The price of saving lives: Oak Bluffs examines EMS

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File photo by Nelson Sigelman

A report from a committee charged with evaluating Oak Bluffs town departments, with a focus on improving the town’s economic health, concludes the $1.5 million emergency medical services (EMS) operation provides an essential and valuable service to Island residents, but also points out a number of areas where the town might save money.

The report of the Community Development Council’s (CDC) ad hoc fiscal sub-committee also warns that health care trends and increasing costs could limit the department’s main source of revenue in the future.

The council listed 13 separate policy and administrative recommendations, along with suggestions for better cost control.

The report also notes a dramatic increase in demand for ambulance services over the past four years, as the town’s population ages, and the summer tourist influx puts greater strain on the emergency response system.

“Like a small business you have to mature,” said Terry Apenzellar, chairman of the CDC. “When you grow inside out, instead of planning from the top down, you take on responsibilities that seem to be a good thing at the time, but have consequences you don’t understand. The town has tried to be responsive, but that doesn’t always mean you grow in the most efficient way. I don’t think there is anything shocking or horrifying in the findings. I think there are some enlightening possibilities.”

Oak Bluffs has fully implemented one of the report’s recommendations, a process for recovering overdue bills and writing off uncollectible amounts.

Focus on costs

While offering high praise for the council’s comprehensive and detailed analysis of his department, ambulance chief John Rose said some of the recommendations are difficult or impossible to implement in the near future.

“There’s a lot of suggestions,” Mr. Rose said. “It comes down to man hours, and manpower. I don’t have a lot of that because of budget restrictions. Before we can implement some of this stuff, we have to look at increasing staffing.”

The report credits Mr. Rose and his staff for “full and valuable cooperation” with the committee.

“It was so impressive,” said Kathy Burton, chairman of the Oak Bluffs board of selectmen. “It was clear that everybody knew that what we were doing was in the best interests of the town of Oak Bluffs. This report is an invaluable tool for management as we struggle to improve our financial condition.”

Ms. Burton said the board will work with the town administrator in the coming months to evaluate the recommendations made by the committee.

“I feel confident this board and this town administrator want to accomplish the recommendations that we make for ourselves, and the recommendations others make for us,” Ms. Burton said. “I think we’ll stay on task.”

24/7/365

The Oak Bluffs ambulance department employs 11 full-time and one part-time employee to provide 24-hour coverage. Nine of the employees are paramedics who have the highest level of emergency medical service training and certification.

The department can call on 10 other paramedics and 20 basic emergency medical technicians who get a $50 stipend if asked to be on call, ready to respond to any emergency, and $19 per hour if they are called to duty.

Chief Rose earned $76,000 in fiscal year 2012, which just ended. Salaries for the entire department in 2012, funded partly from taxpayer appropriation and partly from insurance payments for ambulance services, total $890,653. Of that amount, $261,697 comes from taxpayer appropriations, and $628,956 comes from a revolving fund, where all revenue from the ambulance department is collected.

The report notes that ambulance salaries and hourly rates are not set according to the town’s compensation study, but by the chief and the town administrator. The town’s personnel board is now reviewing department staffing and salaries.

The report cites that only one-third of the nation’s ambulance services are town-operated, stand-alone departments. Most are combined with a fire department, run by a hospital, or operated by a private for-profit company.

Overlap

The town operates, in essence, two overlapping ambulance services.

The ambulance department provides emergency medical service, responding to 9-1-1 calls for everything from scrapes and cuts to heart attacks and strokes. The same department provides transport services for all residents of the Island— for instance, when someone needs ambulance service transportation from the Martha’s Vineyard Hospital to a mainland hospital, usually in Boston.

The 9-1-1 response service offers basic life support such as stabilization, oxygen, blood pressure, cardiopulmonary resuscitation (CPR) and other emergency services. In 2003, town meeting voters decided to increase the level of care to advanced life support. That means paramedics can administer cardiac monitoring, give certain medication, chest compression, and other advanced procedures.

“Instead of the loved ones planning a funeral, they get to plan the next birthday party,” Mr. Rose said. “For someone having a heart attack, we bring the first line of medications that the ER (emergency room) would be giving you, right to your doorstep. That means you’re receiving the medication and treatment 30 to 40 minutes before the ER.”

While the ambulance department earns high praise from those it serves, the increased level of life support comes at a price.

“The level of care is higher, and the level of responsibility is much higher, and the level of liability is higher,” Mr. Rose said. “The training requirements are dramatically higher. You have to pay the people for that.”

Greg Coogan has an interesting perspective on emergency medical care, as an Oak Bluffs selectmen who must watch the purse strings, and as a patient. When he was injured in a fall at his home on Columbus Day in 2010, it was Chief Rose who answered the call.

“They couldn’t have been better,” Mr. Coogan said. “They got me up off the ground in record time, on a holiday. You have to give them a lot of credit for that.”

Providing top-quality ambulance service, at a time when town budgets are under increasing pressure, is a question faced by nearly every town on the Island, and beyond.

“We all want Cadillac service, and we all realize that prices are getting difficult to handle,” Mr. Coogan said. “The question is, how can we make a better and more efficient health care system, without strangling us with the costs.”

Funding

The ambulance services are funded partly by taxpayers, and partly by revenue from insurance reimbursement and private payments.

“For example,” the report’s authors wrote, “all personnel benefits, whether the hours worked are 911 or transport, are paid with (taxpayer) appropriated funds. The program chief is working to designate non-personnel expenses by type of service in order to most accurately reflect the true costs of 911 vs. transport service. Neither labor hours nor vehicle usage is specifically tracked as 911 or transport expense.”

Mr. Rose estimated that if the town ran a stand-alone emergency service, without a transport service, it would cost $814,000 annually to operate, according to the report. The service could operate with one ambulance, and a spare back-up vehicle, instead of the three ambulances and one back-up it now maintains.

Revenues are projected at $500,000 to $550,000 annually, leaving taxpayers with an annual appropriation of $265,000 to $290,000.

But in reality, funding for the emergency 9-1-1 service is not treated entirely separately. All revenue, whether from an emergency call or a transport, goes into a revolving fund, which runs a surplus every year. That surplus is used to offset operational costs, and for capital expenses for the ambulance department, as well as the police and fire departments. In the fiscal year that ended June 30, the fire and police departments used a total of $237,200 from the ambulance revolving fund for their vehicle costs. In a draft capital asset plan, the town projects that capital investments for the ambulance, police, and fire departments will average $425,000 over the next six years.

The report raises concerns about pressures to reduce the cost of medical care, as well as increasing salary and operating costs that could reduce revenues and require a larger appropriation from taxpayers.

“The revolving fund has been looked at very carefully and closely,” Ms. Apenzellar said. “We’ve had enough money in past years to buy new vehicles for safety service. That has to be a goal, but I think it’s going to be harder in the future. Insurance companies are really tightening down on reimbursement. We know we’re going to have to increase payment for Steamship costs. It’s the uniqueness of being on an Island. Sometimes we have to cough up the extra charges.”

Cost vs. Value

This overlap adds a layer of complexity to an already complex operation, making it difficult to determine exactly where taxpayer money goes, exactly how much emergency calls cost or exactly how much transport costs, and exactly how much the transport business benefits the town financially.

Mr. Rose said the value of the transport service cannot be measured in financial terms alone. He compares a 20-minute response time for his department to an off-Island department that might take as long as four hours to come to the Island aboard a ferry, pick up a patient, and return aboard a ferry.

“We shorten their wait time and transport times a lot,” Mr. Rose said. “Is it a huge money-maker? When you put down everything in writing like that study did, it’s not making as much money as one would think. I don’t know that it’s a huge fiscal benefit, but it is a huge benefit to Martha’s Vineyard.”

The committee recommended that the ambulance department work to create a clearer picture of revenue and expenses.

“Budgeting, revenue and expense tracking for all EMS services, 911 and transport, should be transparent, accurate and timely as possible,” the report’s authors wrote. “EMS program management and town administration staff will need to work together to track and account for expenditures data as precisely as possible.”

By the numbers

In 2011, the Oak Bluffs ambulance made 864 emergency calls at an average cost per call of $349, according to the committee’s report. The department made 750 transport runs, the majority of those to off-Island hospitals, at an average cost of $994 per run. The average for all calls is $649.

The report concludes that these averages compare favorably with national averages. The committee used figures from the U.S. Government Accountability Office for comparison. According to that office, the cost of emergency medical serve nationally is $415 per transport, with wide variances depending on the level of emergency medical service, urban vs. rural area, productivity, and tax support. In 2011, the average cost per transport for an ambulance department of similar size, under 2,000 calls, was $553 in inflation-adjusted dollars.

Collect calls

As part of its work, the Community Development Committee examined various sources of payment for ambulance services. Its findings are a microcosm of one of the most criticized elements of the nation’s current health care system. The findings illustrate how taxpayers and insured patients subsidize those who cannot or will not pay for emergency services.

According to the report, the town collected an average of 81 percent of the amount charged for ambulance calls in fiscal year 2010. The town collects only 57 percent of the charges to one federal insurance plan, Medicaid HMO. The town collects only 10 percent of the charges from private citizens billed, mostly people who have no insurance.

“The collection rates for Medicaid HMO and Patient appear very low and account for 12 percent of transports,” the report’s authors wrote. “Other payer groups are essentially subsidizing this non-payment.”

That amounts to 109 ambulance runs during the year, for which the town received no payment. The report does not cite the cost per transport for fiscal year 2010, but using the cost per transport cited for the following year ($649) as a rough example, those ambulance runs cost an estimated $70,741. It fell to taxpayers and other insurance companies to make up the deficit.

The federal Medicaid and Medicare programs dictate how much they will pay for ambulance service, and it is substantially lower than the rate the ambulance bills.

“They tell you what you’re going to get,” Mr. Rose said. “They set the rate for the nation. They don’t care that we live on Martha’s Vineyard, where things cost three times as much. They don’t care that we have to buy a ferry ticket. They pay the same amount they pay in Boston.”

Uncollected bills also damage the town’s credit record. They create a large liability on the town’s balance sheet, a situation singled out year after year by the town’s independent auditors. In March, selectmen implemented a specific plan with schedules and guidelines for collecting unpaid bills, and a timeline for writing off bills that are uncollectible.