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FireTimes Wire Services & Staff
Scottsdale, Arizona - Rural/Metro Corporation announced late Wednesday that it has notified the City of Scottsdale, Arizona, that the company has initiated a planned exit as the contracted provider of fire protection services effective June 30, 2005.
The company will remain as the exclusive contracted provider of emergency medical transportation services under a five-year agreement that began July 1, 2002.
Jack Brucker, President and Chief Executive Officer said, "The strategic direction of our company places significant value on our ability to effectively and efficiently focus on the needs of the communities we serve. We believe the business model that our founder created more than 50 years ago for subscription-based fire protection services has served us well, and we plan to focus on growing this segment of our business in the future."
"It was a hard decision to make, partyly because we fought a hard fight," said Kurt Krumperman, president of Rural/Metro's fire and emergency services group, in a story published in the Scottsdale Tribune.
Rural/Metro has provided fire protection services in Scottsdale, Arizona, for 52 years. The fire protection contract, which was most recently renewed in 2002, generated $16.7 million in net revenue representing 3.2 percent of the company's total revenue. The contract is not expected to cause a significant financial impact upon expiration in 2005.
Will continue paramedic ambulance service
During that renewal period, the city executed a separate contract for the paramedic ambulance service for a longer duration. Television news was reporting that Rural/Metro would retain the ambulance contract, long regarded in the industry as one of the most lucrative service areas in the nation. Reportedly, Rural/Metro would continue to serve the ambulance contract under its Southwest Ambulance division, a large Arizona company it acquired in 1997.
Scottsdale owns all of the fire stations and most of the fire trucks serving Scottsdale. It does not own much of the incidental equipment or vehicles, such as hoses, firefighter turn-out gear or battalion chief vehicles. Those costs, estimated to be as much as $6 million, will have to be paid by Scottsdale.
At the heart of the Scottsdale controversy over the past year was a lack of pension and death benefits for Rural/Metro firefighters on par with other Phoenix area cities. Rural/Metro's firefighters in Scottsdale and surrounding Maricopa County are represented by an IAFF local. IAFF members were a prominent part of the March initiative election, lending both major financial and door-to-door support.
It is not clear what will become of either the 200 firefighters working in Scottsdale, nor if the city intends to have firefighter paramedics in view of the separate paramedic ambulance contract. Prior to 1992, Scottsdale relied on three private ambulance firms to provide paramedic ambulance service, as the Rural/Metro fire companies were only BLS. Scottsdale and Rural/Metro modified the contract in the early 1990s after another citizens' ad hoc effort called attention that Scottsdale was the only major Arizona community without firefighter paramedics. Today, Rural/Metro fire ambulances perform both the emergency and non-emergency ambulance service in the city.
"Scottsdale is a good place to be in the ambulance business," said FireTimes Managing Editor and public safety consultant Jon C. Altmann. "The population is generally middle income or above and the collection rate exceeds 80 percent historically," Altmann explained. Collection rates, which are the barometer of an ambulance service's economic success, are generally considered excellent at the 80 percent level, according to Altmann.
"We will work closely with the Scottsdale leaders to ensure a smooth transition and have recommended that the city begin the process of establishing a municipal fire department. During this period, and in the future, we will remain committed to providing the highest-quality services to our customers in Scottsdale, in Maricopa County, and throughout Arizona. Our decision to refocus on subscription-based fire protection for our future growth is a sound strategic and business move that we believe will provide excellent opportunities going forward," said Krumperman.
Krumperman also was quoted by television news as saying Rural/Metro planned to continue its subscription fire services to other Phoenix area communities, including the neighboring Town of Paradise Valley, Arizona's most affluent community located between Scottsdale and Phoenix borders. Rural/Metro serves the town with one fire station. Public safety officials in the Phoenix area had said that Paradise Valley had been making contingency plans for sometime in the event of Rural/Metro's departure from Scottsdale. The town had passed an ordinance some years back requiring all of its residents to subscribe to Rural/Metro, but the town does not have any firefighting resources of its own. The Phoenix Fire Department has long been rumored to be a possible contractor to replace Rural/Metro, as Phoenix borders the town three sides.
Rural/Metro's fire protection division serves more than 100,000 fire subscription customers throughout the nation. The company also provides specialized industrial and airport fire protection services to customers in 10 states, including the FedEx Express airport hub in Memphis Tennessee, the Morristown Municipal Airport in New Jersey, CITGO Petroleum operations in Louisiana, and International Steel Group's manufacturing plant in Indiana.