Ambulance operators aim to offset emergencies

For Orange County's private ambulance companies, 911 calls are a crapshoot.

"On a 911 service call, you have no idea who the payer is or if you will get paid," said Jim Kan-as, general manager of Brea-based Emergency Ambulance Service Inc. "You respond to service without that (knowledge)."

What is certain is that ambulance operators can't deny service on -emergency calls, regardless of whether a patient can pay or not.

To offset the risk, ambulance operators are looking to up their business mix with more predictable work: calls from managed care plans, nursing facilities and hospitals. Those facilities often call on ambulances to take patients to another place for care. And many of those patients have insurance.

With so-called facility calls, "before you ever turn a wheel, you know pretty much who's ordering the service and who's paying for the service," Kan-as said.

Balancing the uncertainty of emergency calls is the driving dynamic for OC's ambulance industry, which includes 16 licensed private providers. Huntington Beach and other cities operate their own services.

The market size for OC's private ambulance providers is hard to come by. Figures from the county Health Care Agency show 151,063 emergency ambulance calls in 2001. Last year, the county's emergency rate was $450. This year it's $466.

If you do the math, around $70 million worth of emergency charges were billed, not including private facility calls.

But the actual revenue figure for emergency calls is much lower. On average, about 60% of billed charges are collected.

"There are not too many businesses where bad debt is built into 35% of your revenue," said James Ignacio, president of Laguna Hills-based Doctor's Ambulance Service, which provides service in Tustin, Laguna Woods, Laguna Hills, Dana Point, Laguna Beach and parts of Aliso Viejo. "It's the usual insurance scenarios-indigent care, bankruptcies and nonpayment."

"There's a 40% writeoff," said Phil Davis, Emergency Ambulance's president. "You factor that into your overall operation-how many calls it's going to take, what your overhead is. If you know what you're doing, you should be able to make a profit. Or you won't be in the business that long."

About 60% of Emergency Ambulance's business comes from private, scheduled services, including managed care pacts and medical transport programs for hospitals, Karras said.

Emergency is a family-owned business that provides service for Brea, Yorba Linda and Placentia (it played a big role in Placentia's April MetroLink derailment). This year, the company expects gross sales of $19 million this year, up from $11 million last year.

At Aurora, Colo.-based American Medical Response, one of the country's larger ambulance providers, hospital contracts help offset unpaid emergency calls, said Erik Mandler, American's local director of operations.

American's hospital transport clientele includes Hoag Memorial Hospital Presbyterian in Newport Beach, Long Beachbased Memorial Health Services Inc. and its three OC hospitals, and Oakland-based Kaiser Permanente.

American is the primary emergency provider for Fullerton and Westminster and provides backup service countywide.

"Certainly, 911 in and of itself, is tough to survive on," said Mike Taigman, an Oaklandbased industry consultant. "It is always difficult to make ends meet without a subsidy. There are some communities that have managed to do it, but it is hard."

One of ambulance companies' biggest concerns: Medicare.

"There have been some issues with Medicare (that have been) detrimental to the industry," said Greg Pate, OC division manager for Los Angeles-based Schaefer Ambulance Service Inc. "The fee schedule makes it tough."

Schaefer, which has 12 ambulances and 65 workers in OC, offers basic life support and facility transport services, along with 911 service for Costa Mesa.

Earlier this year, federal regulators changed Medicare ground ambulance fee schedules to rates that critics, such as the American Ambulance Association, charge are 45% below the national average cost of providing ambulance services.

Pate contends that rates for Medicare, as well as MediCal, are "well below" the basic county emergency ambulance transport rate, which is set by the Board of Supervisors.

In terms of government agencies, ambulance companies are regulated by the county's Health Care Agency and interact with the Orange County Fire Authority. The authority runs a bid process and administers a publicprivate partnership for ambulance service in 23 county areas.

Ambulance companies looking to do business in the county have to submit extensive information, said Mary Jo Vincent, the Health Care Agency's ambulance program coordinator. The county looks at financial statements, ownership, proof of liability insurance, workers' compensation coverage, business licenses and training for emergency medical personnel, she said.

The regulatory environment can be "perplexing," Emergency Ambulance's Karras said, particularly when it comes to government agencies setting rates.

OC's ambulance industry counts more than its share of locally based providers, such as Emergency Ambulance, which was started in 1977 and has 47 ambulances and 250 workers overall. Emergency Ambulance also serves several Los Angeles County communities, including Diamond Bar.

American, on the other hand, has about 35 vehicles and 100 people assigned to OC, Mandler said. "Everyone would like to have more of a market share into the business, and certainly, we're no different," he said.

But Mandler said the company was "careful about keeping our economy so that we provide good service to customers and expand from there. We're careful not to spread ourselves too thin."

American once had a wider reach in OC. Early last year, the Garden Grove City Council switched its ambulance service contract to Anaheim-based Care Ambulance Service Inc.

Garden Grove lawmakers made their decision after expressing concerns that the bankruptcy filing of Laidlaw Inc., American's Canadian parent, could impact service.

Care also serves Anaheim, Buena Park and Fountain Valley.

American hasn't been impacted by Laidlaw's troubles, Mandler said.

"We have been operating our own cash and funding capital," he said.

During the 1990s, American was one of the more aggressive industry players, buying scores of smaller companies.

"The reality of this, and the consolidators learned this the hard way, is that EMS and ambulance is a locally driven business," said Taigman, who once consulted for American. "Large companies that are smart have local managers who have a fair amount of autonomy from the corporate offices."