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Ambulance company prepares to take financial hit

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Posted: Friday, March 29, 2002 10:00 pm

Thursday, 10:24 a.m.: A crew from American Medical Response arrives at Lodi's Arbor Convalescent Hospital in response to a call for an 81-year-old woman with difficulty breathing.

Entering her room, the crew finds the frail, elderly woman - whose legs have both been amputated below the knee - disoriented, sick and frightened.

They gently reassure her in comforting tones, at the same time quickly and efficiently getting her prepared for transport to Lodi Memorial Hospital, where she arrives about 15 minutes after the call came in.

The crew belongs to the team of 24 AMR emergency medical technicians and paramedics which currently serve Lodi. About half of them live here.

They are among the 201 employees in the region covering San Joaquin and Calaveras counties who are part of AMR, the nation's largest provider of medical transportation, which employs more than 19,000 at its 265 U.S. operations. The company is based in Aurora, Colo.

American Medical Response field supervisor Bob Watternbarger, left, and paramedic student Lisa Curlee reload gear after transporting a patient at Lodi Memorial Hospital on Thursday.
American Medical Response field supervisor Bob Watternbarger, left, and paramedic student Lisa Curlee reload gear after transporting a patient at Lodi Memorial Hospital on Thursday. (Brian Ross/News-Sentinel)

AMR's 4,000 vehicles respond to more than 4 million calls annually.

The firm, which has grown rapidly since its formation in 1991 through the consolidation of several small ambulance companies, acquired more than 100 additional companies in the next six years - merging with Med Trans in 1997 to become America's largest ambulance service provider.

For a time, the advantages afforded by the company's sheer size helped to ward off challenges presented by the demands of expensive new technologies and the growth of managed-care plans.

Now, changes afoot in the way private ambulance companies are reimbursed for providing service, combined with proposals by local fire departments to begin placing paramedics on their fire engines, may drastically alter the way AMR does business.

Lodi's fire chief has proposed hiring paramedics and taking over local ambulance service, contending the idea as an effective way to improve public safety services.

But AMR officials say it's a case of government unfairly competing with private business - aided by taxpayer money.

No matter where they come down on the issue, the principals seem to agree on one thing: Change is definitely on its way.

Lodi Fire Chief Michael Pretz said he wants to make the change because he feels it would significantly improve the current emergency medical services available to Lodi residents.

"The current level of service is somewhat thin," Pretz said. "I certainly feel that the community deserves an increased level of service."

The proposal comes at a challenging time for AMR, whose parent company, Laidlaw, filed for bankruptcy protection in June.

On Monday, the firm will face a deep cut in the base reimbursement it receives for transporting Medicare patients - $176, down $151 from the present rate of $327.

Rick Keiser, who manages AMR service in San Joaquin and Calaveras counties, said that about 30 percent of the people transported in Lodi by AMR are Medicare patients.

"That will undoubtedly result in some loss of revenue for us," Keiser said of the imminent billing changes. "At that rate, we'd actually be losing money by responding to some calls."

Tristan North, a spokesman for the Washington, D.C.-based American Ambulance Association, said there are currently bills before both the House and Senate which seek to raise the Medicare reimbursement rate to about $240 - the approximate amount which the association believes would be the financial break-even point for private providers such as AMR. However, the future of those bills is uncertain.

"We believe that, ultimately, reimbursement must be based on the actual costs of providing such service," North said. "We feel the new rate is substantially below that."

Pretz said that when it comes to providing emergency medical services, the bottom line must never become part of the equation.

"The public has a right to the best emergency medical services available, period. In our case, those costs could be absorbed from other areas of the city's budget if necessary."

In the past, AMR has discontinued service on short notice in communities where the firm wasn't earning sufficient profits, Pretz said.

That possibility concerns him in light of Laidlaw's bankruptcy protection filing last year.

But AMR spokesman Brad Shehan said Laidlaw's troubles have at no time affected AMR's operations. AMR is, in fact, quite healthy, financially speaking, he said.

"AMR is not in financial trouble now, and has never been in financial trouble," Shehan said.

Keiser also insists that AMR is in sound financial health in Lodi, and is not considering any plan to leave.

Under the fire department's proposal, firefighters would become the first responder to Lodi's medical emergencies, while emergency medical technicians and paramedics employed by AMR would provide both basic and advanced life-support services for patients en route to Lodi Memorial Hospital.

Pretz supports such an arrangement, saying it would provide the public with the best possible emergency medical service - citing a recent study which determined that Lodi Fire Department arrives first at the scene of an emergency more often than AMR, in about 70 percent of all calls.

A big part of the reason for that earlier response time are Lodi's four fire stations located throughout the city, Pretz said. AMR has two stations and one daytime staging area in Woodbridge.

Keiser acknowledges that Lodi firefighters are often on the scene before AMR, and said he welcomes the addition of paramedics to Lodi fire engines.

"I also feel that the public deserves any mix that will deliver the best service they can get - and I think that owing to our experience and professionalism, AMR must be an important part of that mix."

Keiser said the firm is quite amenable to establishing a public-private partnership with the Lodi Fire Department - like scores of similar agreements already in effect around the nation.

However, Keiser draws the line at the notion of the Lodi Fire Department getting into the ambulance business.

"Regardless of what the Lodi Fire Department decides to do, AMR intends to continue serving the community of Lodi," Keiser said.

AMR hopes to be able to work out an agreement with the city which is amenable to all involved, he said.

"We offered a partnership almost a year ago to Lodi Fire Department that would allow us to share costs on things like training and supplies," Keiser said. "I don't think we're really that far apart on the issue. I believe that both LFD and AMR should continue to do the jobs which we do best."

Pretz said he would also welcome a partnership with AMR - but added that he felt the offer put forward by AMR in response to the fire department's plan was anything but a true partnership.

"The word 'partnership' to me implies equality," Pretz said. "But under the terms of their offer, we would have done the work and they would have collected all the money. That isn't what I would call a partnership."

Pretz said he has already been warned away from entering into an agreement such as the one suggested by AMR by numerous fire chiefs who entered such pacts but found they demanded substantial responsibility while providing only moderate income.

Pretz plans to offer the Lodi City Council a two-layered approach to the changeover: One phase establishing medical transport service within LFD, and another placing paramedics on Lodi's fire engines.

While the order in which such steps are executed is not critical, Pretz said he would prefer to see the establishment of a city ambulance service come first.

"I have an obligation to the public to ensure that they have the best service available," Pretz said. "That means exploring a range of options; not just those that are acceptable to AMR."

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