Battle Over Emergency Care Spurs Bitter Feud

When the call came in, medic Matt Goldberg and his partner slid into their ambulance and sped off, siren shrieking, lights flashing.

They rolled through a string of tiny Delaware County towns in suburban Philadelphia before reaching a rest home in a city called Wawa. There they found Helen Miller, a 93-year-old retired teacher, suffering from congestive heart failure. And right behind them came an angry police officer named Michael Irey with his ticket book in hand.

“He’d seen us go through his township and said we’d been speeding. He insisted we answer questions, show our driver’s licenses,” said Goldberg, 32. “He followed us to the hospital and did the same thing. He cost us maybe 12, 15 minutes.”

Goldberg and his partner finally wheeled the patient into the emergency room of the Riddle Memorial Hospital in Media, the county seat. Minutes later, Helen Miller’s heartbeat was just a flat line on an electrocardiogram.

“This woman is dead because of this cop,” Goldberg said.

Irey wouldn’t comment on the incident, which occurred in March 1997, but Frank Corbett, chief of police in Nether Providence Township, said his officer did the right thing. Private ambulances like the one driven by Goldberg are not allowed to run emergency calls in Delaware County, he said, only routine medical transportation. Yet, some public safety officials here say, these companies have become more brazen, more willing to drive fast and run hot--with lights and sirens on--just to grab business from each other and, maybe, the local paramedics.

“I think these ambulance services have become very competitive in the last couple of years,” Corbett said. As for the woman, her death was a coincidence, he said. “Elderly people do that.”

Firefighters Among Bitter Competitors

Delaware County is just one example of the bad blood that has arisen between public safety people and the nation’s private ambulance companies--many of which have been bought up by giant corporations--as they compete for the same lucrative insurance reimbursement for a trip to the hospital.

Like other segments of the health-care industry, the private sector ambulance business has seen consolidation and expansion as the way to achieve economies of scale. It has viewed bidding on municipal 911 services as a logical extension of the business.

Yet the big ambulance companies have rolled into many towns only to face an implacable and flinty-eyed foe: the American firefighter.

Because of better building codes and fire prevention techniques, firefighters have far fewer fires to fight than they did a decade ago, and far less reason to justify their large staffs and costly, standby equipment. So in the last few years, they have considered it critical to branch out ever wider into emergency medical services (EMS) and, more important, to win the right to take the patient to the hospital and collect the insurance check.

“The fire service is trying to be more like a business, and the ambulance industry is trying to become more like government,” said Dr. Robert Bass, director of the Maryland Institute for Emergency Medical Services Systems and one of the leading authorities on the subject. “They’re both kind of careening toward each other.

“My sense is that it’s still pretty much a standoff. We’ve seen some areas where partnerships develop. You go to other areas, and there’s perpetual war.”

Struggle Between Public, Private Firms

Some scenes from the front:

* In the last few years, firefighters have lost fights over paramedic services in Portland, Ore., and San Jose, and won them in Florida’s Seminole County.

* San Diego firefighters teamed up last year with a natural enemy, No. 2 ambulance company Rural/Metro, to jointly offer EMS to the city and defeat a rival bid by American Medical Response, the world’s largest ambulance company.

* After a mudslinging competition for 911 services among firefighters, AMR and Rural/Metro, San Mateo County supervisors decided in February to put city paramedics on firetrucks, which roll on all 911 dispatches, in effect giving the firefighters a cut of AMR’s business. Previously, emergency calls were handled by AMR paramedics.

The struggle between the private and public sectors is being driven in large part by the availability of Medicaid and Medicare reimbursements for both emergency and nonemergency ambulance rides. There are no real Medicare ceilings on what can be charged for ambulance service, and from 1985 to 1995, Medicare allowances for ambulance trips jumped from $600 million to more than $2 billion.

A federal report last year said that Medicare was blowing hundreds of millions of dollars on unnecessary ambulance charges. The Health Care Financing Administration plans to impose a rate schedule on ambulance service and tighten rules by 2000. Hearings are to begin in July.

“I think the perception that EMS is a cash cow is starting to fade,” said Dr. David C. Cone, an EMS professor at Philadelphia’s Hahnemann University and a director of the National Assn. of EMS Physicians.

Nobody has more money riding on putting people in the hospital than American Medical Response. In five years it has merged more than 200 ambulance companies in 37 states.

The company is the brainchild of entrepreneur Paul Verrochi, who previously had helped consolidate the sanitation business.

Verrochi merged four ambulance companies--in San Francisco, Oakland, Wilmington, Del., and New Haven, Conn.--and went public as AMR in 1992.

Three major competitors rose up by doing the same thing: MedTrans, the ambulance arm of the giant Canadian bus company, Laidlaw; Rural/Metro of Scottsdale, Ariz.; and Careline of Irvine. Goldberg was working for a local ambulance firm when it was bought by Careline, then No. 4 in the country.

Then the giants began consuming each other. First, Laidlaw’s MedTrans bought out Careline in 1995. Then, Laidlaw snapped up AMR last year for $1.12 billion and folded its own MedTrans into the industry leader. That left two companies, AMR and the much smaller Rural/Metro, sharing nearly one-quarter of the nation’s $7-billion annual ambulance business.

The huge merger came just two weeks after AMR made its debut in Delaware County, where a county-run 911 system and a series of handshake agreements tie together a patchwork of 50 fire departments, eight hospitals and handful of private ambulance firms.

Consolidation Pains Prompt Criticism

It was there that a cautionary tale for the big ambulance companies emerged.

AMR was undeterred by the complexities of local politics. It bought a local firm called AmbuCare and folded it in with its other recently acquired operations in the metropolitan area. It moved the dispatch center to Philadelphia. It brought in its own management style, set revenue targets, dictated new response times.

Those complexities quickly overcame the apparent advantages of the merger, and in February, AMR closed the Delaware County operation.

The retreat from Delaware County was part of a 20% cut in AMR’s operations in eastern Pennsylvania, New Jersey and Delaware, the company said, resulting in 140 layoffs. It also recently pulled most of its operations out of Chicago, idling more than 500 workers, and may cut back in Houston and other places.

The company says its missteps are mere growing pains. CEO George DeHuff III said AMR has $40 million in additional acquisitions either sewn up or lined up so far for 1998.

“It’s not surprising that when you look at that kind of consolidation . . . there are going to be some markets that are not going to be performing the way they need to,” he said.

The firefighters say the downsizing just proves their point: Big health-care corporations care more about profit margins and shareholder returns than quality service and human kindness.

“We in the fire service have one mission: to provide service,” said Gary Ludwig, chief paramedic for the St. Louis Fire Department and board member of the International Assn. of Fire Chiefs. “They have two: to provide service and a return on investment.”

Ludwig writes a column for the group’s newsletter that routinely exhorts firefighters to stake their claim to EMS-related revenues. He’s pessimistic, though, about long-term prospects. The big ambulance companies are cutting exclusive deals with large insurers and hospital chains and taking over management of emergency room staffs. By combining these services with their telephone dispatch centers and emergency transportation services, they’re moving toward creating self-contained EMS systems that Ludwig said will circumvent public 911 systems, leaving them only for the poor.

Ludwig said AMR is shutting down in places where its operations fail to hit a 15% profit margin. AMR spokeswoman Marijo Rymer wouldn’t confirm that, though she came close.

“That’s in the range,” she said. “It could be 12; it could be 18.”

Yet even David Nevins, executive vice president of the American Ambulance Assn., the main trade group of the private ambulance industry, says such a figure is a high expectation. “If it’s 15%, I think it’s kind of not realistic in this industry.”

Still, AMR says it can get a hefty return for its shareholders while still providing faster, cheaper service than firefighters can. Before they began acquiring each other, in fact, the four ambulance giants agreed to finance a series of studies meant to discredit unionized firefighters in general, but they dropped the plan after word of it leaked out.

“We’re not trying to take away your fire service,” DeHuff insisted. “But if the fire service tries to take away something we’ve got, we’re going to fight for it.”

‘They Bit Off More Than They Could Chew’

It was that sort of terrier-like tenacity that allowed AMR to get its ill-fated foothold in Delaware County in the first place.

Cornelius Cassidy, a local businessman and former fire chief, founded AmbuCare 22 years ago because he saw a need for it. He knew the people who worked in the hospitals and nursing homes and fire departments, and he pretty much meshed his business with the local landscape, steering clear of the emergency service that the public sector so coveted.

But when the big ambulance giants began buying their way into the metropolitan area, he sold AmbuCare to AMR and stayed on as a consultant. He got to watch as the newly revamped, suddenly enlarged AMR tried to consolidate its operations.

“The communications center was just overrun with calls, I guess, and certainly not everyone could be served at one time,” he said. “I think the merger of two mega-companies was too swift and not organized enough, and that’s where it fell apart.”

Former employees also say the merger hurt quality. A 900-bed county nursing home could count on AmbuCare arriving within 15 minutes on nonemergency calls, usually to take an elderly person for some scheduled medical treatment. AMR took three times as long.

“They were losing contracts left and right,” Goldberg said. “The equipment was substandard. Wheels fell off the stretchers. They bit off more than they could chew.”

Fran Zarnawksi, one of the laid-off AMR workers from Philadelphia, said dispatchers sometimes would instruct drivers to run hot on calls that weren’t emergencies so they could squeeze in more business.

Said DeHuff: “There is no way it’s our approach to run our vehicles hot when it’s not appropriate.”

As Goldberg found out, Delaware County officials are extremely sensitive about private ambulances horning in on 911 runs, or even appearing to be in a hurry.

Corbett himself blocked an ambulance with his police cruiser in July when it tried to pull out of a nursing home parking lot with another ailing woman, even as the patient’s stunned daughter looked on.

That ambulance also had zipped through his township with lights and sirens on. “They get to handle the job quick and then they get to handle another one,” he said with disdain.

He said he believes that woman is still alive.

A Mistrust of Private Involvement

Edwin J. Truitt, Delaware County’s emergency services director, admitted that local authorities have a mistrust of the private sector’s involvement in public safety. “We’ve never relied on privatization. You’re dealing with the ups and downs of the stock market. And that’s not good for people lying in the street.”

Rymer, the AMR spokeswoman, conceded that there may have been some problems during the merger. “What we’ve been doing in the past year is like changing a tire while the car is running. We may have overlooked, in the heat of trying to get this work done, some of the things that have to be done at the local level.”

She’ll hear no violins playing in Delaware County, where the public safety sector is almost proud that AMR couldn’t make a go of it. The townships have a tough enough time keeping their volunteer fire departments financially afloat, said Keith Laws, director of paramedics for the Riddle Memorial Hospital in Media.

Those volunteer fire departments and their little paramedic operations need that insurance revenue to survive, particularly in an era when fewer townsfolk seem to have the time or inclination to volunteer their time or money to help out, he said.

“AMR has been viewed as a big threat to the volunteers because of their size and what they’ve been notorious for, which is coming into an area and outbidding everyone,” Laws said.

“That didn’t really happen in Delaware County,” he said with a chuckle.