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Rural/Metro suddenly formed an alliance with the San Diego Fire Department after it appeared both stood no chance of getting the ambulance contract for San Diego. The joint proposal as new partners called for Rural/Metro to infuse cash into the deal by building a new communications center and purchasing ambulances. The San Diego Fire Department and Rural/Metro proposal won the San Diego contract. Another such partnership between Rural/Metro and a fire department cropped up in Aurora, CO; a joint proposal was unsuccessful in San Mateo County, CA.
While Rural/Metro was wearing the white hat with the fire departments in San Diego and Aurora, it found itself embroiled with fire departments for EMS contracts in Lincoln, NE, and Orange County, FL. Additionally, at the same time it was trying to show its friendship with the fire service in San Diego, it - along with other major players in the private ambulance industry - was helping to fund a secret smear campaign against the fire service through the Goldwater Institute in Arizona. Witzeman and Warren Rustland, both members of the Rural/Metro board of directors at the time, also sat on the Goldwater Institute board of directors.
With rumors and counter rumors flying of Rural/Metro filing for Chapter 11 bankruptcy protection, it finds itself trying to keep the dike from springing a major leak. In January 2000, Rural/Metro ousted its president and announced it would revamp its ambulance operations. On Jan. 19, 2000, the Rural/Metro board of directors announced it had promoted Senior Vice President and Chief Operating Officer Jack E. Brucker to president and COO. The board also accepted the resignation of Robert E. Ramsey from the position of executive vice president and board member. Ramsey had owned Southwest Ambulance in Arizona before it was bought out by Rural/Metro.
Another resignation shortly thereafter came from Rural/Metro's chief financial officer, Mark E. Liebner. Shortly before Liebner's resignation, Rural/Metro reported that it was not in compliance with several financial ratio covenants of its revolving credit agreement.
Rural/Metro's strategy at this point to remain financially solvent is to:
- Reduce non-emergency ambulance operations for locations that are highly dependent upon Medicare and Medicaid reimbursement.
- Focusing on determining prospectively if a transport will be reimbursed rather than fighting denied claims and pursuing patients without insurance.
- Examine new cutoff points for internal collection efforts.
- Take millions of dollars in charges to restructure.
- Pull out of approximately 30 markets, resulting in roughly 1,000 layoffs.
As a result of its ongoing restructuring, Rural/Metro reported a $42.4 million loss for its second quarter and a $16.6 million loss for its recent third quarter, ending March 31, 2000. Additionally, Rural/Metro reported in May 2000 that it would be shutting down operations in Corpus Christi, Dallas, Houston and San Antonio, TX. The resulting shutdown of operations will result in approximately 300 employees being laid off.
Whether Rural/Metro survives remains unknown. What is clear is that its financial failure follows the same pattern as AMR - demonstrating that Wall Street and the delivery of emergency medical service were never destined to flourish.
Gary Ludwig, MS, EMT-P, a Firehouse® contributing editor, is the chief paramedic for the St. Louis Fire Department and is the vice chairman of the EMS Executive Board for the International Association of Fire Chiefs. He has lectured nationally and internationally on fire-based EMS topics and operates The Ludwig Group, a consulting firm specializing in EMS and fire issues. He can be reached at GaryLudwig@aol.com.