Los Angeles’ plan to outsource Fire Department billing draws heat

City and Fire Department officials face opposition from organized labor and some City Council members over a proposal to contract out billing and collections for the Los Angeles Fire Department’s emergency medical services.

The proposed outsourcing of collections is bundled with a popular initiative to move to electronic collection of medical data by the Fire Department’s emergency medical services unit. The proposal would give paramedics hand-held tablet computers on which they would input patient medical information at the scene of an emergency, eliminating the current system of hand-printed forms that department staff called cumbersome and prone to transcription errors.

The computers would allow Fire Department personnel to check hospital bed availability and transmit information about a patient’s condition to hospital staff electronically, as well as store billing information.

The two-part proposal includes a $10-million, six-year contract with Scanhealth Inc., better known as Sansio, for the computer system. Under a separate six-year contract, the city would pay Advanced Data Processing Inc. up to 5.5% of net collections revenue to handle billing and collections.

The city projected a net revenue increase of about $11 million over six years under the plan. The Fire Department billed $151 million for emergency medical services in the 2009 fiscal year but collected only $58 million.

The City Council’s Public Safety and Personnel committees considered the proposal last week but handed it to the full council without a recommendation to either approve or reject the contracts.

Council members Dennis Zine and Jan Perry said they liked the idea of digitizing the medical records but had concerns that outsourcing the bill collecting operations would eliminate jobs and might not prove more cost effective than handling collections in-house.

“I don’t believe in outsourcing,” Perry said.

Public Safety Committee Chairman Greig Smith, on the other hand, said outsourcing collections would be in the city’s best financial interest and would potentially bring in funds to restore budgeted cuts in ambulance service.

The outsourcing of collections would eliminate 49 clerical positions in the Emergency Medical Services unit, although city officials said the staff would be transferred to vacant positions in the Fire Department rather than being laid off.

The unit has struggled to collect fees for ambulance rides and other emergency services. An audit released two weeks ago by City Controller Wendy Greuel — on the same day the city laid off more than 200 employees — showed that the city collected only 53% of its bills in the 2009 fiscal year, amounting to an annual loss of $260 million. Emergency Medical Services fared worse, collecting 38% of the money owed.

City Administrative Officer Miguel A. Santana said the city needs to focus its resources on the functions it can perform effectively.

“The question is, is collection something we do well — is it part of our core mission?” he said. “The controller recently released an audit that very clearly stated it’s not something we do well.”

Pat McOsker, president of United Firefighters of Los Angeles City, said that collections issues stem from the inefficient paper system, not from any fault of the department staff, and that moving to an electronic system would solve many of those problems.

But Genethia Hudley-Hayes, president of the Board of Fire Commissioners, said the board carefully considered the pros and cons of contracting out collections and concluded that doing so would best serve the community. The commission approved the proposal in November.

“I think you always are going to get a bit of push-back when you are considering outsourcing,” Hudley-Hayes said. “I think in the long run, you really and truly are going to do a much better job of cost recovery.”

The digitizing of medical records would help bring the city into compliance with the federal government’s goal of creating electronic health records for all Americans by 2014.

The full City Council will consider the proposal at its July 20 meeting.

abby.sewell@latimes.com