This is long, Sorry, but all complex things in the world can’t be summed up into sound bites. (that is how we get Trump and other problems) Not to long ago, I gave a front line view of what ACA has meant to me as a Paramedic in a mid-sized metro area emergency service. How we were losing money every year but not nearly as much as before since more of the bills were being paid, though at a lower rate. For example I showed that Medicaid only paid $275 of the $400 bill to do a basic transport to the hospital. This prompted several comments about how there was no reason to be charging $400, no reason to be losing money if you charge $400, and personal second hand stories about how other area Ambulance services were even more “abusive” with pricing.
So, what makes you so special?
Now, i’ve been providing EMS care since 1997, starting with a really great (but now shut down) Volunteer Ambulance service in upstate New York. In 1999 I became part of the budget committee and started getting a look into the cost of EMS for a non-profit non-charge EMS service. 2003 I was in Maryland (mobilized to a state side assignment) and volunteered with the local Fire and Ambulance department, again working with the budget committee for a not-for-profit billing EMS service. Later in 2009 I was in Ohio — lost my NY job while deployed, the spouse found full time work in Ohio so we moved there — and worked for a private Ambulance company. At one point ended up on light duty assisting the billing and review department for several months. At the same time I was working on my Emergency Management degree and took several EMS management courses — staffing, leadership, advertising, accounting, etc — which allowed me to help with the volunteer Fire and Ambulance section of the community Fire Department’s billing and fundraising committee. I am not an expert about this though. I just have a pretty good idea of costs and ball park numbers which will give you some idea why services charge “so much”.
Lets start with the main costs.
There are three main costs to running an ambulance service. First, the Ambulance. Second, the supplies, maintenance, fuel, insurance, repairs, etc. Third, the Human Costs — pay, benefits, training, etc.
The Ambulance
It is just a utility truck with a box on the back, how much more expensive can that be? Well an Ambulance runs between $84,000 (for a re-furb) to $123,000+. Ambulances are specialty items, they are one step above hand crafted, just like fire trucks. Your service gets to pick designs, cabinet placement, seating, electronic layout, oxygen lay out, and comply with 10,000 pages of DOT rules.
There are several companies that “build” ambulances. They know what the DOT requires, then present you with options — what kind of truck do you want the box on? My current system requires the truck to be from a company that builds that truck in the state...which there is (currently) only one brand (and the ones we get are not made in the state, go figure.) Other places i’ve worked only wanted a low cost truck, no matter what the brand. Yet others wanted all the ambulances to always look alike so it meant one brand one type. The Box is the truly expensive part. Is it built from scratch or is it a “re-firb” — take an old box off a broken truck or old ambulance and put in on the new truck. Re-firb’s are cheeper but still need to have all new wiring, Oxygen tubing, safety gear, etc to meet DOT rules. While building from scratch lets you optimize your lay out...which is really subjective. Do you have five driver side cabinets and a head placed bench seat or a chest placed bench seat for CPR? Do you have access to out side compartments or not? How much gear do you need — do you run a 24 hour shift with limited access to supply centers or 12 hour shift from a station? What you pick will determine the cost.
Keep in mind, most states won’t let local government ambulances get too old or too many miles. My first service would get a good deal buying another state major city’s used ambulance that had hit the state limit on miles. In 1998 we spent $67,000 to buy and bring up to code, an used ambulance. (since we were a non profit volunteer unit, the city nicely had their crews remove their lettering and replace it with ours with out any additional charge, and we picked them because they used the same color as our department) In 2004 the Maryland department bought a new, designed for us, ambulance with all the computer hookups and fancy gizmos for $137,000. This replaced one of the older of two ambulances that was sold, and the “younger” of the two shifted to second response. Since this was a from scratch build, “everyone” wanted their say and it took seven months to get an agreement to place the order and four more months to get delivery. (and still people complained.)
My current service bought several new ambulances after a four year non-replacement drought in the recession. Average cost has been $115,000, which included five re-firbs and 9 new. There is no milage limit on the ambulances in this state, but the Metro Gov has visual standards for appearance and safety that generally replaces squads about four to seven years of service. (though we still have several that are approaching 14 years, and over 500,000 miles)
Private services often are exempt from milage and some safety requirements, and it is not unheard of to see squads with documented maintain records of over a million miles, it is not uncommon to see 350,000 miles on a majority of the squads. They are trying to squeeze every dime out of them they can.
An asside here: in 2010, my squad for a private service I was working for had over 450,000 miles on the odometer, and the maintenance supervisor said the frame/Box had over 900,000 on it as the engine had been replaced but it was the same transmission. My “beast” developed some wear that caused the transmission to burn off some of the fluid. For the first part of that year, I would add a quart every other shift, by mid year it was a quart every shift and by the end of the year I was putting in three or more quarts a shift. I asked when it would be fixed and was told — never, when it dies, it is junked unless we can get the box off in one piece. I asked about the cost of the fluid eating into profits. “It cost us $1.90 per quart. One trip gets $200 to $300 in payment. When you are putting in 199 quarts per run, then we will scrap it.” In 2011, 18 months of adding fluid, the alternator belt broke and they scrapped the “beast” because it was too much effort to replace the belt.
You also have to have more ambulances than you need for your staffing. Ambulances break down, catch on fire, short out, get stuck, go in for maintenance, get hit by people who don’t see/hear the siren and lights, and just don’t start. You need spares. Sometimes you have to do extra staffing — a bad weather event, special events, etc. and need to put more than normal numbers of ambulances out to handle the increased call volume.
The Stocking of an Ambulance
To stock: one dose of glucagon cost $225, you have to carry four per state stocking laws. You will throw away 25% to 40% because it expires before you use it. That is one drug. according to the price list my stock room has on the wall for ordering, one ambulance stock of medication is $37,893.47 per year. A current model of ECG monitor/defibrillator start at $19,000 and when you add in features — 12 lead ECG, Transmit ability to ED system, bluetooth encrypted transfer, ETCO2, SPO/CO2, service agreements, $29,000 is not out of line (our service has been upgrading to the LifePack 15 at $26,700 per doing 5 a year). Lucas CPR device — $18,000, Stretchers $3,000 to $12,000 for the powered ones. Stair Chairs, splints, bandages, IV sets/needles, fluids, tubing, etc close to $25,000. Then are the HIPPA secure electronic patient care computers, Mobility Dispatch Telemnotors, etc. -- amped up computers and tough books, $3,500 and up.
Over all stocking is going to cost you 57,000 a year and an upfront cost of $60,000+ Maintaining means you replace the med’s and “disposables” every year.
Oil change, tires, etc. Most ambulances will drive 3,000+ miles a month, and our service mandates they have at least a four hour down time between use. I work in the downtown area, near the main hospitals, and we do over 100 miles a night, other crews in the suburbs will rack up 200+ regularly. You have to keep the ambulance running or plugged in so the electronics won’t kill the batteries. You will go though a set of breaks twice a year (hard stops from high speeds with a heavy truck make those go fast), tires a year (6 per), oil change every two months, etc. Our budget is just under $1 million a year for 28 ambulances (note: we only staff 23), about $22,000 each and lets not forget fuel cost. (average of 15 gallons a shift, two shifts a day, 364 days: 11,000 gallons of diesel at @2.75 a gallon — $30,250 a year if prices stay low.)
Then there is the cost of insurance on the ambulances, malpractice, warranties, buildings you work out of or store equipment and supplies. Those costs can be very high, and the biggest for non-self insured (government mostly) is auto insurance. You think having a teenager on your car insurance is expensive, now put a 19 year old behind the wheel of a 3,500 pound truck with lights and sirens with permission to speed and break the traffic rules while moving a person to the hospital, that is very expensive. You don’t need an special license to drive an ambulance of any size. If you get any training it was due to the employer trying to lower their premiums. The one insurance bill I saw was for a two ambulance company with a 45,000 mile annual per ambulance, and it was $14,700 per squad for replacement and basic liability. No one under 20 was allowed to drive to get a discount.
And then we have the Staff equipment and uniforms. Shirts will run $25 to $40, more with patches and name tags, pants start in the $35 range. Some agencies push uniform pants, t-shirts, and boots on to the responsibility of the employee and save money there, but still provide shirts, Full time normally gets five. You either order a selection for common sizes (bulk savings) or order per employee. A lot depends on how high your turn over is. You don’t get to return the 2XS shirt for the 4’11” female or the 2XXL shirt for the 6’4” male, and re-use is low.
The photo is of my “work kit”, everything there is what I have in a bag assigned to me other than the narcotics (a special cost all its own). There is over $3,000 worth of equipment displayed there. We rotate the medical equipment as we use it but still end up with lesser used items expiring before we use them (and honestly, i’m glad that most of the time my pediatric equipment and meds expire unused)
Narcotics. Very expensive to buy. Lots of regulatory rules to comply with that cost money, lots of money. But you have to have them to do your job as a paramedic. Lock boxes, security storage, 24/hour dual locked monitoring, inventory control, audits, record review and mandatory drug testing. I’ve never seen a cost breakdown but it could easily be close to $1,000 a month. Management has to do an 100% inventory every month and a 25% mid month spot checks. It takes two people to do this and managers are not low cost. Lock boxes are expensive, starting around $400 each and they do get damaged and have to be replaced from time to time.
Staffing, now we are really talking costs
Staffing seems to be the cheapest part, but it really is the most expensive. National average for paramedic pay is $14.50 an hour. This area it is $15 to $16 an hour. Add in benefits, taxes on salary, retirement, and other personal costs and you’re looking at close to $21 an hour in costs. Your EMT will make less, $10 to $12 an hour, so $16 an hour in costs. (which is why we have more “BLS ambulances” -two EMTs vs an EMT and a Paramedic)
If you staff a 12 hour shift, doing a common two days on, two days off, three days on three days off, you log 2,184 hours. $45,864 for the Paramedic (they see $32,760 before taxes) and $34,944 for the EMT ($26,200 before taxes). That is $80,800 a year in costs for one crew — you staff four crews (24/7 costs money) for $323,200 for staff for one ambulance. total ball park cost: One time expense around $160,000, and annual cost around $412,000. (Still not counting insurance — very expensive — over staffing due to sick time, vacation, FLMA, etc. Training and compliance costs, billing costs, annual training costs — EMS providers have to do continuing education, lost equipment, waste, bio-waste disposal, uniforms, workers comp, etc) $900,000 to run one ambulance is reasonable.
With most service jobs, staffing is your biggest expense that you have some control over. If you pay $14.50 an hour with a 25% tax/benefit additional employer cost per hour, that is $18.13, but if you pay $16 an hour with same additional employer cost, it’s $20 an hour. This means the employer will try to cut the hourly pay rate as low as they can and still get people (EMS gets low pay because so many of us take low pay or do it for free). They also try to reduce the backend cost by cutting benefits or education.
Your government run system tends to pay better on the back end, but not much difference on the hourly rate as private services do. All this often means the EMS provider is working two jobs (many times with another EMS company) to make ends meet. Add in that most EMS workers are not unionized — they tend to be very conservative for the same reasons military do — and you can see why they get lower pay. After all, higher pay for the 911 service means higher taxes (because the ambulance people keep losing money every year, those lazy bums just sitting around in their squads all day doing nothing.) Which is sad because many of them buy the “Burger flippers getting $15 an hour? that is more than I make and I save lives” divisive talking points.
My current (government) employer pays almost a dollar and half less than private companies in the area, but up until last year the retirement and hazardous duty treatment was much better. I put in 10% and they put in 30% to the pension, and a 1% disability kicker with a 25 year retirement. You can see how that raises the cost of an employee. (the new employees get an 8% match with a guaranteed 4% a year growth in a 401k program they can’t touch till they are 59 ½.)
So what is the general cost?
A break even price if no other problems is around $300 a call, if a squad does 3,000 billable transports a year. Or 8 transports in 12 hours. And that is a busy shift. Some areas do 15 to 16 transports in 12 hours — like mine but we are less than 10 min from the hospitals and have shorter turn over times. But other areas only do 4 or 5 transports in a 12 shift. You still have to cover that area, but your billable transports are less so your re-coup rate will be higher per call.
Obviously, your management will try to even out the cost, the higher volume downtown area making up for the suburbs lower volume. Which means they are always breathing down your neck to “clear and copy” but only check in on the suburban squads. And with everyone they are super picky about documentation to support billing charges.
Add in that not all insurance will pay for all treatments or pay the price billed. Take the drug glucagon, $225 per dose. Medicaid will only pay $79.89 for it, because there is another much cheeper way of improving a persons Blood Glucose level — start an IV and give D50 — $11.87 for the D50, $47.28 for IV set up and tubing, and $20.74 for the ALS labor costs. But when a person is overweight, diaphoretic, unresponsive, has a BG of <20, and you can’t get an IV, you have to use the glucagon. (Or let the person die) [Note; there are ways around this, certain ‘documentation’ processes that will get Medicaid — and other insurances — to pay for treatment they would not normally cover or pay at a higher rate. But that is a whole different issue and changes constantly]
The $400 price for basic service is a price that assumes low payments by medicaid, no pay from self pay’s, and what ever special deals the big insurance companies force on the service. You start doing an ALS run, say a cardiac arrest, and you will use over $1,500 in equipment and medication, and we only bill $950.
Conclusion
Every system is different. Every state is different. These are general numbers and change all the time. Our service made a deal with a fuel provider to lock in a price of $2.35 a gallon for fuel when it was $2.30. Fuel went up to $2.95, and everyone praised them for being so forward thinking. When the contract was renewed the price was $2.75 and got locked in at that rate. At the pump today it is $1.99...and the same people who praised the lock in, are screaming for the heads of the “idiots” that signed that deal.
Our service accepts that they will not recover the full cost of providing EMS to the citizens. The Council does not accept that and can’t understand why, and does not care because they know the answer, get rid of that union loving EMS and bring in a private company to do things right. Which is another issue I will cover some day.