not resolved in 24 hours, an explanation will be given of the steps that must be taken and the reason for the delay (for example, persons involved are off shift and will be interviewed when they return to work).
Routine post-service written surveys showed that despite high fees (ranging from S100 to S2,000), customers were very satisfied. Survey suggestions and remarks promptly were followed up with a phone call to the customer.
Research and development. Along with other business-oriented practices, the department began to invest more staff hours in research and development. As a result of a growing reputation, this rather small department began to be viewed by equipment manufacturers as the place to test advanced technology. Computerized rapid defibrillation equipment was tested in the early ’80s, leading to the launching of the International Association of Fire Chiefs Rapid Zap project in Springfield in 1987.
External cardiac pacing equipment, now a standard feature on advanced life support defibrillators, was first used in Springfield in 1982. In the early days, the department took a lot of flack for testing “silly gadgets.” Hut the “gadgets” gradually were accepted by others and 10 years later are considered state-of-the-art.
Awards and accolades. The department’s EMS program was named number one in the state in 1983 and number one in the nation in 1985, with the city of Eugene’s program. Three years after the Rapid Zap project was initiated, Fortune magazine listed the Springfield and Eugene area as one of the 10 safest locations in the nation for people with heart conditions to live. With the addition of the FireMed program, several nationally distributed videos were filmed in Springfield. The SFLS staff frequently was invited to speak nationally, and the chief was selected to receive the first annual NIP A International lire Command Fellowship to study fire and EMS innovations in Europe.
Strategic planning. A strategic planning process was begun to refine the organization’s mission and values and focus its energy on common goals. Management team members were not familiar with the strategic planning process, and progress was slow at first. However, the process served as a significant team-building exercise, and group consensus came easier with experience. A new mission and values statement was made sufficiently broad to encourage growth while defining the areas in which growth would occur. The document received widespread and enthusiastic support.
Within less than a year, fire and EMS divisions were merged, ambulance billing services were moved from the control of the finance department, a fee-based haz-mat program was initiated, and planning of a new fire station and helicopter medical transport system was begun.
THE PITFALLS
A megaboost in productivity, millions in new revenue generated, great customer relations, innovations and improvements, and a national reputation for excellence. Sounds more like a manager’s dream than a city fire department. So where are the pitfalls?
Shift in general fund support. When the department began to generate its own new revenue, it was perceived as less in need of general fund financial support, regardless of the increase in workload. As a result, some shifts in general fund support formerly reserved for fire and life safety occurred. When the ratio of such shifts is 1:1—make a dollar of new revenue, lose a dollar of general fund support — the results of your labor are for naught. The money you raise is going to help another department Fortunately, the SFLS ratio is only 0.23:1, or 23 cents of general fund support lost for every new dollar earned, a net budget gain of 77 cents per dollar earned.
Indirect (overhead) charges for centnd services. If you operate an enterprise within government, you likely will pay an overhead fee for centralized support from such general fund departments such as finance, human resources, city manager, and legal. This method, first developed tor use in large private companies and later adopted by government, is legitimate but depending on how the charges are determined may result in excessive shifting of revenue. Hie concept is based on the premise that agencies that sell services should pass the cost of central support on to the consumer. No argument there. However, if a large, indirect charge is added to a sizeable loss of general fund support, the result will leave the fire department with all of the work and not enough of the revenue. This establishes a powerful inverse reward system that will discourage future efforts at revenue generation.
In the case of the SFLS, indirect charges add an additional five-cent loss for each new dollar of revenue generated. When combined with the general fund loss, the net budget gain is reduced to 72 cents per new dollar earned.
HOW THE DEPARTMENT HAS FARED
Probably the best indicator of progress is to compare the general fund support and total budgets of fire and police departments in 1981 and today. A general fund comparison shows that the FY 1980-1981 police support had grown 96 percent by FY 1991-1992, a substantial increase compared with fire and life safety support, which grew only 72 percent during the same period. However, when the growth in total budget (including EMS) was reviewed, the fire and life safety budget had increased 151 percent, compared with 96 percent for police. By these comparisons, most would conclude that the SFLS has experienced a positive overall outcome for its efforts. The bottom line for budget increases is derived from the 72 cents per dollar of new revenue the department keeps.
What does the future hold? Oregon recently has joined the ranks of other states with property tax limitations. The SFLS is now 47 percent selfsufficient—generating nearly half its own support. Provided that the city does not increase the shift of general fund resources aw ay from fire and life safety, revenue generation will minimize the impact of tax limitations. In addition, the department will continue to explore new sources of revenue to maintain and improve services. Although the total effect of Oregon’s tax limitations is yet unknown, one thing is certain: Experience in the new financial reality of limited resources and business-oriented solutions will help. Following are some of the lessons learned.
- Don’t sacrifice the historic fire service mission of protecting life and property for the sake of dollars.
- Don’t compromise safety for the sake of productivity.
- High performance will not occur without a high-quality workforce. Good labor relations are essential.
- If you charge high prices, customers will demand high quality. Be prepared to provide it.
- Quick handling of complaints is important.
- Research and development pay off big.
- Advertising, when done right, works just as well for selling fire and life safety services as it does for selling soft drinks.
- Multiple-role, multiskilled personnel are more satisfied with their jobs and produce higher-quality service.
- Don’t begin selling services before researching the legal requirements.
- Have an agreement that spells out how much revenue you get to keep before you begin to raise new money.
