Sudden Loss Of EMS In Six States Undermines For-Profit Model For Critical Services

A gov. contractor leaving without warning while still under contract violates notion of government trust in the private sector.
By @FrederickReese |
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    An abandoned health clinic in Chicago. (Photo/Graham Milldrum via Flickr)

    An abandoned health clinic in Chicago. (Photo/Graham Milldrum via Flickr)

    A private ambulance service that offers medical transportation for more than 70 towns and cities in a six-state region shut down Monday without explanation or notice, leaving millions without emergency medical service and begging the question if critical emergency services should be left in the hands of private companies.

    First Med EMS, which under the names TransMed, Life Ambulance and MedCorp, offered emergency medical services and ambulance services in Kentucky, North Carolina, Ohio, South Carolina, Virginia and West Virginia. Despite the fact that it publicly advertised — “We take pride in our performance and the safety of our patients. We refuse to compromise on this” — the company went dark, with its website down and calls to its corporate offices indicating the lines were either disconnected or unmanned.

    Despite the fact that no bankruptcy paperwork for the company have been filed, company workers said on Facebook that the company has declared bankruptcy.

    While most of First Med’s business was non-emergency transportation, such as taking patients to doctors’ appointments, the company’s sudden shuttering does not compromise public health in an immediate way in most areas. However, the lack of notice inconvenienced countless numbers of patients and social service offices, who had to ascertain how to meet weekend medical appointments. The company’s 2,300 employees were also not warned. Most were told of the company’s closure from coworkers, who found the doors locked on Saturday.

    “I found out on Facebook and from a coworker that I no longer had a job,” said First Med Dispatcher Stacey Carpenter to NBC affiliate WECT. “I am absolutely devastated. I don’t know what I am going to do.”

    The company’s official position is that it has “ceased operation.” All requests for emergency runs were cancelled on Friday night, with workers in the middle of their shifts told to go home.

    “We didn’t know what to do,” said Derek Griffin, an emergency medical technician in Hopewell, Va., to NBC affiliate WWBT. “They told us to turn our truck in, to turn our equipment in. That was it. It was done so shadily and so behind closed doors.”

     

    Blind trust

    Most communities that used First Med EMS for emergency medical support were able to switch to another ambulatory service with minimal disruption. Some, however, were hit harder than others. In Bertie County, N.C., First Med was contracted to offer emergency medical rescue service for the county. Upon news that the company shut down, the county temporarily hired the displaced Med First employees to continue EMS operations. The county has yet to decide if legal actions should be taken against First Med.

    With no official explanation given for the shutdown besides rumors that the company was “out of money,” this series of events bring into sharp focus the downfall of privatizing human services. While the decision to close seem to be held “close to the vest” by First Med’s CEO and shared with only the company’s directors, the idea that a government contractor could decide to leave without warning — while still under contract — violates the notion of government trust in the private sector.

    Typically, emergency medical rescue services are the responsibility of the local government. This responsibility is usually meted out to the fire department, to a private contractor or to a service controlled by the hospitals and licensed to the community. As an increasing number of communities seek to bring their budgets under control by contracting out critical services — such as psychiatric services and emergency response — to for-profit organizations, reports of organizational instability, malpractice in care, service cuts and fraud continue to appear.

    When Bertie County decided to privatize its EMS, it was due to what has been called by Bertie County officials “a perfect storm.” A tax base that was drying up, a lack of volunteers and a swell of 911 calls forced the rural North Carolina county to decide between investing the little money it had on expanding the EMS infrastructure or getting help from outside.

    “With our economic status and as economically poor as Bertie County is, the choice was made by the commissioners to seek a contracted service by putting out a request for proposal, which was released early May,” said Mitch Cooper, director of Bertie County Emergency Management, to CBS affiliate WNCT in July.

    The hope was that more paramedic jobs would be gained for the area and more trucks will be deployed, reducing response times.

    “With our longer transport times being that we’re such a rural area, over time you’ll see an increase in quality of life as far as the outcome of patients when they leave the hospital because they will receive the highest level of care pre-hospital,” Cooper continued.

    Bertie County contracted First Med at $310,000 per year — $135,000 per year more than when the county ran its own EMS.

     

    Cost over assurance

    “Local government officials may view privatization of emergency medical services as an easy answer to problems of trimming municipal budgets,” writes the International Association of Fire Fighters in its monograph, “Emergency Medical Services: Privatization and Prehospital Emergency Medical Services.”

    Municipal firefighting services provide approximately 80 percent of the nation’s emergency medical rescue services.

    “Private companies are able to provide cheaper services only through lower wages and fewer benefits for their employees, a reduction in the services provided, or both lower compensation and decreased service,” the IAFF states. “Private providers must make a minimum profit, while fire departments can return surplus resulting from operations to the system or further reduce the price of services offered to the citizens.”

    The IAFF also argues that for-profit service providers may influence government decisions by introducing the profit motive as the primary factor in decisions concerning the public welfare, that the cost of governmental subsidies and administrative costs in enforcing the service contract are not usually included in the initial cost estimates and typically exceeds any cost savings the community may have been promised and that labor disputes, economic hardship and/or management crises may leave the provider unable to offer continuous service.

    Earlier this year, Rural/Metro, the nation’s second largest for-profit emergency service provider with operations in more than 400 communities in 21 states, sought Chapter 11 bankruptcy protection. Despite announcing that it will continue operations during restructuring, many communities found themselves seeking backups and establishing contingency plans.

    In Syracuse, N.Y., where Rural/Metro provides primary emergency medical rescue services to the city, Councillor-at-Large Lance Denno wrote in a letter to the Syracuse Post-Standard that the city must consider having a second company available should Rural/Metro’s operations be disrupted.

    “The current arrangement between Rural Metro and the city of Syracuse poses risks to city residents that have worsened since the issue arose with the closing of Engine Companies 6 and 7,” Denno wrote.

    Firefighting Engine Companies 6 and 7 were closed due to budgetary cuts earlier this year. Currently, the Syracuse City Fire Department is the backup to Rural/Metro, but the department only has one ambulance.

    “The potential for ambulance crews to strike, as they did briefly in Buffalo … is only one of the concerns,” Denno added. “The exclusive relationship with Rural Metro is not in the public interest, and failure to immediately address this problem puts the community at risk of an interruption of ambulance service.”

    Mayor Stephanie Miner’s administration has indicated that they will monitor the situation, but it has made no efforts to offer a redundancy.

    One of the headaches Syracuse and other communities, such as Santa Clara County, Calif., would have in leaving or mitigating Rural/Metro’s contract is that the negotiation and rebidding process would exacerbate existing financial problems.

    For example, Rural/Metro failed to meet Santa Clara’s response time requirements in 2012 and experienced “a series of performance and fiscal challenges” in 2011. Despite this, the Santa Clara County Board of Supervisors agreed to keep its contract with Rural/Metro until at least 2016.

    “Even though Rural/Metro has faced significant challenges that have impacted confidence in the system, our current contract is considered a model for other jurisdictions and offers extremely low rates to our residents,” read a memo from the county board of supervisors. “We believe that reducing the term of the contract and initiating a new bid process would not yield the same benefits, but would result in higher costs for service.“

     

    Trusting capitalism

    Without an established “guarantee of service” with service contractors, governments on all levels are effectively placing the public good in private hands on the basis of trust alone. Repeatedly, the news is filled with horror stories of private prison abuses, failures to provide adequate elderly and juvenile care, overruns in contract costs and employer misconduct from government contractors.

    As reported in the recently-released “Out of Control: The Coast-to-Coast Failures of Outsourcing Public Services to For-Profit Corporations” from In the Public Interest, some of the more grave incidents of for-profit public contract abuse include the case of the Jenkinsville Water Company, which failed to pay state employee payroll taxes, “misplaced” tens of thousands of dollars and lost millions of gallons of water.

    And an analysis from the Palm Beach Post that showed that four out of Florida’s six private prisons failed to meet the cost savings required by law, with three not saving any money at all.

    Also listed in the report is the case of Wings of Refuge, which offered foster care for Los Angeles Counties. Despite allegations of beatings and severe abuse, the county only canceled its contract with the group due to the group failing to file key financial forms for three years.

    Los Angeles County admitted that it only audited its foster care contractors once a decade and that audits usually results in little or no punishment.

    Since former New York Governor Mario Cuomo stated “It is not government’s obligation to provide services, but to see they’re provided,” the idea of a public/private partnership toward providing critical services has always been a part of the way government in America worked.

    But the recent drive toward financial considerations over quality of services offered has created a situation in which Americans are being asked to accept less so that a few can receive more.

    In the Public Interest has posted recommendations toward reforming the government contracting system that include:

    • Online posting on the tax revenue allocations and job gain of government contracts

    • Requiring that any company contracted with the government must disclose its financial and meeting records with the public

    • Ensuring that adequate staffing levels for contract oversight are met

    • Ensuring that the government can break the contract without penalty if the service provider fails to meet quality and cost savings requirements

    • Ensuring that private contractors’ employees are paid reasonably and have reasonable benefits

    • Considering, before the contract is signed, how will the agreement affect the community-at-large

    • Banning any contract language that guarantees company profits

    • Allowing and considering cost-saving and quality-improving proposal from existing public service workers

    The idea that the private sector is automatically worthy of trust, and a company will automatically do the right things without being forced to do them is folly. It has been said that evil exists because good men do nothing to stop it. Blindly agreeing to a contract for promised cost-savings without independent proof that the savings can be achieved and without considering the public ramifications of the deal endanger the community as a whole.

    While it is unlikely to convince public officials that critical services must be handled publicly, it is not too much to ask that assurances are made that when the call for help is uttered, it will be replied to quickly and competently.


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      • Guest

        Everyone is forgetting that they were contracted for 911 runs in another city and they shut that down without notice as well. Lima, OH, had two EMS companies — MedCorp (a First Med company) and Hanco — and MedCorp shut down its operations in Lima abruptly and without notice to its employees or to the city. Last I had heard, the state board was looking into that because of how it was done.

      • FMEMS

        The company closed down all operations in VA, NC, SC, OH, WV, Ky without
        notice last Friday, Dec 6. According to some employees who were contacted, the
        company cited bankruptcy as the reason. However, as of Tuesday afternoon, no
        such bankruptcy was recorded. The
        situation did not have to end this way. Read on:

        This mess came about after Enhanced Equity, a group of private equity
        investors hired a firm to conduct due diligence on proposed OH acquisitions
        which the company later completed. The firm mis-judged the per run costs and
        revenue by a long shot. Original First Med founders discovered the
        miscalculation when real data was available the following year and created a
        workable plan to fix the mess created by the (lack) of due diligence. Shortly
        thereafter, Enhanced Equity chose to hire Bryan Gibson as CEO and dismissed the
        original founders. Trace Gibson’s history on Linked-In, etc… and the story
        speaks for itself while the original founders have a great record for both patient
        and employee care.

        The question that should be investigated is: Do current executives stand
        to benefit from this bankruptcy personally for the CEO’s own company in AL at
        the expense of all loyal First Med EMS employees, patients and customers? There may be bars of the non-alcoholic type in the future.