Making Smart Choices in Bad Economies

As public budgets continue to shrink, how can EMS leaders make smart but tough choices that keep their doors open and let them keep serving the public? A report by well-known consultants Fitch & Associates, Making Smart Choices About Fire and Emergency Medical Services in a Difficult Economy, looks at problems being faced by emergency services managers and presents a variety of solutions that are working for some.

In many communities, public safety funding makes up as much as two-thirds of the municipal budget. In today’s economy, where real estate values have dropped significantly, budgets that rely on property taxes have been impacted dramatically. When community leaders slash budgets in response, emergency managers are left to determine how to save money without costing lives.

According to the authors of the report—Fitch’s Joseph J. “Jay” Fitch, PhD, and Michael Ragone and the RedFlash Group’s Keith Griffiths, who produced it for the International City/County Management Association (ICMA)—this financial squeeze will not end any time soon. They cite U.S. Fire Administration officials who say that even once the economy rebounds, it will take 1–3 years for municipalities to see increased revenues. Fire-rescue agencies can expect a 3–5-year wait before seeing their budgets increase.

A public agency’s sheer size and exposure in the public eye make it an easy target for cuts. One easy and often-used technique is across-the-board cuts that affect every municipal department. The intent is to “share the pain” by treating everyone the same. But not every unit of government has the same mandates and measures to define success. This means across-the-board cuts are liable to have unintended consequences because the budget “fix” has not been thoroughly thought through. A more accurate process is to have serious policy discussions that take into account what the community really values, then prepare budgets accordingly.

Personnel costs are often a high percentage of agencies’ budgets, as well as municipalities’ overall expenses. An example in the report cites that public pensions represent 20% of Los Angeles’ budget costs. One way cities are lowering these costs is by moving from defined benefit plans to more 401(k)-style defined contributions plans. Another money-saving technique is a tiered system where new hires earn fewer benefits initially, but their benefits increase with tenure.

Attempts to maximize payroll dollars include the ongoing debate over whether it is cheaper to pay overtime and work existing employees more hours, or hire additional responders to save overtime costs. According to the report, the general rule says that if it costs more than 50% of pay to hire and provide benefits to new employees, then it is cheaper to pay overtime to current staff. However, strongly held beliefs and traditions also come into play when trying to decide how to proceed, which makes the overtime-vs.-new-hire decision process unique to each agency considering it.

Some agencies explore using alternative service delivery methods to achieve more (or at least maintain) with less money. But Fitch cautions EMS managers to keep the medicine in mind when looking into solutions that affect response capabilities. “Decisions on how to respond need to be based on sound medical evidence,” Fitch says. He notes that response time targets need to reflect how they affect outcomes, not necessarily just some arbitrary performance standard.

The report’s authors cite two different concepts that are finding success. In suburban Portland, OR, Tualatin Valley Fire & Rescue runs ALS-equipped and -staffed engines and uses a private third party for transports. The department deploys peak-demand engine companies or rescue response vehicles to answer calls and maintain response times during busy periods.

The San Jose, CA, Fire Department has devised a resource management strategy called dynamic deployment to minimize the impacts on service of shutting down fire companies. They faced some upfront costs for software, communications personnel and ongoing data gathering and analysis, but officials expect to reduce service-level impacts to the most critical calls.

Several other communities are using different means of triaging calls at their dispatch centers and offering callers alternatives such as nurse-assist lines or appointments with and transportation to clinics. Costs are lowered, risk is reduced from fewer emergency runs, and resources remain in service for true emergencies.

The report offers good advice on patient transports for EMS managers trying to decide if ending transports by contracting with third parties would be better. Fitch says this process can be complicated because most requests for proposals only ask applicants what they can do. This makes it hard to evaluate competitors. According to Fitch, a more objective procurement process will clarify the agency’s service expectations and ask applicants how they can meet them. RFPs written in this fashion will result in responses that can be objectively compared based on how well applicants meet the designated standards.

Fitch says the bottom line to any decisions that affect response-to-service requests is unique to every agency. “Whatever is decided has to work for that agency based on its mission, staffing, attitudes and local needs,” he says.