HomeMy WebLinkAboutMINUTES - 09092014 - FPD D.3RECOMMENDATION(S):
ACCEPT a report from the Fire Chief and representatives from The Ludwig Group regarding the financial feasibility
of the Contra Costa County Fire Protection District providing emergency medical services (EMS) transport.
FISCAL IMPACT:
No fiscal impact. Report only.
BACKGROUND:
On April 22, 2014, the Board of Supervisors, acting as the Board of Directors (Board) of the Contra Costa County
Fire Protection District (District), authorized the Fire Chief to issue a request for proposals for a consultant to analyze
the viability of the District providing emergency ambulance transport services. The Board requested an expedited
return on this matter.
The attached report explores the financial feasibility of the District providing 9-1-1 EMS transport in the community
where they serve and other areas currently serviced under a contract by a private ambulance provider. The existing
contract terminates on December 31, 2015.
The report provides guidance regarding the financial feasibility of participating in the competitive bidding process. If
an EMS system cannot be created that would be revenue-neutral or provide funding in excess of expenditures, the
District would not participate in the competitive bidding process for EMS transport.
For purposes of this study, the scope of the project was designed to evaluate:
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 09/09/2014 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, Director
Candace Andersen,
Director
Karen Mitchoff, Director
Federal D. Glover, Director
ABSENT:Mary N. Piepho,
Director
Contact: Jeff Carman,
925-941-3500
I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board
of Supervisors on the date shown.
ATTESTED: September 9, 2014
David Twa, County Administrator and Clerk of the Board of Supervisors
By: June McHuen, Deputy
cc:
D.3
To:Contra Costa County Fire Protection District Board of Directors
From:Jeff Carman, Chief, Contra Costa County Fire Protection District
Date:September 9, 2014
Contra
Costa
County
Subject:Report on the Financial Feasibility of Providing EMS Transport
BACKGROUND: (CONT'D)
A hypothetical model of what a future District-operated EMS transport system might look like.
An examination of the financial numbers regarding expenses and revenues if a fire-based EMS transport model
were to be operated by the District.
Recommendations that could enhance revenue or reduce expenditures if EMS transported services are provided
by the District.
The assessment was intended to provide direction to elected and appointed officials, citizens, and other
governmental entities and to provide a road map for current and future EMS delivery in the District.
By determining the financial feasibility, the District is exploring the possibility of designing a new business
model. This analysis required an understanding both of business and financial principles as well as EMS transport
operating requirements. The analysis also required an understanding of the reimbursement revenue in order to
make a sound business decision whether to participate in the competitive bidding process.
In this case the financial evaluation demonstrated that it would be cost effective for the District to operate its own
EMS transport system.
CONSEQUENCE OF NEGATIVE ACTION:
The report will not be accepted by the Board of Directors.
CHILDREN'S IMPACT STATEMENT:
No impact. This report is informational only.
CLERK'S ADDENDUM
Speakers: Alex Aliferis, Contra Costa Taxpayers Association; Ernie Wheeler, resident of Hercules; Erik
Rohde, General Manager, American Medical Response.
ATTACHMENTS
Final Report - Feasibility Study of the Contra Costa County Fire Protection District Providing EMS Transport - The
Ludwig Group, August 2014
A Comprehensive Assessment of the
Financial Feasibility
of the Contra Costa County Fire Protection District
Providing EMS Transport
Prepared by:
The Ludwig Group
9525 E. Vista Drive, Suite 200
Hillsboro, MO 63050
(636) 789-5660
August 2014
Dr
Acknowledgements
The Ludwig Group greatly appreciates the excellent cooperation received from all levels,
departments, and organizations within the Contra Costa County Fire Protection District.
We thank the many employees of the Contra Costa County Fire Protection District, and
other who cooperated, provided information, or were interviewed.
While there are too many to mention individually, we wish to especially thank the
following individuals for helping to launch, coordinate, and advise the project.
Jeff Carman Fire Chief
Benjamin Smith Battalion Chief
Jackie Lorrekovich Chief of Administrative Services
The Ludwig Group Staff and Consultants
Gary Ludwig, Project Manager
Richard Hamilton, Subject Matter Expert
Contra Costa County
Fire Protection District
An EMS Transport Financial
Feasibility Study
Prepared by:
The Ludwig Group, LLC
9525 E. Vista Drive, Suite 200
Hillsboro, MO
(636) 789-5660
August 2014
Table of Contents
Chapter Page
Chapter I – Executive Summary 1
Conclusion 2
Chapter II – Project Approach 3
Data Study and Review of the Literature 3
Methodology 3
Implementing EMS Transport for the Right Reason 4
Key Criteria Points 5
Chapter III – Background 6
The CCCFPD 6
EMS Delivery in Contra Costa County 7
Chapter IV –Proposed Fire-based EMS Transport Model 11
Models 11
An EMS System 12
Proposed CCCFPD EMS System 14
Chapter V – Proposed Expenditures 26
Costing Out an EMS System 26
Personnel Costs 27
Other Costs 28
Startup Costs 28
Chapter VI – Anticipated Revenue 32
Revenue Projection Findings & Recommendations 34
Revenue Project Methodology 38
Example of EMS Billing and Collections Programs 41
GEMT Explained 42
Chapter VII – Conclusion 44
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 1
Chapter I
Executive Summary
This report explores the financial feasibility of the Contra Costa County Fire Protection
District (CCCFPD) in California providing 9-1-1 EMS transport in the community where
they serve and other areas currently serviced under contract by a private ambulance
provider. Being good fiscal stewards, there is interest in competitively bidding on the
EMS transport contract when the current contract expires on December 31, 2015. This
study will provide guidance whether it is financial feasibility to move forward and
participate in the competitive bidding process. If an EMS system cannot be created that
would be revenue-neutral or provide funding in excess of expenditures, the CCCFPD
would not participate in the competitive bidding process for EMS transport.
Current EMS transport is provided by a private for-profit ambulance company called
American Medical Response (AMR). AMR is a part of a larger corporation called
Envision Healthcare, a publically traded company on the New York State Exchange
under the symbol EVHC. It is anticipated they would also be engaged in a future
competitive bidding process.
For purposes of this study, the scope of the project is designed to evaluate:
A hypothetical model of what a future CCCFPD operated EMS transport system
may look like.
An examination of the financial numbers regarding expenses and revenues if a
fire-based EMS transport model were to be operated by the CCCFPD.
Recommendations that could enhance revenue or reduce expenditures if EMS
transported services are provided by the CCCFPD.
This comprehensive assessment is intended to provide direction to elected and
appointed officials, citizens, and other governmental entities. The purpose of this
assessment is to provide a roadmap for the current and future EMS service delivery in
the CCCFPD.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 2
By determining the financial feasibility, the CCCFPD is exploring the possibility of
designing a new business model for the fire department. A business case analysis of
alternative business options is an activity undertaken when complex alternatives need to
be compared on a common cost basis. This analysis requires an understanding both of
business and financial principles as well as EMS transport operating requirements. In
this case the analysis also requires an understanding of the reimbursement revenue in
order to make a sound business decision whether to participate in the competitive
bidding process.
Based on the recommendations and statements contained in this document, the
document is a compilation of principles and policies that should guide decision makers
on matters that affect the future of the District and the community.
Conclusion
Our financial evaluation demonstrates that it is cost-efficient for CCCFPD to operate
their own EMS transport system. Based upon projected revenue of $31,635,744 and
budget expenditures of $29,356,812.16, the approximate revenue in excess of
expenditures is projected to be $2,278,931.84. Adding to the advantage of being a fire-
based EMS model that can seek reimbursement for GEMT, there is a potential of an
additional $7,529,124 in revenue after the first year of operation. Based on the first year
revenue and the GEMT, the potential for second year revenue is $9,808,055.84.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 3
Chapter II
Project Approach
The Ludwig Group approach to the CCCFPD project EMS service delivery assessment
was multi-faceted. A careful balance of academic principles and realistic understandings
of the challenges that California fire districts face today were prioritized and deliberated
in order to form a consensus represented in this document.
Data Study and Review of the Literature
One aspect of this project was to review literature and data from various sources
including the CCCFPD, the California Ambulance Association, Medicare, Medi-Cal,
private insurance providers, and the Fitch & Associates Consultant report in March 2014
titled “EMS Modernization Project Report.”
Methodology
The delivery of emergency medical services (EMS) is essential to the public safety and
health of the general public. In order to provide implementable strategies for the
CCCFPD a detailed scope of work was established for this project resulting in specific
recommendations. The methodology of the study includes the following items:
Analysis of the existing potential revenue and expenditures for a fire-based EMS
transport model for the CCCFPD with a comprehensive description of the
sources of revenue and expenditures.
The preparation of specific recommendations to improve and enhance
reimbursement strategies for efficiency, effectiveness, quality, and long-term
stability as it relates to fire-based EMS transport in the CCCFPD. The provided
recommendations are structured to support evolutionary improvements to the
system with continuous strengthening of the system’s stability.
An analysis whether the CCCFPD was attempting to implement an EMS
transport program for the right reasons.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 4
Implementing EMS Transport for the Right Reasons
All too often there is discussion of a fire department wanting to enter into EMS transport
without giving thought as to why. Usually there is thinking that “this is something we can
do” or “we can make money.” Fire departments that have this philosophy do not have
justification for entering into the EMS transport arena.
Fire departments need to ask specific questions when determining their interest when
entering into the question of whether to provide EMS transport. Some of those
questions include:
Does the Department feel they can increase the EMS service level to the
community?
Are there slow ambulance response times to calls for service?
Is there unsatisfactory quality of personnel or services? (Clinical care and
complaints)
Is there frequent rotation of different EMS personnel in and out of the current
service?
Is there an opportunity to coordinate first response and EMS transport and create
continuity of EMS delivery?
Are there unacceptable operations for providing EMS?
Is there dissatisfaction with increasing costs of services?
Does local government want more control over EMS operations?
Does local government and the community want more services?
Does local government and the community want unique services (EMS bike patrols
for mass gathering; community health outreach programs, etc.)
Local government and community want more personalized services
Is there growth in the community that creates a need to increase service levels?
The forthcoming report was established with specific goals in mind. The goals are:
Determine if it is financially feasible for the CCCFPD to provide EMS transport
services.
Improve financial stability of the system by maximizing the use of resources while
improving efficiency and economy.
Determine if CCCFPD is wishing to enter into EMS transport for the right reasons.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 5
Key Criteria Points
In developing this study, The Ludwig Group made a series of factual observations based
on data, interviews, history and tradition, stakeholder input, available resources, future
planning, growth predictions, changing demographics, risk profile, system demands,
community expectations, and perceived value of stakeholders.
The key criteria points for the CCCFPD are as follows:
CCCFPD has long standing respect among the citizens in the community.
CCCFPD has an experienced work force in place for supervision, coordination, and
management.
CCCFPD has been a longstanding EMS provider in Contra Costa County as a first
responder.
CCCFPD has the geographical distribution of resources and facilities along with
single point dispatch that can improve pathway management of events.
CCCFPD has an established Advanced Life Support program.
CCCFPD is a public safety net in the community. If they lose money they will not
abandon the operation.
Service to the citizen is paramount.
There will be increased performance accountability and scrutinizing of this report by
outside entities with financial interest in the County EMS operation.
System operation changes should be data driven.
CCFPD has the responsibility for and will exert authority for strategic planning and
implementation if the decision is made to move forward.
EMS service delivery should be predicated on performance measures.
EMS transport in the CCCFPD will continue at predicted growth rates for the
foreseeable future as outlined in the Fitch report.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 6
Chapter III
Background
The concept of performing an assessment of the feasibility of EMS transport by the
CCCFPD was initiated when The Ludwig Group, LLC was contacted and asked to
submit a proposal with a fee cost.
Through a series of telephone calls and emails in May and June 2014 with fire district
officials, the scope of the study, its goals and objectives, and the obtaining relevant data
was done.
A great deal of data and many reports were requested of, and provided by the CCCFPD,
including, but not limited to, budgets, capital equipment, frequency of runs, standard
operating procedures, and memorandums. Some data was available from the start, and
some data was produced at the request of the principal consultant as the study
progressed.
In performing the requested analysis, The Ludwig Group also compared EMS service
delivery within the CCCFPD to other communities in the region that do EMS transport
such as the San Ramon Fire Protection District and the Moraga-Orinda Fire Protection
District
The CCCFPD
The CCCFPD is a dependent special district of Contra Costa County, California and was
created in 1964 when two fire districts merged together. Since then, ten more fire
districts merged into the CCCFPD with one of those districts reforming as an
independent fire district in 1999. The District is administered by the County Board of
Supervisors who also serve as the Board of Director for the District.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 7
The CCCFPD serves the following cities in the County: Antioch, Clayton, Concord,
Lafayette, Martinez, Pittsburg, Pleasant Hill, San Pablo, and Walnut Creek. They also
serve these unincorporated communities: Bay Point, Clyde, El Sobrante, Pacheco, and
Port Chicago.
The fire protection district is located in Contra Costa
County. Contra Costa County itself is located in
central and the western part of California near San
Francisco. Contra Costa County had a 2010 census
population of 1,049,025 and a land mass of 804
square miles.
The CCCFPD is an all-hazards fire agency that
operates from 23 fire stations with 24 pieces of fire
apparatus that are ALS-capable with a
firefighter/paramedic. Those also operate specialty
units such rescues, wild land units, trench rescue unit, a boat, and an air support
services vehicle. There are also two fire stations that are regularly staffed by reserve
firefighters.
EMS Delivery in Contra Costa County
EMS in Contra Costa County is administratively overseen by Contra Costa Health
Services. Contra Costa Health Services is a county government operated agency that
deals with all public health matters in the County including EMS. This agency
coordinates all EMS administrative issues, licensing of personnel and ambulances,
outreach programs, prevention programs, etc.
Contra Costa Health Services enters into and monitors ambulance service agreements
with ambulance providers to provide emergency service within the County when
requested through the communication center(s). The County is divided into response
areas and the three agreements/contracts currently are in place specify the response
areas with the emergency service ambulance providers.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 8
There are a total of three emergency response providers operating in the County who
when requested by the communication center(s) respond to 911 emergency calls. They
are:
American Medical Response
Moraga-Orinda Fire Protection District
San Ramon Valley Fire Protection District
There are a total of eleven other ambulance providers in the County who provide non-
911 inter-facility transports between medical facilities or discharges from a medical
facility. These providers transport patient between medical facilities or discharges from
medical facilities for such scheduled care events as kidney dialysis, chemotherapy, and
radiation treatments. According to the 2014 Fitch Report, there is estimated to be more
than 50,000 such transports each year in Contra Costa County. They are:
American Medical Response
Bay Medic Ambulance
Arcadia Ambulance
California Ambulance
Falck Northern California
Falcon Critical Care Transport
Knight Star Ambulance
NorCal Ambulance
ProTransport-1
Royal Ambulance
Rural/Metro of Northern California, Inc.
Westmed Ambulance
As emergency service providers, American Medical Response, San Ramon Valley Fire
Protection District and the Moraga-Orinda Fire Protection District all have Ambulance
Service Agreements and/or Contracts” with the County to respond ambulances when
requested by the County’s designated public safety dispatch center(s) to designated
response areas.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 9
Figure 1 reflects the four-year call volume of EMS 911 calls in Contra Costa County.
Figure 1 – County-Wide EMS Response1
Traditionally, there will always be a certain percentage of patients who are not
transported by ambulance after a response has been made by emergency service
providers. In most of these cases the patient is refusing care and/or transports. In other
cases, the patient is deceased, it is a false call, or no one can be found. With the
exception of a few episodic events such as deceased patients were unsuccessful
resuscitation has been attempted, government and private insurance payers will not
reimbursement ambulance services for no transport. Some ambulance services do
charge for no transports if some treatment was rendered but the collection on these from
commercial insurance providers is very low. Medicare or Medi-Cal will not pay for such
services.
_________________________
1 Source – 2014 Fitch Report
2009 2010 2011 2012
Calls 77,872 78,850 79,833 86,134
Transports 58,292 59,538 61,390 64,530
0
20,000
40,000
60,000
80,000
100,000
County-wideEMSResponse
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 10
In an attempt to obtain a true picture of the number of EMS calls and transports in the
Emergency Response Area (ERA) that the CCCFPD would be interested in submitting a
response to the RFP when issued if this study determines the financial feasibility, the
total number of calls responded to and transported by the San Ramon Valley Fire
Protection District and the Moraga-Orinda Fire Protection District were subtracted from
the overall figures found in Figure 1 for County-wide EMS response and transport. The
numbers in Figure 2 are representative of the historical number of EMS responses and
transports in what is now ERA 1, 2, 5 with the exception of portions of ERA 1 that are
contained with the Moraga-Orinda Fire Protection District. This graph is found on the
following page.
Figure 2 – EMS Response in ERA 1, 2, and 52
2009 2010 2011 2012 2013
Calls 67,695 69,761 70,927 74,863 74,380
Transports 53,932 55,337 56,853 59,984 58,911
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
EMS Response in ERA 1,2 and 5
____________
2 With the exception of portions of ERA 1 that are contained with the Moraga-Orinda Fire Protection
District.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 11
Chapter IV
Proposed Fire-based EMS Transport Model
This section of the report will deal with the proposed fire-based EMS transport model
that the CCCFPD would have to operate if they were to determine financial feasibility
with pursuing the agreement/contract with the County to provide emergency ambulance
service to ERAs 1, 2, 5 and starting January 1, 2016.
There are various fire-based EMS models that are available to fire departments to
operate. The determination should be made upon the service levels needed to fully
operate the system efficiently, while maintain response times, quality of care, and
financial solvency.
Models
There are various models that fire agencies can operate. They are:
Cross trained/multi-role firefighter/paramedic:This model allows for all
paramedics to be also be cross-trained as firefighters, and certified in various other
hazard mitigation including hazardous materials. In this role, the
firefighter/paramedic can either be assigned to a piece of fire apparatus and/or an
ambulance. This employee is exempt from the Fair Labor Standards Act and
allows the firefighter to work up to 56 hours in a work week without being paid
overtime for any hours worked after 40 hours.
Single Role Paramedic:This model limits the function of the employee to the
paramedic role. The paramedic is not engaged in any firefighting or mitigation of
hazardous events and can only be assigned to the ambulance. This employee
must be paid overtime for any hours worked greater than 40 in one week.
Contract Paramedic:This model is used very seldom in the United States and is
mostly found in the upper mid-West. This model is such that a private company
provides the paramedic who works on the fire department ambulance. This
paramedic wears the fire department uniform and patch. Although they appear to
be a fire department employee, they are actually a contracted employee from a
private company.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 12
In consultation with officials from CCCFPD regarding the three potential system models,
the decision was made to use the single role model as a foundation for determining
costs associated with all three models.
An EMS System
The modern model for delivery of emergency medical services (EMS) has been evolving
since the mid-1960s. Throughout the country, during this 40+ year evolutionary process,
EMS systems have developed to the point that there are commonly accepted
components that can be used to describe EMS systems. These industry components
originate in a variety of sources. Some of these sources are; the original “15 Essential
Components of an EMS System” that were identified in the federal Emergency Medical
Services Act of 1973, and in the “10 EMS System Standards” once used by the U.S.
Department of Transportation to evaluate state EMS systems. In addition, these
components can also be found in the standards of the Commission on Accreditation of
Ambulance Services and in the EMS accreditation standards developed by the
International Association of Fire Chiefs, the contracting guidelines developed by the
American Ambulance Association and the National Fire Protection Association’s NFPA
450 – Guide for Emergency Medical Services and Systems. The NFPA is clear to
identify that this document is a guide and not a standard.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 13
If you were to review each of these documents, clear common denominators would
emerge that define the components of an EMS system. They are:
System Analysis and Planning
Finance
Medical Direction
Quality Management
PIER Programs
Communications
Equipment and Facilities
Human Resources
Operations
All of these components will be examined when helping define what the CCCFPD
system may look like and what the costs would be associated with these different
components.
Emergency medical services should reflect the entire continuum of patient care,
treatment, and transportation for patients outside of the hospital environment. In order to
succeed, an EMS system may include multiple providers and agency(s) required to
ensure prompt response, effective treatment, and appropriate medical transportation for
patients.
The participants in an effective emergency medical service system include members of
the communities, patients, first responders, other public safety agencies such as law
enforcement and fire services, ambulance services, and their Emergency Medical
Technicians (EMTs) and paramedics, physicians overseeing patient care and protocols,
dispatch centers, and medical personnel at hospital emergency departments. The
patient’s needs in emergency events can only be met through the effective cooperation
of multiple individuals and agencies.
How well an EMS system meets each of these components determines the quality of the
overall system.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 14
Providing quality EMS involves the sophisticated integration of a variety of public safety
resources into a system. Any one of these components, segregated from the rest will
result in less than satisfactory outcomes. It is only through the combination of these
components that true system effectiveness can be achieved.
An EMS or medical transportation system is comprised of multiple components. Its
functioning is based upon the coordination and cooperation of, sometimes, multiple
agencies and individuals working together with a common plan to achieve the desired
outcome.
EMS systems have as their primary goal, to deliver the most appropriate emergency
care to someone in need, in a timely manner. The two key operative phrases are “time”
and “level of care.”
Time is the issue that most significantly effects survival for patients experiencing life
threatening emergencies. The most sophisticated, well-trained EMTs and paramedics
do not do a patient any good if they do not arrive in time. In order to best serve the
public, any EMS system must get help to people within clearly established time limits.
Getting the right level of care to people is almost as important as the time issue. The
most important services that can be provided to a patient are the basic-level skills or
basic life support. Sophisticated, advanced life support paramedics in ambulances is the
second level of care that is required in order to achieve excellent patient outcomes.
Proposed CCCFPD EMS System
This section of the report will detail the various components of a potential EMS system in
CCCFPD and any costs associated with that component.
System Analysis and Planning
System analysis and planning provides for a foundation of how the EMS system will be
designed and how structural components will interface to bring about quality within the
system and provide for the proper resources within the acceptable period of a response
time.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 15
Ambulance Staffing: The staffing will consist of one paramedic and one EMT on
each ambulance – an increase over the current levels that allows less than one
paramedic and one EMT on each ambulance.
Response Time Standard: This plan calls for sufficient resources within the system
to meet the current County contract with AMR to have a:
Priority 1s – Life-Threatening Responses
o Ten minutes and zero seconds (10:00) to calls originating in ERZ A,
except for rural designated areas as set forth in Exhibit C of the current
contract.
o Eleven minutes and 45 seconds (11:45) to calls originating ERZ’s B,C,D,
and E except for rural designated areas as set forth in Exhibit C of the
current contract.
o Sixteen minute and 45 seconds (16:45) to calls in rural-designated areas
in Bethel Island and Discovery Bay.
o Twenty minutes and zero seconds (20:00) to calls within other rural-
designated areas as set forth in Exhibit C of the current contract.
o All QRV response requirements can be handled with fire ambulances.
Priority 2s – Non-Life Threatening Emergency Response
o All responses in designated urban/suburban areas will be fifteen minutes
and zero seconds (15:00) and thirty minutes and zero seconds (30:00 in
designated rural areas.
Priority 3s – Non-Emergency Response
o All non-emergency response requests with a maximum response times of
thirty minutes and zero seconds (30:00) in designated urban/suburban
areas and a maximum response time of forty-five minutes and zero
seconds (45:00) in designated rural areas.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 16
Communities Served: This proposal examines providing services to the following
communities:
Antioch
Bay Point
Bethel Island
Byron
Clayton
Concord
Crockett
Discovery Bay
Brentwood
El Cerrito
El Sobrante
Hercules
Kensington
Lafayette
Martinez
Oakley
Pinole
Pacheco
Pittsburg
Pleasant Hill
Richmond
Rodeo
San Pablo
Walnut Creek
Finance
The goal of any EMS system is to make maximum use of potential revenue streams.
The goal of any system is a careful balance between the community quality care,
response-time standards and operational efficiency. While it would be wonderful to park
a paramedic-staffed ambulance on every street corner, it is extraordinarily expensive.
Alternatively, it would be inappropriate to have unacceptable levels of mortality and
morbidity in the system. A balance that is “right” for the community is what needs to be
sought out and achieved.
Aggressive analysis and management of both system expense and system revenue will
achieve this balance.
This proposal examines revenue and expenditures in Finance and Budget chapter..
Medical Direction
All EMS systems and providers should have the benefit of qualified medical direction.
This statement is true regardless of the level of service provided and helps ensure that
EMS is delivering appropriate and quality health services that meet the needs of
individual patients and the entire population. Generally, the role of medical direction is to
establish, implement, and authorize system-wide medical protocols, policies and
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 17
procedures for all patient care activities inclusive of criteria-based dispatching and pre-
arrival instructions, first responders, and EMS transport providers.
Effective EMS systems provide a role for the physician EMS medical director. The
physician is involved in many aspects of the operation from establishing the clinical
standards of care to the performance improvement process and continuing education.
The role of the EMS medical director should be defined in writing, and any agreement for
services clearly defines mutual responsibilities and expectations.
Currently CCCFPD does have a part-time medical director but the hours committed to
this position will have to increase. Table 1 on page 28 reflects that increase.
Quality Management
A comprehensive Quality Management program is required to effectively maintain an
EMS system. There are two distinct components to such a system: Operation
Performance Improvement and Clinical Performance Improvement.
An effective Quality Management program identifies standards and puts in place the
necessary data gathering, analysis, and feedback processes to ensure that the system
is constantly improving. Quality Management, clinical quality, and data reliability is a
mind-set. The concept is that the system is constantly examining itself and constantly
changing for the better.
Currently CCCFPDD has one quality improvement nurse who does random and focused
audits of patient care reports. CCCFPD reviews all STEMI calls, cardiac arrests, all
trauma, and all pediatric calls. If a paramedic falls below the acceptable standard, they
are remediated and if a crew falls below the acceptable standard, they receive focus
training. Additionally, positive reinforcement is provided for crews who perform
exceptionally.
Table 1 on page 28 reflects an increase in quality improvement, training and supervision
personnel who would all be engaged in quality improvement.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 18
PIER Programs
Public Information, Education, and Relations provides for essential information to be
conveyed to the public at large: the business community, schools, citizens, and even
visitors. An effective public information, education, and relations (PIER) program is a
critical activity actively integrated into the functions of an EMS system. Through analysis
of information and about public health threats and physical risks in the community, the
PIER programs are selected or developed where they do not exist and deployed in the
most effective and efficient manner possible. New technologies and techniques proven
in other jurisdictions are explored and utilized when advantageous. A collaborative
approach, utilizing materials, expertise, and guidance from other agencies can enhance
the message and its retention by citizens, all of whom are potential consumers of
emergency medical service care and disaster response services in CCCFPD. The focus
of PIER programs is more diverse than prevention; their messages can be targeted to
special populations, such as children during Halloween for safe trick or treating or fall
injuries for senior citizens.
Currently, CCCFPD has started a program with Rite Aid where they will be doing blue
immunizations for the public as well as medication reconciliation for the elderly. Other
programs CCCFPD does provide includes an aggressive pool safety program that
includes a pool safety fair. Future plans also include a hands-only CPR campaign.
Communications
A communications system and/or center are essential to the successful operation of any
fire/EMS agency. Without an effective communications center and radio
communications, the ability to evaluate a 9-1-1 call, transmit the alarm, transfer
information between the communications center and the scene, or engage in on-scene
communications would be non-existent.
The communications center in a 911 system is also essential when evaluating 911
medical calls to make the determination to send the right resource to the right call. This
is accomplished using a criteria-based dispatching system to assess the nature and
severity of the medical emergency.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 19
Currently, CCCFPD does operate and dispatch all 9-1-1 calls in the current contract
area. After evaluation of the call, if it requires an ambulance dispatch, the call is routed
to the AMR communications center in Sacramento. If the call warrants a first responder
company, CCCFPD handles the dispatching and management of the first responder
company for the medical emergency.
Based on approximately 74,000 medical calls per year, it will be necessary to place one
more additional dispatcher per shift in the communications center to manage the
increase workload. The budget item for this will be included in another chapter.
In checking with the current CAD software, upgrades have been on-going and if
CCCFPD were to enter into a contract to provide EMS transport, there would be no cost
to the CAD software attributed to the implementation of an EMS transport program.
Resource Management
Resource management in any EMS system includes the capital items needed to achieve
a balance of expected response/performance standards with human resources to meet
those standards. The critical pieces of pieces in resource management include fire
stations, ambulances, and critical pieces of more expensive equipment in an EMS
system such as monitor/defibrillators. Resource management also includes logistical
support such disposable medical supplies, uniforms, maintenance of the ambulances,
maintenance of critical equipment, etc.
The CCCFPD does have existing structures (fire stations) within their District and other
communities they would service under a performance contract also have fire stations
that CCCFPD could operate from when ambulances are not on calls. Additionally, also
available to CCCFPD is a model used by the private ambulance industry called System
Status Management (SSM). SSM is a computer-based system where historical call data
are used to deploy the ambulance fleet for optimal response times and to predict where
the next cluster of calls is likely to occur. Typically this requires “posting” ambulances a
intersections where they can locate on a parking lot. Many private ambulance
companies utilize intersections where a gas station/convenience store is located so that
their personnel can use restrooms and availability to hydration and food.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 20
CCFPD does have access to 40 fire stations throughout what would be a future
response area if awarded the contract. Figure 3 is geographical visual description of
those fire stations.
Figure 3: Fire Stations Locations Available to CCCFPD
CCCFPD does have the necessary vendors, specifications and contracts in place that
would be necessary to acquire ambulances, monitor/defibrillators, jump bags, portable
oxygen devices, and other equipment necessary to start-up and operate an EMS system
if awarded the contract.
The start-up costs for CCCFPD will be addressed in the Finance & Budget Chapter.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 21
Human Resources
The personnel standards of a fire department EMS system should be designed to
establish and maintain a competent and well-trained force by recruiting highly qualified
individuals, retaining them, training them, and providing them an interesting and useful
application of their skills and training in the fire service.
Private industry uses labor, material, and capital to produce goods or services that it
sells in order to make a profit. Likewise, federal, state, and municipal governments use
labor, material, and capital to provide services to the public. In either scenario, the key
resource is people, and the administration of this resource is a basic responsibility of
management if the goals of the organization are to be accomplished.
Essentially, human resource management is concerned with maintaining effective
human relations within an organization. As such, personnel administration is an integral
part of the job of all people in the supervisory capacity and is as much a part of their job
as the work that has to be done.
A key source in any fire department is the human resource--the people who actually
make the EMS system work. Fire departments have a number of choices as they
develop. The demographic aspect of the system catchment area often dictates
workforce decisions.
The goal is to recruit, educate, and retain fire department personnel in sufficient
numbers to provide service throughout the system that meets the performance
standards agreed upon by the community and the department.
A significant number of human resources will be needed in order to operate an EMS
transport system. This does not only include those who would be assigned to the
ambulance, administrative, supervisory, and support personnel.
Future explanation and breakdown of positions will be explained in a later chapter.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 22
Operations
Safe and reliable response and transportation is a hallmark of effective EMS systems.
The system should make effective use of resources and provide for the smooth
integration of ground and air transportation systems. If CCCFPD enters into the EMS
transport business, the primary mission should be to provide emergency medical
services to the citizens and visitors of the response area. Any fire department that
delivers these services understands the importance of reliable and consistent levels of
service. When a citizen places a call to the Communications Center, a whole series of
events begins. Each of these events must work cohesively and as a group in order to
allow for a quick and efficient response to the scene of any emergency. Delivering this
service results from the teamwork of dispatchers and responding units.
The goal of any system is to reduce the amount of time that it takes from the time the
emergency is identified until the fire and EMS units are on the scene. At that point, the
level of training and the expertise of the personnel become the deciding factor for the
outcome of the medical emergency. The key to this attribute is the balance of a well-
trained, fast-response system with the budgetary requirements to fund the necessary
equipment, training, and personnel.
Key to the success of the operations piece of any EMS system is the response time, the
staffing levels, and the quality of the care. Response times are quantitatively measured
in several different methods but it is not effective or cost-wise to the have the same
number of ambulances on duty 24 hours of a day. Generally, EMS activity is predictable
based on the numbers of population and the activity of that population. Given the same
numbers of people, traditionally EMS systems will have lesser call volume when the
majority of the population is sleeping versus when they are awake. Therefore, the
practicality of having the same number of ambulances available at four o’clock in the
morning is not the same as four o’clock in the afternoon.
An analysis of the EMS runs in the Priority 3 and 2 categories were examined for
calendar 2013. CCCFPD dispatches first response companies not only for their District
but for other fire agencies within the current response. The only areas were EMS run
data was not available from the CCCFPD Communications Center was for Richmond
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 23
and El Cerrito. However, through other sources we were able to ascertain that the total
amount of EMS calls in those two communities during 2013 was 15,146. This averages
approximately 2 calls during every 24 hour period.
Figure 4 reflects by the hour and the run volume per hour and Figure 5 reflects the
average calls per hour. This is important in determining the number of ambulances that
would be potentially needed in order to operate an EMS system while taking into
consider the financial effectiveness.
Figure 4
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 24
Figure 5
Based upon the data in Figures 4 and 5, the average number of EMS calls per hour at its
highest peak is approximately 11 and and its lowest is 5. Since there are flucations in the
days of the week and the seasons of the year with summer months being traditionally
slightly busier and other untoward events related to weather, the exact science of how
many ambulances are needed to operate the system can be challenging but error should
always benefit the patient. Other factors that impact the number of ambulances
available for call include the assumption that an EMS call can take greater than one hour
to complete. Therefore, for purposes of this report,CCCFPD could effectively and
efficiently operate 23 advanced life support ambulances on a 24-hour schedule.
The value also of an EMS system operated by the CCCFPD allows for mobilization of
additional ambulances during surge periods. During periods of surge if no ambulances
are available, spare ambulances can be parked at fire stations and firefighters can
transition from the engine or ladder company to an ambulance. In effect, if five spare
ambulances were parked at fire stations, a maximum of five ambulances during the peak
hours could be mobilized, bringing the total of ambulances during peak periods to 28.
Effective field supervision is also necessary for an effective and quality-proven EMS
system. Therefore, for purposes of determining expenditures, it is recommended that
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 25
there be one field supervisor in the three different areas of CCCFPD, east, and west on
twelve hour shifts.
Since the scope of this report deals mainly with the financial feasibility of CCCFPD
implementing an EMS transport model, this section will not go in detail of where
ambulances would be housed or deployed.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 26
Chapter V
Proposed Expenditures
In order to determine the projected cost for the CCCFPD to operate an EMS transport
system, it is important to determine the total number of ambulances, the staffing of those
ambulances, the support for such an operation, and other costs associated with
operating an EMS system.
Costing Out an EMS System
How do you determine the cost to operate an EMS system?
Unfortunately, there is no national consensus on the true cost of running and operating
an EMS system. Attempts have been made to determine how to cost an EMS system.
An effort by the National Association of EMS State Officials and the Medical College of
Wisconsin called EMS Cost Analysis Project (EMSCAP) was designed to create a
framework that would determine the cost of providing EMS care from a societal
perspective. The framework includes a 12-step tool in the form of a workbook for
determining the cost of an EMS system. Some contend that the framework is not
complete and still needs to be revised.
However, there are three generally accepted methodologies for costing out an EMS
system.
The first deals with taking the total EMS budget and dividing it by the number of EMS
calls. As an example, if the EMS budget is $1,000,000 and there were 2,000 calls in the
system, you will divide $1,000,000 by 2,000 calls and the average cost to run a call
would be $500.
The second method is somewhat more complicated and provides a cost per hour to run
an EMS system versus the first method which is the cost to run each EMS call.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 27
In the second method, you determine the number of unit hours and divide into the overall
EMS budget. As an example, if you have two ambulances on duty for 24 hours, the total
unit hours available are 48. You would then multiple 48 by the number days in the year,
which is 365. The product of 365 times 48 equals 17,520. If the EMS budget is
$1,000,000, you will divide $1,000,000 by 17,520 and the cost to operate each
ambulance per hour in the system is $57.06 per hour.
A third method is to take the amount of EMS revenue collected and divide it by the
number of calls to determine the cost generated by call. As an example, if an EMS
system collected $500,000 on 2,000 EMS calls, the total amount of revenue generated
per call would $250.
Personnel Costs
In Chapter IV, it has been already been determined that a base of 23 ambulances will be
required 24 hours a day. Using 12 hour shifts and a factor of one employee for every
four to account for vacations, sick leave, injuries, etc, the base number of employees
needed to operate the ambulances would be 230. This number was determined using a
four platoon system, operating 12 hour shifts.
A base of 23 ambulances 24 hours a day over four platoons = 184 employees.
Using a factor of one extra employee for every four employees = 46 employees
A total of 230 EMTs and paramedics would be required.
Over all this equates to 200,928 unit hours in a year or 3,864 unit hours per week.
Additionally personnel such as supervisory personnel will also be required. Using a
concept of three field supervisors for each of the three zones on all four platoons, a total
of 12 field supervisors will also be required.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 28
Additional personnel to support the operation are necessary including a medical director,
quality improvement personnel, training personnel, mechanics, dispatchers and support
personnel will also be necessary. Salaries were determined by examining the current
salaries and benefits associated with AMR personnel who are assigned to a twelve hour
shift, working a 48-hour work week. Table 1 reflects the anticipated costs for personnel.
Table 1 – Human Resource Costs
Employees
Proposed Salary w/
Benefits Extended Price
115 EMTs $76,876.80 $8,840,832.00 *
115 Paramedics $90,854.40 $10,448,256.00 **
12 Field Supervisors $110,000.00 $1,320,000.00
2 RN QI Coordinator $168,426.00 $336,852.00
3 Dispatchers $170,462.00 $511,386.00
2 Mechanics $124,698.00 $249,396.00
3 Training Personnel $120,000.00 $360,000.00
1 Medical Director $100,000.00 $100,000.00
2 Support Personnel $120,000.00 $240,000.00
$22,406,722.00
* EMT salary is based on prevailing wage of $22 per hour and a 40% benefits package totaling $30.80 per
hour, on a 48 hour work week. This equates to $76,876.80 pay and benefits package.
** Paramedic salary is based on a prevailing wage of $26 per hour and a 40% benefits package totaling
$36.40 per hour, on a 48 hour work week. This equates to $90,854.40 pay and benefits package.
Other Costs
There will be other costs associated with the operation of the EMS system. One of the
largest costs would be the commission paid to a billing company for the billing and
collection of EMS reimbursement payments. Based upon anticipated revenue of
$31,635,744.00 (found in the next chapter) and a normal and customary fee within the
profession of nine (9) percent, (could be higher or lower) the commission paid to a billing
company would be $2,847,216.96.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 29
Startup Costs
Whenever an EMS transport starts operation, there is generally startup costs associated
with the operation. These startup costs generally is a tremendous outlay of capital
money to purchase ambulances, monitor/defibrillators, stretchers, airway equipment,
suction equipment, jump bags, oxygen distribution systems, etc. The preferred method
for such as a purchase is to purchase ambulances with the equipment supplied by the
manufacturer of the ambulance. Thus, all ambulances would be delivered fully
equipped. Since it has already been determined that 20 ambulances would be required
at peak operations with five ambulances sitting in reserve at fire stations for surge
periods, it is recommended that a total of 35 fully-stocked and loaded ambulances be
purchased to staff the fleet and provide sufficient reserves for times when ambulances
are being serviced for maintenance.
Research on pricing for Sprinter van ambulances fully-loaded to the advanced life
support level indicates an approximate pricing of $150,000 per ambulance or a total of
$5,250,000. Using good business practices, this amount can amortized over a five
year period at 5.25 percent interest for a monthly payment of $100,281.10 or a yearly
budget amount of $1,203,373.20 through financing typically available through the
ambulance manufacturer. This amount is reflected Table 2 on the following page as a
budget line item.
Other costs associated with running and operating an EMS system, salaries,
professional fees for ambulance reimbursement, and capital acquisition through leasing
are found in Table 2 on the following page.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 30
Table 2 – EMS Budget
Account Number Description Amount
1101 Salaries & Benefits $22,406,722.00
2100 Office Expense $35,000.00
Overtime $500,000
2102 Books-Periodicals-Subscriptions $5,000.00
2130 Small Tools and Instruments $2,000.00
2131 Minor Furniture & Equipment $300,000.00
2132 Minor Computer Equipment $50,000.00
2140 Medical & Lab Supplies $500,000.00
2150 Food $5,000.00
2160 Clothing & Personal Supplies $50,000.00
2190 Publications & Legal Notices $1,000.00
2200 Memberships $3,000.00
2251 Computer Software Cost $30,000.00
2270 Maintenance - Equipment $75,000.00
2271 Vehicle Repairs $800,000.00
2272 Vehicle Fuel/Oil $350,000.00
2273 Tires $75,000.00
2301 Auto Mileage Employees $3,000.00
2303 Other Travel Employees $25,000.00
2310 Non-County Professional Services $2,847,216.96
2477 Training Supplies & Courses $35,000.00
2479 Other Special Departmental Expenses $10,000.00
2490 Miscellaneous Services & Supplies $10,000.00
3616 IT Data Processing Supplies $500.00
3617 IT Maintenance Radio Equipment $15,000.00
3618 IT Other Telecommunications Charges $20,000.00
Capital Lease (Ambulances with Equipment) $1,203,373.20
Total $29,356,812.16
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 31
The following series of equations provides a general application of costing out the EMS
system.
Performance Indicator
Unit hours produced (weekly): (note: 168 hours in a week)
168 x 23 units available each day for 24 hours = 3,864 hours per week
58,911 transports for year 2013 or 1,133 transports per week
1,133 transports per week divided by 3,864 (unit hours per week) = .29 unit hour
utilization (UHU) ratio. This unit hour is well within acceptable industry standards.
Based upon projected revenue of $31,635,744 and budget expenditures of
$29,356,812.16 the approximate revenue in excess of expenditures is projected to be
$2,278,931.84.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 32
Chapter VI
Anticipated Revenue
Patient charges for ambulance services are determined in a number of ways. Many of
the decisions are not made through logical business rationale, but are determined,
limited, or impacted by local political decisions. Many ambulance services base their
charges on the amount that they expect to be reimbursed by Medicare, and others have
simply followed their price structure of other services within the community.
However, while all of these factors may affect the ultimate charge structure, the first step
in establishing a rate schedule is to clearly establish the cost of providing the service.
Any business offering a product or service to consumers will base its prices on the cost
of delivering those goods or services, and EMS should be no different. Only after the
actual costs have been established should the positive impact of subsidization on
charges be determined.
The fiscal stability of a medical transportation service is largely determined by the
system structure in which it functions, its design and its characteristics. Certain key
areas must be examined fully in order to evaluate the financial aspects of a system.
The unique characteristics of a system include its call volume, geography, population,
demographics, and density. A large population generating a high volume of patient
transports allows the fixed costs of providing the services to be distributed over a larger
patient base. Similarly, a given population in a small geographic area requires fewer
medical transportation resources than an equal population dispersed over a large
geographic area. In addition to impacting service usage, population demographics affect
the ability of the service to recover revenue.
For example, revenue for a service with a high percentage of consumers more than 65
years of age will be significantly impacted by the local Medicare reimbursement policies.
Additionally, lower income areas historically have a higher utilization rate for EMS than
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 33
more affluent areas, while revenue from these lower income areas is significantly
impaired. This directly affects utilization as well as revenue recovery potential.
Even though equitable comparison of one system to another is difficult, each system
does have similar associated costs that can be determined. The costs of the EMS
system are summarized as operating, capital, bad debt, and reserve costs.
The question of financial efficiency is directly related to the program’s information
gathering and analysis capability.
It cannot be stressed enough - Proper documentation by field providers is
essential to maximizing ambulance reimbursement for the EMS transport
program.
EMS administration should ensure that all paramedics who transport a patient to the
hospital are being as detailed and accurate as possible when completing a patient
report. Many reimbursement agencies, whether it is a Medicare agency, the State, or a
private insurance company will refuse payment based upon “medical necessity.” Many
claims are rejected because of the lack of documentation supporting the “medical
necessity” of the transport
Additionally, the EMS administration of the chosen system needs to develop a method in
order to reconcile that all transports are actually being billed for reimbursement. Failure
to bill a patient that has been transported will result in lost revenue.
Collection rates will vary from place-to-place based upon the expertise of the collection
company and how the collection rate is measured. The base rate does NOT reflect what
will be collected on each call.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 34
Revenue Projection Findings & Recommendations
The Ludwig Group has projected that if CCCFPD implements an EMS transport
component, approximately $31.63 million will be collected. We have based this
estimated projection on a detailed analysis of the following data points and /or use of
certain tools:
1.) Total annual transport volumes within these categories; Basic Life Support –
Emergency (BLS), Advanced Life Support -1 (ALS1), and Advanced Life Support
– 2 (ALS2),
2.) A proprietary “EMS Revenue” calculation spread sheet,
3.) Existing fee schedule amounts (for AMR units in place),
4.) Estimated “payor mix” within Contra Costa County (independent research and
those gleamed from many of the source documents provided by County
personnel),
5.) A list of the current Third Party reimbursement amounts for the local area.
In the table 3 below, we have inserted the transport call types and the annual volumes
within each of these types. These volumes were based on Computer Aided Dispatch
(CAD) run report numbers and other documents received from the CCCFPD. We
calculated an average “revenue-per-run” number utilizing a “proprietary” EMS revenue
calculation spread sheet associated with this effort.
This spread sheet calculates calls based on type and at a set percentage above the
National Medicare rates. It also includes mileage and any other associated changes
within the final “revenue-per-run” number. This is based on an average of five (5) miles
per trip. In the County’s case, mileage results could be higher, but it will only account for
a few additional “thousands” in terms of the final revenue collected.
We have also only utilized the existing fee schedule numbers currently in place to
perform our calculations; 1.) BLS e - $813.00, 2.) ALS1 e - $1822.00, 3.) ALS2 e -
$1,822.00, and 4.) $25.00 per loaded mile transported. Although we have made one
small addition—a $100.00 charge for Oxygen usage on transport. This is due to the fact
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 35
that both private insurance companies (approximately 90% of applicable charges) and
Medi-Cal ($11.86) provide a source of reimbursement for this type of charge, even
though Medicare does not.
Table 3 - Estimated Revenue Projections
Transport Call Types Annual Volumes Revenue Per Run Revenue
Totals
ALS 1 35,347 $537 $18,981,339.00
BLS Emergency 22,386 $537 $12,021,282.00
ALS 2 1,179 $537 $633,123.00
Totals—58,911 $31,635,744.00
It is also important to note that the revenue numbers listed above are predicated on the
County adopting the “recommended level” of EMS billing and collection efforts within the
overall program. We are recommending that the County adopt an “aggressive” billing
and collections approach. This is the same approach that AMR utilizes as the current
vendor. This would mean that a series of notices / invoices would go out at regular
intervals, requesting payment of any remaining co-pays or deductibles from patients. It
would also mean that anyone without a form of healthcare insurance (the “Self-Pay”
category) would receive a bill for the total amount due, based on level of services /
treatment provided at the time of transport and payment would be required.
A minimum of at least three notices / invoices would be mailed out, but it they were
ignored, then a series of collection efforts would occur. This also means here would be
dunning letters, phone calls, or the reporting of the “uncollected” or “unpaid” balances /
amounts to a credit bureau.
The specific details on the recommended EMS billing and collections program and / or
other types of programs can be found later in this section.We also provide details of the
potential “negative” or “positive” effects on revenue generated from each program
detailed.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 36
The table 4 below reflects the current “payer mix” within Contra Costa County. This data
was obtained based on our independent research of the California EMS transport market
place and through numerous source documents provided by CCCFPD.
Additionally, this data was compared against payer mix results that were received from
other municipal fire departments, which were surveyed as part of this study. This effort
was undertaken to reassure ourselves that even though, the Contra Costa County payer
mix data was from collative sources, it could be used to reflect an accurate and relevant
set of estimates—overall. We believe that it is reflective of the final results that will be
experienced by the County; if this program is implemented and underway.
Table 4 - Payer Mix Projections
Payer Types Percentages within Contra Costa
County
Medicare 33%
Medicaid 15%
Third-Party Insurance 25%
Self-Pay / Patient 27%
We also believe that with the continued implementation of the Patient Protection and
Affordable Care Act (PPACA) or commonly referred to as the Affordable Care Act, these
numbers (in terms of the percentages of “insured”), could improve collection rates.
However, there is much uncertainty regarding how this legislation will be implemented;
for example, it could mean an improvement in the total, overall number of insured
population, but it also might mean that benefits could be removed from plans or the
amounts reimbursed for existing benefits could be reduced. No one can say for sure—at
this point—exactly what will happen regarding final application of the legislation and
implementation of it.
In the table 3 listed on the following page, concerning the data contained within the
“Third-Party Reimbursement Data” for Contra Costa County, CA, there are some specific
things of note:
1.) Due to Medicare and Medi-Cal being “fixed” fee schedules, in terms of
reimbursement rate, the allowable reimburses the same amount on each
transport, regardless of how high the fees are set at by the County. The only
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 37
variance in reimbursement amount is related to the level of services / treatment
provided to each patient during transport. Medi-Cal does allow for the
reimbursement of oxygen and an additional (second) attendant, in certain
circumstances. Medicare does not. Medicare patients are always responsible for
the remaining 20 percent “co-pay” and any beginning of the new year
deductibles; Medi-Cal patients are not (in most cases).
2.) And, because most of the County’s revenue will come from the “Third-Party
Insurance” category, this overall fee structure should be higher. Insurance
companies will pay approximately 80 to 100 percent (with an average of 89
percent) of “customary and reason” charges, minus any co-pays and / or
deductibles the plan enrollee might be responsible for under their plan(s).
Table 5 -Third-Party Reimbursement Data
BLS Emergency
(A0429)
Medicare / Medi-
Cal / Insurance
Reimbursements
ALS 1
Emergency
(A0427)
Medicare / Medi-
Cal / Insurance
Reimbursements
ALS 2 Emergency
(A0433) Medicare
/ Medi-Cal /
Insurance
Reimbursements
Mileage
Medicare / Medi-
Cal / Insurance
Reimbursements
Ancillary
Charges; i.e.
Oxygen
Medicare / Medi-
Cal / Insurance
Reimbursements
Medicare
Allowable:
$420.45
Medicare
Allowable:
$499.29
Medicare
Allowable: $722.66
Medicare
Allowable: $7.16
Medicare
Allowable: $0
Medi-Cal
Payment: $118.00
Medi-Cal
Payment: $118.00
Medi-Cal Payment:
$118.00
Medi-Cal
Payment: $3.55
Medi-Cal
Payment: $11.86
Insurance
Payment: 80% to
100% of
“customary and
reasonable”
Insurance
Payment: 80% to
100% of
“customary and
reasonable”
Insurance
Payment: 80% to
100% of
“customary and
reasonable”
Insurance
Payment: 80% to
100% of
“customary and
reasonable”
Insurance
Payment: 80% to
100% of
“customary and
reasonable”
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 38
Revenue Project Methodology
The following is a demonstration of the methodology by which the total amount of gross
revenue was derived. In Step 1, we determine the primary payer units.
Step 1 -Determine Primary Payer
Units
Enter Total
Trips:58,911
Trips by Level of Service
Provided by ABC Agency
ALS E
ALS 2
E BLS E SCT E Total
Payer Mix 60% 2% 38% 0% 100%
Medicare 33%11,664 389 7,387 -19,441
Private
Insurance 25%8,837 295 5,596 -14,728
Private Pay 27%9,544 318 6,044 -15,906
Medicaid 15%5,302 177 3,358 -8,837
100%35,347 1,179 22,386 -58,911
In Step 2 on the following page, the number of transports, the payer mix, the base rates,
the collection rates are calculated to produce the financial results of gross and net
charges. Our projections call for a total of $31.6 million in net revenue. Our more
conservative figure of costs per trip of $537 is much less than what is found in the Fitch
report of $575. This equates to an increase of approximately $2.2 million. If CCCFPD
were to collect what the Fitch report predicts, the total revenue collected in one year
would be $33,873,825.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 39
Projected
Annual Transports
ALS Emergency (60%) 38,718
BLS Emergency (38%) 24,521
ALS2 (2%) 1,291
64,530
Treat No Transport
64,530
Private Rates
BLS Emergency (assumed Medicare approved urban rate of $341.19 times 150%)813.00$
ALS Emergency (assumes Medicare approved urban rate of $405.17 times 150%)1,822.00$
ALS 2 1,822.00$
Rate per loaded mile (assumes Medicare approved urban rate of $7.03 times 150%)25.00$
Average miles per trip 5.00
Average supply charge -$
Private ins. contr. allow 0%
Treat No Transport -$
Payer Mix
(Primary payer gross charge % of total gross charge)
Medicare 33%
Medicaid 15%
Insurance 25%
Patient 27%
100%
Effective Collection Rates
(Cash collected % of net charge )
Medicare 99%
Medicaid 99%
Insurance 89%
Patient 5%
Gross Charges
Annual Dollars 95,057,980$
Per Trip 1,473$
Net Charges
Annual Dollars 60,127,806$
Per Trip 932$
Collections
Annual Collections 31,653,203$
Per Trip 537$
Financial Results
Summary of Significant Assumptions
Contra Costa County, CA
Projection of Annual EMS Collections
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 40
Revenue Projection Prepared for Contra Costa County, CA
Step 1 - Determine Primary Payer Units
Year Dispatches Transports
Enter Total Trips: 58,911
2009 67,695 53,932
2010 69,761 55,337
ALS E ALS 2 E BLS E SCT E Total 2011 70,927 56,853
60% 2% 38% 0% 100% 2012 74,863 59,984
Medicare 33% 11,664 389 7,387 - 19,441 2013 74,380 58,911
Private Insurance 25% 8,837 295 5,596 - 14,728
Private Pay 27% 9,544 318 6,044 - 15,906
Medicaid 15% 5,302 177 3,358 - 8,837
100% 35,347 1,179 #NAME? - 58,911
Step 2 - Determine Gross Charges, Net Charges & Collections
Medicare/ Medicare/ Medicare/ (100%)
Average Medicaid Medicaid Medicaid Medicare/ (80%)
Private Private Average Supply Gross Allowed Medicaid Medicare Projected Projected
Level of Base Mileage Miles Charge Charge Gross Allowed Mileage Allowed Allowed Approved Collection Cash Net
Service Trips Rate Rate Per Trip Per Trip Per Trip Charges Base Rate Rate Supplies Charge Amount Percentage Receipts Charges
Medicare Trips
ALS E 11,664 1,822.00 25.00$ 5.0 50$ 1,997$ 23,293,763$ 405.17$ 7.16$ -$ 5,143,641$ 4,114,913$ 99% 4,073,763$ 4,114,913$
ALS 2 E 389 1,822.00 25.00 5.0 50 1,997 776,699 722.66 7.16 - 294,990 235,992 99% 233,632 235,992
BLS E 7,387 813.00 25.00 5.0 50 988 7,298,671 499.29 7.16 - 3,952,880 3,162,304 99% 3,130,681 3,162,304
SCT E
19,441 31,369,133$ 9,391,511 7,513,209 7,438,077 7,513,209
Private Insurance Trips
ALS E 8,837 1,822.00 25.00 5.0 50 1,997 17,646,790 89% 15,705,643 17,646,790
ALS 2 E 295 1,822.00 25.00 5.0 50 1,997 588,409 89% 523,684 588,409
BLS E 5,596 813.00 25.00 5.0 50 988 5,529,296 89% 4,921,074 5,529,296
SCT E
14,728 23,764,495 21,150,401 23,764,495
Uninsured/Self Pay Trips
ALS E 9,544 1,822.00 25.00 5.0 50 1,997 19,058,533 5% 952,927 19,058,533
ALS 2 E 318 1,822.00 25.00 5.0 50 1,997 635,481 5% 31,774 635,481
BLS E 6,044 813.00 25.00 5.0 50 988 5,971,640 5% 298,582 5,971,640
SCT E
15,906 25,665,655 1,283,283 25,665,655
Private Pay/Crossover (75%)
ALS E 771,546 5% 38,577 771,546
ALS 2 E 44,249 5% 2,212 44,249
BLS E 592,932 5% 29,647 592,932
SCT E
- 1,408,727 70,436 1,408,727
Insurance/Crossover (25%)
ALS E 257,182 89% 228,892 257,182
ALS 2 E 14,750 89% 13,127 14,750
BLS E 197,644 89% 175,903 197,644
SCT E
- 469,576 417,922 469,576
Medicaid Trips
ALS E 5,302 1,822.00 25.00$ 5.0 50$ 1,997 10,588,074 118.20 3.55 12 783,687$ 99% 775,850 783,687
ALS 2 E 177 1,822.00 25.00 5.0 50 1,997 353,045 118.20 3.55 12 26,131 99% 25,870 26,131
BLS E 3,358 813.00 25.00 5.0 50 988 3,317,578 118.20 3.55 12 496,327 99% 491,364 496,327
SCT E
8,837 14,258,697 1,306,145 1,293,084 1,306,145
Treat No Transport
TNT - - - - 150 - 5% - -
58,911 96,936,282 31,653,203$ 60,127,806$
Xover P (1,408,727) Per Trip 537$
Xover I (469,576)
Gross Chgs 95,057,980$ Aggregate Gross Col. % 33%
Aggregate Effective Col.% 53%
Collections by Payer
Payer Dollars % of Total
Medicare 7,438,077 23%
Medicaid 1,293,084 4%
Insurance 21,568,323 68%
Patient 1,353,719 4%
31,653,203 100%
Trips by Level of Service
Provided by ABC Agency
Payer Mix
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 41
Example of EMS Billing and Collections Programs
Here is the list of four “standard” EMS billing and collection models that are currently
deployed by many different agencies—across the United States:
1.) Insurance Reimbursement (only)
Only invoices sent to insurance carriers
Hardship waivers available for “self-pay” patients
No billing or collection efforts for Medicare’s 20% co-pay or other
insurance co-pays
2.) EMS Billing & Collections (Passive billing efforts)
Co-pays are pursued
Three notices / invoices sent out to patients; 30, 60, & 90 days
3.) EMS Billing & Collections (medium efforts)
Accounts receive same treatment from billing vendor (as listed
above)
However, at the 180 day mark, instead of being written-off, they
are sent to treasurer for collection efforts, as with other County
debts
4.) EMS Billing & Collections (Aggressive billing and collections efforts)
Patients will receive three notices / invoices
At the 180 day mark, will receive a series of “dunning letters”
asking for payment
If no payment received at the 270 day mark, the account will be
reported to credit bureau as a “bad debt”
The Ludwig Group is recommending that Contra Costa County, CA deploy #4 from the
list above. Of the four listed, it will generate the most revenue. It may generate more
controversy than a “softer” path like #1 and #2—as it relates to #3 or #4 with a “harder”
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 42
collections path. Those efforts both deploy more aggressive billing and collections
techniques and can result in an increased level of citizen complaints. The “trade-off” for
more “possible” complaints, is an increase in overall revenues from these additional
efforts. It is also important to note that AMR already deploys this type of program within
the County and this would not be a substantial change from existing policy or procedure.
The variance in revenues generated will range roughly—from 15 to 20 percent, for each
additional level and the more aggressive billing & collection efforts that is associated with
it. And, conversely, there will be a loss of 20 percent for less effort—with the “insurance
reimbursement only” plan. For example; with EMS billing and collection efforts listed in
#2, and we use a hypothetical number of $1 million collected per year with that program;
if #1 was deployed, we would expect them to be 20 percent less—or $800K in total
collections; and if #3 was used, we would expect it to be approximately 15 percent more,
or $1.15 million in total collections. If #4 was implemented, we would expect it to be
approximately 30 percent more than #2, or $1.30 million in total collections.
The process of collecting EMS funding through a reimbursement process is not an exact
science. However, close proximities are possible based upon the best tools and
historical data from calculations done in other communities.
Additional revenue sources are available for CCCFPD including the provision of
providing inter-facility transports and reimbursement through the Ground Emergency
Medical Transport (GMET) program for public agencies. However, for purposes of this
study, the focus was mainly on anticipated revenue through EMS transport
reimbursement.
GEMT Explained
In the simplest terms GEMT is a federally backed program where the unfunded cost of
doing business is reimbursed to an agency by way of federal certified public
expenditures (CPEs). For example, the current rate of reimbursement from Medi-cal for
an ambulance transport is $125.00. The cost of providing that transport is $1,325.00.
$1,325.00 - $125.00 is $1,200.00. Therefore, $1,200.00 is your unfunded liability. 50%
of 1,200.00 is $600.00. $600.00 + $125.00 is $725.00. $725.00 is what a Medi-Cal
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 43
transport will pay to a government agency. This is revenue that will be put back into the
system and it is revenue that the private providers are not entitled to. The California
Ambulance Association publicly acknowledges that private ambulance companies will
not be able to compete for local contracts because of this.
After review of the current legislation and how GEMT would impact CCCFPD, it is
determined based on 8,836 Medi-Cal transports, there is a potential of $7,529,124 in
payments after the first year of operation.
Financial Feasibility of EMS Transport
Contra Costa County Fire Protection District
August 2014 Page 44
Chapter VII
Conclusion
This financial feasibility study for CCCFPD has looked at all the costs of running and
operating an EMS system, while also generating revenue to sustain the costs. The
study does reflect an opportunity for CCCFPD to implement an EMS transport system
that would generate revenue in excess of expenditures to sustain the operation and
provide value to the existing system.
CCCFPD has also demonstrated their intent to enter into an EMS transport program for
the “right reasons.”
Having worked with officials from CCCFPD, as well as others, the principal consultant is
confident that the desire to take the tough steps needed to look further at the prospect of
operating an EMS transport system by the CCCFPD is present. The challenge will be
with the decision-makers on which path they wish to follow.
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