Are You Considering Starting a Fire-Based Transport Service? Think Again

I just did a class on the topic in today’s column. We’ll break down the good, bad and ugly things about starting a fire-based transport system. 

Fire departments often want to expand into providing emergency ambulance service because they believe that the revenue generated by the “buses” can help pay for fire department operations. In some cases this is true, but in most it isn’t. Before deciding to provide EMS, it is important for your department and local political leaders to understand all of the costs and benefits as well as the numerous pitfalls. 

As I say in my lectures, the best way to start a fire department EMS service is to not do it. Just flat out don’t think about it. It’s painful, it’s expensive, and it will make your firefighters hate you. That being said, if your city manager or county council comes to you as the chief and says “Let’s explore this, I want to know more,” then that’s step one. Let the powers that be bring up the idea; let them come to you.  Having that political buy-in is half the battle. The other half is to make sure you do a detailed and professional needs assessment. In fact, hire someone else to do it so there’s less perception it’s biased. I recommend you project your revenue and expenses out over at least three years in order to see how increasing call volumes and contractual increases in expenses might change your operating budget.   

If the needs assessment says the existing service is adequate, and recommends ways you can assist them in making things better; great! Run with those ideas. In the rare instance it says that the existing service in the area isn’t savable or adequate, then and only then is it time to start CONSIDERING transport. 

Your Citizens and Funding

Your fire department ambulance service generates revenue almost 100 percent from three main sources:  private insurance companies, government insurance programs and private pay individuals. The revenue generated by your ambulance billings will depend on the mix of these three sources, and your community demographics will determine that mix.

If you have a large population aged 65 and over, your mix of revenue will shift towards Medicare. If you have a large population living at or near the poverty line, your revenue mix will shift towards Medicaid and private pay (uninsured). Many areas of rural South Carolina fall into BOTH these categories, retirees over 65 at or near the poverty line. If your community has a large population that are of working-age and are not living at or near the poverty line, your revenue mix will naturally shift towards private insurance programs. Also, according to the CDC, the younger demographic tends to have fewer chronic health issues and use emergency ambulance service less than older age groups, this is good and bad, right?  You need calls to generate revenue, but you also need those calls paid for. On average, an ambulance has to run three paying calls a day just to cover operating expenses. This doesn’t cover new buildings, new ambulance capital savings, etc., etc. 

Another demographic factor that will affect your ambulance revenue is population density and geography. The more dense your population, the more emergency calls you can expect in a compact area, and the shorter distance/time between incidents and a hospital. This results in more efficient ambulance utilization hours (UHU) and makes your department more likely to break-even or become profitable. By contrast, if your ambulance is protecting a small, highly scattered population (low population density) then it is harder to make a profit because of low call volume and long distances covered. Your needs assessment will break this out for you and it will be a big factor in their recommendations. For numbers sake, South Carolina’s overall population density is about 80 people per square mile. Greenville County is the densest at 481 and a whole slew of smaller counties run close to the bottom in the 30s, mostly south and east of I-95. 

Staffing an Ambulance Service

Your area will demand a certain out-the-shoot and response time for your ambulance(s). You know that I personally could care less about response times as long as you can show me your outcomes are good.  I’ll take better outcomes over six-minute response times all day, but your community and politicians will still demand low response times. Many areas of South Carolina have trouble getting an ambulance from the station to the scene in less than eight minutes, and people in many areas wait an average of 12 to 20 minutes for an ambulance. A rule of thumb used for most departments is that an ALS unit needs to arrive on location at a call for EMS in eight minutes or less 90 percent of the time. For many departments in South Carolina this will mean hiring staff to get the ambulance on the road immediately. If you weren’t in the ambulance business we wouldn’t need this staff. Jump companies are a whole other political football we won’t discuss today. Just know you can save 100 patients a year in cardiac arrest with a company that jumps from an engine to an ambulance for a medical call, but the first time Grannies She-Shed burns down because you were on an EMS call, they will call for the Chiefs bugles…

Your community will probably demand Paramedic level service. This is what people see on TV and what they’ve become conditioned to expect from EMS, thanks again Johnny and Roy. Your residents will know (trust me) that surrounding communities have Paramedic level service and they want nothing less. Consequently, your full-time staff most probably will be firefighter/paramedics (Gasp). In the long run having folks rotate from the engine to the bus will assist you in retention, compassion fatigue and burnout. 

“Well Rob, I have a decent population of volunteers in my area. I can count on them to staff a unit for me.”  Sorry, Chief, not the case. Overall in South Carolina about 72 percent of EMS calls occur between 10 a.m. and 4 p.m., stretch it to 6 p.m. and it’s a bit higher. At a minimum, it would be mandatory to have two fire medics at the fire station each weekday from 8 a.m. to 6 p.m. when volunteer firefighter availability is at its lowest and when the few available volunteers are more likely to be working at Boeing, or Volvo, or insert local industry here_______, if your goal was eight minutes 90 percent of the time.

Cost Considerations

In today’s market it is easy to spend $200,000 to purchase a quality ambulance that will give you five to 10 years of service, depending on call volume and maintenance quality. Amortizing the cost of this apparatus means that your annual cost just to BUY the ambulance is $20,000. Add the mandatory South Carolina DHEC liability insurance and malpractice insurance (300k/600k per incident), medical supplies and medications ($20-30,000/year), vehicle maintenance (figure $4,000 a year for the first five years, it’s a crap shoot after that), diesel fuel ($1400-4900), service contracts for the maintenance of the stretcher and defibrillator ($2K), and cleaning/disinfecting the ambulance. All these expenses start closing in or surpassing $100,000 a year.

OK, so you have your EMTs and medics, they have a valid NREMT and SC cards, and they are ready to work. Now you have to maintain them with training and licensing costs. Each EMT needs at least 24 hours of training bi-annually; paramedics, 40 hours. If you decide to hire full-time staff you will have to pay them overtime to attend EMS training off-duty. If you want to add an in-house EMS Training Officer/Coordinator, then think nine to five, a vehicle, and $50K a year plus benefits at least. There is also the administrative cost of generating and collecting ambulance bills.

In South Carolina the fire service is generally unregulated, with some minor exceptions so additional regulatory and administrative costs not normally associated with a fire department will need to be considered. There will be additional expenses related to maintaining maintenance records for the ambulance, the defibrillator, the drugs and stretcher. There are no costs for an EMS license or ambulance permit in South Carolina, but you will have costs for drug licenses, non-dispensing drug permit and CLIA. There is record keeping and updating of records related to mutual or auto-aid agreements, medical control agreements (a WHOLE other column!), radio system agreements, procurement of supplies and equipment, HIPPA compliance, Medicare/Medicaid compliance and a myriad of administrative compliance that isn’t generally needed in the fire service here in South Carolina. Finally, there will be a cost associated with answering weekly subpoenas for medical records for patients involved in car crashes, products liability injuries and medical malpractice cases. 

Salary, employer’s health insurance contribution, life insurance, uniform allowance, educational stipends, employer’s pension contribution, employer’s Medicare contribution, and other employee expenses cost most fire departments an average of $75,000 per fire medic per year on the low end. In addition, there are overtime costs associated with required training, covering their vacations and sick time, and any potential call-backs if this is an issue in your area. This overtime cost averages probably $20,000 per fire medic per year. Then there is the South Carolina Police Fire pension contribution, FICA expense, health insurance benefits, unemployment taxes, life insurance benefits, dental insurance benefits and vision insurance benefits. You can confirm this with your consultant doing your needs assessment but figure the cost for a single career fire medic is $125,000 to $140,000 per year. Back to your run numbers — at three paying calls a day, with an average of $400 per call, you potentially have a revenue stream of $438,000.  Subtract operating and personnel costs and you’re left with a small margin (that disappears before you know it) of only $58,000.    

Benefits of Providing Ambulance Service

So if you can’t turn a profit operating an emergency ambulance, then why should you venture into the ambulance business? Like I said up top, my advice is still don’t do it. Start a great first responder service, supplement your EMS transport and save a few lives. BUT, if you’re still looking for some benefits, there are some good reasons.

If your fire department won’t operate the emergency ambulance service for your community, who will? We are so very fortunate in South Carolina to have a paid 911 service in every county; albeit with many different models. But if the current system isn’t working, then what can you do? You could hire a private ambulance company, but they need to make a profit, so unless you are willing to subsidize their losses and guarantee them a profit this isn’t a good option. You could rely on a neighboring county that needs to increase its revenue with more ambulance transports, also not a great option. You could consider creating a shared regional ambulance service. This type of service has been discussed in some of our more rural areas, but nothing has really come to fruition; in emergency services, we still love to cling to our silos and our real estate. These are all viable approaches, but how far away is the ambulance and will it be available enough to serve your county? In many cases, another ambulance or a regional squad could be a 20 or 30-minute drive time away. That isn’t a great option for people who are seriously injured or ill, and we’re back to extended response times.

The dollar amounts in this article are averages, good guesses in some areas. They don’t necessarily apply across our state. Each region and even county has its own workforce rules and regulations, its own insurance rules and rates, and its own performance expectations and standards. However, you will find that each category of cost exists in every region, and I probably missed a few. Before you make the decision whether or not to add emergency ambulance service in your fire department, you need to determine and analyze these costs and revenue streams unique to your department and your area!

Closing the Conversation

In South Carolina, EMS calls account for 60 to 80 percent of our emergency calls for service for our fire departments. I watched call volumes at St. Andrews PSD go from less than a 1,000 before the Super Sofa Store fire to more than 5,000 now, and most of them are EMS related. Does this monstrous increase in call volume mean that Chief Lam needs a couple buses? Nope. He has a great rapid responder program, a new QRV, and one of the top EMS systems in the state to back him up. Just a few miles away, there has been a tremendous population and infrastructure expansion East of the Cooper. Many new fire stations, paramedics on every engine, and a payer mix that makes many rural areas drool. Should the MPFD get into the transport business? Who knows? Maybe?  Every. Department. Is. Different.

We’ll close by saying this: You probably can’t make a profit with emergency ambulance service, but there may be sound public policy, public safety and operational reasons that it makes sense for your department to be in the EMS business. Just make sure you plan your operations, expenses and funding in advance; and most importantly, you get into providing transport service for the right reasons.