Budgetary Best Practices

The irony is hard to ignore: At a time when EMS agencies are being asked to do more than ever—respond to rising call volumes and handle homeland work force challenges—the budgets they're being given to do so are, in many cases, shrinking.

Getting the most out of your money is an imperative these days. So how do you go about it? EMS went looking for best budgetary practices and came up with the following pointers.

1. Know Your Costs

This sounds simple, but amazingly, some people don't.

"There are still large agencies that run on the notion of 'I can't be out of money, I still have checks!'" says Bob Holdsworth, principal of Connecticut-based EMS consultants Holdsworth Pelton. "A number of agencies I'm familiar with have rough budgets that look like what they spent last year, with a cost-of-living increase. So actually having a budget would be step one. Step two is to analyze the budget regularly, to identify trends and find out if you have too much or too little money in a particular area."

2. Control Personnel Costs

Most paid agencies' largest expense is personnel costs. Keeping a handle on these can save a bundle. This includes minimizing overtime and getting the most possible out of personnel on duty.

"One way to maximize the productivity of EMS personnel is to go into some type of a flexible deployment, where you don't have a fixed number of ambulances 24 hours a day, seven days a week," says Rick Keller, a partner with Missouri-based EMS consultants Fitch & Associates. "You can peak-staff and move ambulances around. That way, you can deliver the same level of service with fewer people.

3. Collect What You're Owed

You're likely never going to collect your actual costs of service, but you have to maximize recovery from all payers.

Because this can be burdensome within a department, many now outsource their billing/collections to agencies that do it professionally. Often, this speeds the process, yields higher returns, and also aids compliance with documentation requirements such as those of the new Medicare fee schedule.

"Within two business days of a billable occurrence of service, our billing agent will generate an invoice and forward it to the insurance company or patient. I can't tell you what that means for cash flow," says Bruce Baxter, chief and executive director of New Britain EMS, a midsize third service in Connecticut.

New Britain uses a service by which run forms are scanned into a proprietary system that automatically transmits data to the billing agent. This keeps the process simple and streamlined, and offers another benefit as well: easier QA/QI to guide business decisions.

"Before, the QI process was really a 2½-3-person process that we had saddled on one person," says Baxter. "This has allowed us to spread the process across a couple of individuals who have ready access to the data, and probably saved us from having to hire someone at $50,000 a year."

4. Creative Fundraising

Some conventional wisdom here: Change up your pleas. Tailor them when possible. Get creative.

"We recommend changing your marketing material on an annual basis, so people don't get used to seeing the same old letter in the same old envelope," says Holdsworth. "You also have to make a difference between the solicitation of homes and businesses. For businesses, you can make a wish list of things you need. Billy's Furniture Emporium may not want to part with $2,000, but maybe they have four of last year's perfectly usable living room sets they can write off. What do you care whether you spend money for furniture or are given furniture that looks reasonable?"

Trades are also good. You may be able to swap services like CPR training or event standbys for things you need.

"It's about keeping an open mind," says Baxter, "and recognizing that money comes in many different ways."

5. Seek Grants

Funds are out there, from the feds, states and even private entities. Don't be afraid to seek them. Grant-writing is too big a specialty to be covered adequately here, but as a general rule, grantors are looking to do the most good for the most people. With each grant application, follow the grantor's stated guidelines carefully. It never hurts to try.

6. Lease and Share

Leasing, instead of buying, can spread out the financial burden of new vehicles.

"We recommend leasing if you're going to keep a truck more than five years," says Holdsworth. "Most trucks have higher maintenance costs at five years and beyond, so if your budget allows for an ongoing vehicle expense, leasing makes the most sense."

This works for equipment too; some companies now offer things like rent-to-own AEDs. Agencies may also be able to share certain big-ticket items and services with their neighbors.

"Instead of everybody having their own dispatch center, they could share those services," says Keller. "Training can be shared. In some areas, quality assurance can be shared. Medical directors, billing and collection, fleet maintenance-in the right circumstances, all those things can be shared."

7. Group Buying Power

If you and your colleagues can decide on common specs, group purchases are another good way to get lower rates.

"Work with a neighbor and pool your resources," says Keller, "and you'll have more leverage when buying and contracting for services. Through group purchasing, you may get a better value for your dollars."

8. Regular Rebids

Don't get too comfortable with your vendors. Putting all your contracts out to bid on a regular basis can help you get the best prices.

"You'd be amazed at the money that can be saved," says Baxter. "We recently rebid our Worker's Comp and wound up saving $55,000 a year. We do have vendors and sales reps that we prefer to do business with, but to be honest, people can get complacent on the vendor side, and services can get complacent on their side. Sometimes you end up recognizing that you already have a good value, but at least you've affirmed that, and it's not a wasted effort."

9. Business Minds

Great EMS providers do not necessarily make great money managers. Those individuals overseeing spending should have a modicum of business sense.

Don't be afraid, then, to tap into your local business community for its expertise.

"I routinely recommend that when people put together a board of directors, they leave a spot for a business person from the community," says Holdsworth. "The common reluctance is, 'They don't understand EMS.' Well, good! They'll be the equivalent of the two-year-old on the board asking, 'Why? Why? Why?' You need a different perspective. These people are networked with the Chamber of Commerce, with other business leaders, with political folks. Just because they don't know how to put on bandages or do CPR doesn't mean they don't know how to run a half-million-dollar company better than you."

Conclusion

Steps you can take within your own budget also don't negate the need to keep pressing elected officials and decision-makers to learn about EMS and fund it better. In the end, they can throw more money your way than any of the steps outlined here.

"When it comes to the cost of emergency services, I see a lot of uneducated boards of selectmen and town councils," says Holdsworth. "They'll say, 'You have a published rate of $300 a call, you do 1,000 calls, why don't you have $300,000 in your budget?' 'Well, Medicaid pays 30 cents on the dollar, Medicare is 60 cents on the dollar, and these two things combined make up 60% of my call volume.' They think I'm pulling the wool over their eyes, when I'm really giving them the true economics of what it costs to run an ambulance service."

Educating our leaders about the realities of EMS finance, when it comes down to it, is probably the best budget practice of all.