San Diego Ambulance Dispute Near Resolution Vote

San Diego Union-Tribune

San Diego's fire chief is urging the City Council to switch ambulance providers in a much-anticipated vote next Tuesday, but two new evaluations clashed on whether the ambulance company's plan to boost service by 20 percent is financially viable.

Fire-Rescue Chief Colin Stowell says switching from current provider American Medical Response to Falck would bring long-needed technology and equipment upgrades, while allowing the city to impose stiff penalties for slow emergency response times.

Meanwhile, the city's independent budget analyst issued a report this week saying Falck's financial plan is feasible and that making the switch would not be financially risky for the city.

But a separate consultant's report funded by local organized labor says Falck is overestimating revenue and underestimating costs in its projections, which the report says could leave the city with financial problems, weak ambulance service or both.

In a letter to City Council members, Chief Stowell urged them not to heed calls by critics of Falck to re-start the evaluation process, which he estimates could delay a decision on which provider the city will use long-term by more than 15 months.

"Continued delays affect the Fire Department's ability to provide emergency medical care to the community in the most efficient manner," Stowell said. "The proposed contract with Falck will be the first major upgrade to the emergency medical service system in 11 years."

The upgrades would include 65 new ambulances plus new gurneys, cardiac monitors and compression devices. The city also would regain control of some facilities now occupied by American Medical Response.

But perhaps more importantly, the contract would allow enforceable penalties for slow response times, which has previously been a problem in some San Diego communities south of state Route 94.

"The current contract does not have protections against extremely long response times, which represent significant delay in patient care and transport, with possible adverse outcomes," Stowell said.

AMR said in response that it would also make all the upgrades cited by Chief Stowell because they are requirements demanded by the city last year when it solicited proposals to handle its ambulance service.

The company added that it could make the changes faster than Falck because the city is planning a six-month transition period from AMR to Falck, which will delay some upgrades.

Regarding finances, the independent budget analyst report concludes Falck's financial plan, which would put 10 to 14 more ambulances on the streets each day, is feasible and based on reasonable revenue assumptions.

The IBA report says concerns raised by an independent consultant this winter are legitimate, but there is no reason to dismiss Falck's confidence it can work out relatively lucrative deals for ambulance service with health systems and hospitals like Kaiser Permanente, Sharp Healthcare and Scripps Health.

"We conclude that it is feasible for Falck to raise enough revenue from the 9-1-1 system, as well as other ambulance transportation services, to operate at the level of service provided for in their proposal," the IBA report says.

The 10-page report also says the city faces minimal financial risk if Falck's projections for costs or revenue fail to work out and the company ends up losing money in San Diego.

"There is not much that Falck could do, absent a major contract modification that would require council approval," the IBA report says. "Should Falck attempt to remove ambulances or substantially decrease staffing levels, they would be in breach of the contract itself."

A similar conclusion was reached by a labor group representing local emergency medical technicians that work for AMR and that will work for Falck if the city makes the switch.

The group, the San Diego Association of Prehospital Professionals, sent a letter to the council saying the city would be entitled to millions in performance bond fees if Falck bails on the city because of financial problems.

In that scenario, the group says, San Diego would keep all the new equipment Falck was required to buy, and ambulance service could temporarily be run "in-house" until the city decided whether to again solicit proposals from providers.

While the labor group hasn't expressed a preference between Falck and AMR, it has softly endorsed Stowell's recommendation to make a switch.

"The net of our research has not revealed any concerns that would move us to oppose city staff's recommendation that Falck be awarded the EMS transportation contract," the group said in a letter to the council.

A separate 23-page analysis by consultant Athenian Group, which was paid for by local organized labor, contends it's irresponsible for the city to assume that Falck's Danish parent company would cover any local losses.

The report, which was delivered to all council members Thursday, also says local losses are highly likely because Falck's financial assumptions are overly optimistic.

"Athenian's research makes clear that Faulk has underestimated costs, overestimated revenue and doesn't have enough money in the bank to make up the difference," said Keith Maddox, head of the San Diego & Imperial Counties Labor Council.  "That puts our most vulnerable residents at risk of losing care, and leaves the city and the working families who pay taxes holding the bag."

A group representing the region's hospitals has also expressed concerns about Falck's plans to increase fees it charges hospitals and health systems for ambulance service.

"Shifting the cost of transport to hospitals by selecting a vendor that openly states they will not help keep providers' rates low through volume discounts is not good for health care consumers," said Dimitrios Alexiou, chief executive of the Hospital Association of San Diego & Imperial Counties.

Falck chief commercial officer, Troy Hagen, said the Athenian analysis and other new criticisms are unwarranted and that AMR and its allies are making desperate, 11th-hour attempts to block the switch.

"This is yet another baseless, disguised allegation from the current provider desperate to preserve a contract they have fairly lost twice the past two years," said Hagen, noting that his company's plan for more ambulances is supported by many local civil rights groups.

Tuesday's council meeting, which can be viewed at sandiego.gov, is scheduled to begin at 11 a.m.