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For those of you who entered the fire service within the past five years, you may have heard the "old timers" talk about the 1990s, when factions within EMS were at war about the delivery of care. It was public versus the privates at its best. The battles were particularly noticeable and heated in California and Florida, where public and private ambulances sometimes would arrive simultaneously at the same scene.
At the center of the EMS wars were big corporations such as American Medical Response (AMR), Rural/Metro, Lifefleet, Medtrans and Careline. Merger mania started in 1992, when AMR started with four ambulance companies coming together and making an initial public offering (IPO) of its stock. Soon, others went public with their stock. Most of these publicly traded companies went on a frenzy buying small "mom-and-pop" ambulance services until everything that could be gobbled up was devoured. In all, AMR purchased over 200 small ambulance operations; Rural/Metro and Medtrans purchased far fewer of them, but still significant. Those "mom-and-pops" that remained chose to stick it out and do battle with the "big boys."
Eventually, the "big boys" started buying each other out until three were left: AMR, Rural/Metro and Medtrans. Medtrans was owned by a Canadian corporation, Laidlaw. In 1997, Laidlaw bought AMR for $40 a share, or about $1.2 billion, making a lot of people who owned AMR stock rich. But not only did Laidlaw buy the stock, it dumped the Medtrans name and started calling itself American Medical Response.
At the same time, the fire service found itself in a pitched battle with these large corporations and a few smaller ones for delivery of EMS and what the big conglomerates saw as "market share." After all, when you have investors to answer to, breaking even is not an option. There must be a return on their investment through escalating the share price or paying dividends. The only way to do this is to increase profit margins by increasing profits, cutting expenses and increasing market share. How do you increase market share? By taking away someone else's business through competition.
Suddenly, many fire departments found themselves having to justify their involvement in EMS. Fire chiefs found themselves sitting across the table from elected officials, trying to explain the need to keep EMS in the fire service instead of privatizing it. Other fire departments found themselves trying to get into the EMS business to increase service levels in their communities.
Sometimes, the battles were fierce, as fire departments and the privates battled it out in front of city councils. The "big boys" hired consultants, lobbyists and promoters to win contracts. In some communities, the large privates saw the futility of such battles and partnered with the fire service, as Rural/Metro did with the San Diego Fire Department in the mid-1990s.
After a few years, it did not look like Laidlaw's investment was working out so well. AMR starting paring back and closing some operations where it was losing money. In some communities, the fire departments had about six months' notice they were going to be in the EMS business, as AMR announced it was leaving town because it could not make enough money. The belt was tightened at Laidlaw when investors saw the stock's value slump to less than 25 cents a share at one point and they demanded that management heads roll.
But then when things looked as though they could not get any worse, Congress passed the Balanced Budget Act of 1997, which mandated that Medicare become more frugal with taxpayers' money. The privates predicted that EMS would collapse.
Starting in April 2002, the privates could no longer transport grandma from the nursing home to the hospital for kidney dialysis, stick a paramedic in the back with a monitor/defibrillator and bill a high-dollar ALS trip when no care took place. From then on, EMS reimbursement would be based on the level of service performed, not what service level at which the ambulance was equipped and staffed. This is a five-year phase-in program and culminates in 2007.