To Ambulance or Not to Ambulance?

Speeding ambulance

By Joseph V. Maruca

My fire department, the West Barnstable (MA) Fire Department (WBFD), has been providing advanced life support (ALS)-/paramedic-level ambulance services to our community since 1974. We initiated our service shortly after Los Angeles (CA) County initialed its more famous paramedic program. Our community has 3,200 residents across 14 square miles, operating one ALS ambulance that transported 270 patients to the hospital in 2018. Because of our long experience as a small, mostly volunteer ambulance service, we often get questions from other small fire departments wondering if they should also take on the role of ambulance provider for their communities.

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Most of the time, those departments consider starting or taking over ambulance service because they believe that the income stream from ambulance billing will help support the fire department; that’s generally not the case. Most of the time, small departments won’t make a profit by providing ambulance service. That is why it is best, in small communities, for a fire department to take on the ambulance service for nonfinancial reasons, such as providing better service than is otherwise available.

In any case, small volunteer fire departments need to consider not only the financials, but also the operational, administrative, and cultural changes that adding ambulance service to their mission will bring.

Start with the financial aspect. If your department is considering becoming an ambulance provider, you need to know how many patients you will transport to the hospital each year. This is critical to determine your ambulance billing revenue. Your best source for this information is from the agency that currently provides ambulance transport for your community. If that agency won’t provide the information (and you can’t force them to provide it), you’ll have to estimate the number of patients based on a comparison to other similar communities.

Next, know what percentage of your annual patients will be paying their ambulance bill with Medicare (or another similar government insurance plan); with private insurance such as United Health Group, Cigna or Blue Cross; or if they will pay out of pocket because they don’t have insurance. Each of these categories will pay your service a different rate, and you will experience a different collection percentage from each of these categories.

For instance, in 2018, 171 of the WBFD’s system’s patients were on Medicare, 73 had private insurance, and 21 paid out of pocket (no insurance). Medicare only pays us $420 per patient, so our gross income transporting Medicare patients equaled $71,468. The much smaller group of 73 patients with private insurance paid us a total of $173,076, or an average of $2,522 per patient. The 26 self-pay patients paid us a total of $14,883, or $572 each. The importance of this analysis is that Medicare (or other government insurance) and patients who pay out of pocket contribute much less to your income that private insurance patients do. Although we bill everyone the same amount for a trip to the hospital, what we actually collect varies greatly depending on these factors.

Now, you may be thinking, “Wow, $259,427 in ambulance revenue. This is a great reason to go into the ambulance business. Just think how much more money that is for our fire department.” However, you need to stop and calculate your costs of providing an ambulance. Unfortunately, many fire departments focus on how much revenue the ambulance will produce, but they fail to look too deeply at the expenses.

In FY 2018, the WBFD spent $8,693 on medications and $12,584 in disposable medical supplies. Then there is the cost of the ambulance itself. If you keep an ambulance for 10 years, you need put aside about $30,000 per year to purchase the replacement unit. Then there is the cost of the portable equipment: a stretcher system for $30,000, a monitor-defibrillator for $27,000, a stair chair for $3,500, first-in bags, triage kits, portable oxygen, portable suction, and much more. We easily have $75,000 worth of portable equipment on our ambulance; when amortized over 10 years, that’s another $7,500 per year in cost. There’s insurance, fuel, preventive maintenance, disinfecting/cleaning, licensing, repairs, and multiple radio systems. All in all, it costs us about $80,000 just to own the ambulance without staffing it, training our staff, and administration.

Over the years, as the public has come to expect better and faster service, we’ve had to hire a paramedic/firefighter to be on-duty 24/7; this eats up all of the rest of our ambulance income. Having one person at the fire station to get the ambulance out fast means covering 168 hours per week. At $25 per hour, this equals $218,400 per year—without even factoring in benefits. Staffing just weekdays from 8 a.m. to 6 p.m., which we did for 20 years, cost us $65,000 without any payroll costs or benefits.

If you think, “$25 per hour is too much,” keep in mind that, in the northeast, this is not the case. Right now, our department is struggling to find firefighter/paramedics or firefighter/emergency medical technicians (EMTs) to work shifts at $25 per hour. This situation will vary greatly from one region to another. However, the amount you can charge and collect will vary greatly by region. In parts of the country with lower wage rates, what you can charge will be lower. It is essential to know your labor market.

And, yes, you can run the ambulance without any paid staff on board. We moved to 24/7 staffing because it was taking us 16-18 minutes to get our ambulance to calls on the weekends and at night. Our community found this unacceptable. Today, we get the ambulance and paramedic to the patient in seven minutes or less 90 percent of the time. Our staffing cost is very much driven by community expectations of how fast they want us arriving. Before you start ambulance service, determine what your “90 percent of the time” response time will be so you can set realistic expectations for your public and political leaders.

In addition to direct financial cost, providing ambulance service comes with high resource and administrative costs. We invest a great deal of time training for emergency medical services (EMS). The WBFD’s typical member spent 25 hours participating in EMS training last year. On top of that, there are uncalculated hours spent training new volunteers to drive and operate the ambulance. We do daily drug and equipment checks on the ambulance as well as comprehensive operational checks on the ambulance twice a week. Our staff spends hours each week writing EMS reports, and we need specialized software for patient reports. We also need a part-time administrator to manage billing, regulatory compliance, records management, and licensure data tracking.

Ambulance service will change the culture of your department. Do you allow people to be only EMTs/medics and only firefighters (we do) or do you require everyone to do both? This is a difficult personnel decision that will remain unsettled and debated constantly. You will face burnout issues because EMS will equal 65-70 percent of your emergency calls. Imagine your volunteers suddenly having three times as many emergency calls! Will you have three times as many volunteers to handle the work load?

So, why do we provide ambulance service? There is no other agency that will provide an ALS ambulance in seven minutes, 90 percent of the time, to the people of our community. We do it because it’s what’s best for our community, not because we think we can make money.

 

Joseph V. Maruca is chief of the West Barnstable (MA) Fire Department, a combination fire department on Cape Cod. He served as a volunteer firefighter from 1977 until becoming chief in 2005. He is a director of the National Volunteer Fire Council (NVFC) and represents the NVFC on the NFPA 1917 Technical Committee. Maruca is also a retired attorney and Of Counsel to the Crowell Law Office in Yarmouthport, concentrating in the area of estate planning.

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