Mergers, Volunteerism, and Cost Considerations

The nation’s current economic problems are hurting not only most private-sector businesses but also most state, federal, and local government agencies as well. Faced with the need to cut services and/or reduce costs in other ways, emergency medical services (EMS) providers and other first-responder organizations are seeking to lower what might be called the “unit cost” of the services they provide, specifically including ambulance services, but without cutting essentials.

There are several ways to do this, including the following: (a) replace the municipal agency with a private for-profit ambulance company; (b) use more volunteers; and/or (c) merge EMS into another agency. Any or all of these three principal options would appeal to at least some citizens, and to their elected leaders – but all have some hidden pitfalls as well.

Advocates of merging two municipal agencies often argue that the proposed merger would decrease costs by eliminating so-called “duplicate support functions.” To achieve acceptable cost savings, however, a realistic merger plan might focus on cutting redundant staff during the changeover period through retirement incentives and other strategies. Without such planning the end result would probably be either lower savings than anticipated or morale problems within the ranks – the latter could create a particularly difficult situation when layoffs are enacted primarily to reach savings goals, with little or no consideration given to the “invisible” costs resulting from lower morale.

A more important consideration, though, is that the same work still has to get done. If five mechanics are needed to service the EMS ambulance fleet, five will still be needed to service the same number of ambulances if EMS is put under the fire department’s jurisdiction.

Another point to remember in planning a merger is that the pay and benefits of employees in the same pay grade and/or holding similar titles must be equalized to the maximum extent possible. During New York City’s merger of its police agencies a few years ago, the city’s housing police officers and transit police officers all became New York City police officers. For several decades prior to the merger, though, each group had been negotiating its contracts separately, and there were significant disparities in benefits when the merger was first implemented. If such disparities are not resolved in the original merger plan, the differences that remain can more than offset the cost savings expected from a merger.

A Prudent Look at the Largest Component 

Volunteers are not only a valuable resource per se but they also affect unit costs directly by reducing payroll – the largest component of most of the costs of most agencies, public or private. However, starting a new volunteer agency – “from scratch,” so to speak – is no small undertaking. The first hard question that should be asked is: “What happens if they [the decision making officials] disband the existing agency and the volunteer agency fails?” A more prudent approach would be to take steps early to ensure that whatever volunteer agency is counted on to replace an existing agency is able to survive on its own. In some situations this might mean that the previously existing agency and volunteer agency must work side by side for a while. This approach would take longer, and would negate the possibility of large immediate savings, but could eliminate a number of very large future problems as well.

Volunteers have been successfully used throughout the country, of course, both on a day-to-day basis and when a community is planning for a mass gathering of some type – the national convention of a political party, for example, or a major sports event such as the Super Bowl or the World Series. In such situations, relying on volunteerism to supplement an agency that in the past used exclusively paid employees could cause major problems not only with the existing staff but also with organized labor in general.

The principal arguments in favor of privatization are that: (a) the jurisdiction can negotiate a new contract every few years or so; and (b) the jurisdiction gets out of the EMS business. Conversely, the principal argument against privatization is that it gets the jurisdiction out of the EMS business. Which also means, unfortunately, that the jurisdiction no longer has a built-in EMS command structure to provide real time oversight but usually must rely, instead, on a private-sector contractor to oversee the quality of the jurisdiction’s own work.

Campaigns targeted at improving the public’s awareness of situations warranting an emergency ambulance (and what to do about the situations that do not require an ambulance) may play a key role in introducing policies and practices affecting the volume of future calls. The jurisdiction as a whole may enact initiatives, for example, to decrease the number of EMS calls by enforcing speed limits more vigorously, or by keeping people out of dangerous areas. (Other policies, such as campaigns against smoking, or preventing AIDS, usually come under the jurisdiction of Public Health and may or may not affect the policies and/or resources of the community’s EMS agencies.)

The Sometimes High Cost of Free Services 

Another way of cutting costs is to eliminate, or at least scale down, services that have traditionally been provided at no or only minimal cost. Some public agencies or other healthcare providers now provide free or low-cost transportation – e.g., return trips from the hospital or to and from diagnostic or dialysis centers. Other agencies provide “free” services related to mass gatherings such as concerts, sporting events, or parades; charging for those services in the future may provide a new revenue source – but may also anger citizens who have become accustomed to services that previously were provided at no charge to them individually.

Much of the concern about privatization or the merging of agencies is about degrading the quality of care. This topic is often hotly debated, but is almost impossible to prove ahead of time – when most “go” or “no-go” decisions are made. A more important consideration, though, is that performance – i.e., the quality of care – is largely a matter of the specific indicators selected.

Many agencies that are or have been proposed as merger candidates do not have patient outcome data available because they have not previously provided patient care per se. For that reason, many advocates of mergers often use response time as the only indicator that should be factored into a decision, ignoring other indicators that also should be taken into consideration.

While response time is a significant factor, there are many other factors within the EMS equation that are frequently ignored. One example is the ALS-to-ALS percentage – i.e., the percentage of calls that require an Advance Life Support or Paramedic unit vs. the percentage that actually receive an ALS unit.

Many of the theoretical models now being used by decision-makers have at least some merit – but they also are burdened with a healthy weight of problematic issues. The bottom line is simply what most citizens (and most decision makers) already know – but frequently ignore: Namely, that nothing is free. All services cost something – time, materials, the number and specialized skills of the personnel provided, disruptions to everyday routine, etc. – and the services that are both effective and timely almost always cost more than those that are less effective and/or less timely.