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Critical Times Ahead-Ambulance Services Struggle Financially

April 28, 2017
FROM:     LancasterOnline.com (www.lancasteronline.com)
BY:          Susan Baldridge, Staff Writer
RE:         Critical Times Ahead-Ambulance Services Struggle Financially

Ambulance crews save lives across Lancaster County (PA) every day, 24 hours a day. But leaders say mounting financial pressures could force some to merge and others to close here.

The impact in emergencies, where every second matters, could be the difference between life and death, they say.

Dean Bollendorf, president of the state Ambulance Association, said the financial situation in many companies is dire. “There are some emergency ambulance services that won't be here in the next six months,” he said.

They are being hit hard by stagnant reimbursement rates, the growing number of people who can’t afford to pay on their own and the surge in heroin overdoses, which requires treatment with the costly antidote Narcan.

Ambulance companies across the state, most of which are nonprofit, are funded by both private insurers and the government programs Medicare and Medicaid. But they have also been turning to grants, municipalities and even subscription drives to pay the bills because the state isn’t covering them.

In some cases, they’re being forced to write off debt.

Lots of it.

The largest ambulance service in the county, nonprofit Lancaster EMS, wrote off $1.6 million in unpaid bills in 2016, said executive director Bob May. Its crews run 36,000 emergency and non-emergency calls a year — nearly 100 a day.

The cost of operating Lancaster EMS is about $12 million a year. While it seeks to recover 90 percent of that cost from fees, it has been able to collect only 52 percent of what it’s owed in recent years.

That model is not sustainable.

How EMS providers fund their operations
  1. Charge fees to private insurers and Medicaid and Medicare. That revenue pays for most of the costs of providing services, but it actually represents a shrinking share of operational expenses.

  2. Some run subscription drives, soliciting residents of their territory for donations directly. They promise donors they will be transported to the hospital for whatever their insurance covers, even if it isn't the whole cost.

  3. State and federal grants cover minimal operational costs.

  4. Contributions from municipalities cover a small portion of the costs. Some local governments give to ambulance companies out of their annual budget. Some give nothing at all.

Fewer companies doing more

Two decades ago there were 36 ambulance companies in Lancaster County, with emergency medical staff who rushed to accidents, kept heart attack patients alive and treated the injured.

Now there are 17.

And at a time when the county’s population is growing at a healthy rate, the financial picture for the remaining ambulance companies is bleak. Some have chosen to merge.

A year ago, in May, the Brickerville Fire Company Ambulance service was folded into Northwest EMS because of a lack of volunteers, said Northwest president Scott Kingsboro. Volunteer companies such as Brickerville are not typically able to hire paid staff or cover the costs of training volunteers in emergency medical care so they choose to merge with another, larger provider.

Smaller companies struggle to buy expensive equipment. An ambulance, for example, can cost around $150,000. A life-saving monitor for paramedics that comes with an EKG readout runs about $26,000. And the latest mechanical CPR device costs about $14,000.

EMS services, meantime, are are required by law to respond to every emergency call, whether it's a life-and-death situation or an elderly person who needs help making a sandwich.

After more than 30 years in the business, Bollendorf said he has never seen it this bad. “The EMS system has no sustainable funding mechanism to prevent a public safety crisis,” he wrote in the association's April newsletter.

Operating at a loss

May said ambulance companies are facing financial difficulty because the federal Medicaid reimbursement rates have not increased since 2004. For Lancaster EMS, an average call costs the company about $350; in return, it gets reimbursed $200 by Medicaid.

The losses on Medicaid calls are shifted to those who are able to pay. Lancaster EMS chief financial officer Ryan Greiner said, however, that the federal health care overhaul has many people driven to policies that have high deductibles for ambulance transportation, which they can't afford to pay.

So they don't.

"We're talking about an essential public service and it has to be funded.” 

~ Dean Bollendorf, president of the state Ambulance Association

“Non-payment is a big issue," May said. "If we go to assist someone, let's say if they fell out of bed or they need assistance in some way and we don't take them to the hospital, we don't get paid."

Likewise, the heroin epidemic has stressed the bottom line of emergency medical services. "We spent $40,000 on Narcan last year," May said. "We're using more of that each year and the price for it keeps going up."

Overdose calls are often not billable to insurance or the individual.

"If we wake them up and they sign off and they don't go to the hospital,” Kingsboro said, “we get nothing but we still have the costs of running the vehicle out."

Potential fixes

One potential source of revenue could be mandatory reimbursements for ambulance services even if the patient declines transportation to the hospital. One House bill would require such payments, but it’s fate is unclear.

Bollendorf, the head of the state ambulance organization, said the bill and an increase in Medicaid and Medicare reimbursement rates would help solve the financial woes facing many EMS providers.

Another alternative is local government dedicating funds to emergency services.

"I think the average healthy person presumes an ambulance is going to respond very quickly when there is a problem," Bollendorf said. "But the health of the EMS system is not there.

"We're talking about an essential public service and it has to be funded,” he said, “or you will not get the response, and it will have an impact on outcomes."

Guaranteed cash flow during transition.