The Perfect Storm

 

A storm is brewing. A perfect storm. Just like the movie starring George Clooney in which a confluence of three different weather patterns converged into one spot over the Atlantic Ocean, the fire service, I predict, will be facing it own perfect storm over the next one to four years.

That perfect storm includes the terrible situation many local governments find themselves in when trying to finance public fire and EMS agencies; the turn of suddenly blaming firefighter pay and pension systems for the financial difficulty many communities find themselves in; and the rise of for-profit ambulance companies that plan on making a move on existing fire-based EMS markets.

There is no doubt that the current economic status of our country will drive decisions by local governments for several years to come. According to a survey conducted by the National Association of Counties called, "The Recession Continues: An Economic Status Survey of Counties," many counties are seeing less revenue, particularly from their state governments, and still are making cuts to adjust for that loss.

The problem during these tough economic times and decreased tax revenue is that police and fire departments typically make up a large portion of a local government's budget. Couple all of this with the fact that city and county managers, along with elected officials will be looking to see how they can reduce their fire and EMS budgets because tax revenues are lagging, and the perfect storm begins to develop.

Another factor that will contribute to the perfect storm is that we can expect call volume to keep increasing. The woman who is considered to be the first baby boomer because she was born right after midnight on Jan. 1, 1946, became eligible for Medicare this year. Behind her come an estimated 88 million more baby boomers who will live longer and need increased health care.

Other factors that may contribute to the call rate rising are found in a brief released by the National Center for Policy Analysis. The Jan. 11, 2011, report titled, "Emergency Medical Services: How Health Reform Could Hurt First Responders," says "insured individuals consume nearly twice as much health care as the uninsured. Thus, EMS utilization will likely increase; however, the Affordable Care Act (ACA) does not provide funds to pay for increased EMS use. This will force local governments to choose between taxes, finding alternative revenue sources or reducing emergency services."

The last portion of the perfect storm is the rise of for-profit ambulances companies and their ambitions.

Earlier this year, American Medical Response (AMR), the largest for-profit ambulance company in the United States, announced the sale of its publicly traded company on the New York State Exchange to the private equity firm of Clayton, Dubilier & Rice for $64 a share. The announced sale has resulted in many pension systems and others suing AMR's board of directors and banks associated with the deal because the sale price was 9% below the previous day's stock price.

More important, private-equity firms are interested in investing in the delivery of ambulance service. A confidential document reveals that AMR is targeting 29 cities as potential untapped markets. Another for-profit ambulance company to watch is Falck Ambulance, which according to its website is the largest private ambulance company in Europe and the largest private firefighting force in the world. Just recently, Falck purchased LifeStar, a large private ambulance company on the East Coast with 440 ambulances and other rescue vehicles. LifeStar provided ambulance services in seven states. Last year, Falck purchased Care Ambulance in California. Care operated 135 ambulances and other rescue vehicles. With these two purchases, Falck became the third-largest ambulance provider in the United States.

Bottom line — here's what you will see over the next one to four years: a tough economic period with less tax revenue because governments lag behind any recovery with the collection of taxes; more bashing of firefighters on pay and pensions because fire departments account for a large percentage of local government budgets; EMS call loads continuing to increase as baby boomers age; private ambulance companies positioning themselves to strike while the iron is hot; and city managers and politicians looking for opportunities to cut departments. You can see the perfect storm is developing.

GARY LUDWIG, MS, EMT-P, a Firehouse® contributing editor, is a deputy fire chief with the Memphis, TN, Fire Department. He is chair of the EMS Section for the International Association of Fire Chiefs (IAFC), was appointed to the National EMS Advisory Council by the U.S. Secretary of Transportation and is a member of the International Association of Fire Fighters (IAFF) EMS Standing Committee. Ludwig has a master's degree in business and management and is a licensed paramedic. He can be reached at www.garyludwig.com.

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