Changing health care landscape creates crisis for Sullivan EMS

Feb. 10--BLOUNTVILLE, Tenn. -- There is a cash crisis at Sullivan County Emergency Medical Services that could mean it can't make ends meet in the coming months.

Currently, the ambulance service has nearly $2 million in outstanding bills, nearly a third for private individuals it transported to the hospital.

The struggles come at a time when the health care landscape is changing rapidly -- the rollout of the Affordable Care Act, reductions in Medicare reimbursement payments as a result of federal sequestration, significant increases in health insurance deductibles and a drop in calls -- all challenges affecting many in the health care industry, from hospitals to ambulance services.

"There really is no relief on the horizon," Sullivan County EMS Director Gary Mayes said. "We see these trends at least in the short term -- the next six months -- continuing. That means we have to cut services or cut expenses."

Besides billing challenges, the service has seen a 10 percent decline in calls for service, which means less revenue. While the service is a branch of county government, it operates independently and all revenue comes from billing.

"Historically, Sullivan County EMS has seen flat or trended upward run volume," Mayes said. "From a business perspective, that translates into charges. In February (of last year) things really changed. We were conscious of a potential change, but we really did not anticipate how quickly the change occurred in the health-care sector."

Mayes is so concerned that he recently shared the struggles with the Sullivan County Commission. He says he doesn't want to take taxpayer money to operate the service, but he has not ruled out any option.

High deductible plans

One of the largest changes in the health care world in recent years is the switch to insurance plans with higher deductibles. In many cases, those with private insurance plans must pay for $2,500, $5,000 or even $10,000 worth of medical services out-of-pocket each year before insurance begins paying. Mayes said that has created huge shifts in the ambulance business.

"We believe that patients just simply can't afford to go to the emergency room," Mayes said. "Also, consumers have more outlets to reach medical care. They don't necessarily go to the emergency room. They can go to urgent care."

For an ambulance service to receive payment for an emergency call, it must transport the patient to a hospital emergency room. Often, an ambulance is called to the scene of a car accident, but the person refuses transport to the hospital and the ambulance service receives no compensation.

Mayes said more and more patients are declining transportation to the hospital because they know payment would come out of their own pockets.

"Consumers are becoming more and more astute about their health-care costs," Mayes said.

Sullivan County EMS has more than $700,000 in unpaid bills now from private individuals and Mayes expects to receive only a small percentage of those funds.

The high deductible plans are also impacting private ambulance services. Ambulance Service of Bristol owner Wallace Elliott transports a lot of patients from their homes to dialysis treatment and he often has to explain the realities of out-of-pocket expenses in a high-deductible plan.

"It's the new policies that these people are choosing," Elliot said. "They should choose wisely the policy they go on."

But not everyone is experiencing problems. Bristol Life Saving Crew Captain Mark Blankenship said that his service has noticed an increase in the number of people with high deductibles, but it is not impacting the organization.

"It's not a problem at all," he said.

Sequestration and federal payments

Last April, the federal government implemented a series of cuts to federal payments known as sequestration. That cut 5 percent for EMS payments from Medicare for emergency calls and 15 percent cuts for dialysis transports. Mayes said that cut $38,000 to $40,000 per year out of the EMS budget.

"When you look at the declining call volume and you look at sequestration and you look at the Medicare cuts and the changes in the commercial insurance, then you see the downward pressure on revenue," he said.

American Ambulance Association Senior Vice President of Government Relations Tristan North said the cuts in federal payments are something that all ambulance services are confronting.

"Sequestration in addition to the other factors is having a significant impact on ambulance service," North said.

He said an ambulance service is an expensive business and new technology has created more capital expenses. North said that creates a catch-22 situation. People want the high-tech care, but insurance often does not want to pay the cost.

Mayes said the EMS service is able to meet daily operational expenses despite the cutback, but he said the real challenges are capital expenses. An ambulance fleet is expensive to purchase and maintain.

Sullivan County EMS Deputy Chief Stacy Mahan is in charge of the ambulance service's 19 ambulances. He has to find a way to maintain the fleet in a tough economic environment.

"A lot of our fleet is getting up in age," Mahan said.

An ambulance costs between $120,000 and $150,000 each and contains thousands of dollars in supplies. The ambulances require ongoing maintenance and run for about 300,000 miles.

"I only have so much money to spend," Mahan said. "As billing becomes less, there is less money to spend on overhead."

Developing a plan

Sullivan County EMS must develop a strategy in the coming months that keeps the ambulance solvent, but also provides service across the county.

"That is where the critical decisions are going to have to be made," Mayes said. "Making that decision will involve the County Commission, our medical community and the public."

Areas like Hickory Tree in the rural southern end of Sullivan County require a fulltime ambulance, but the vehicle does not record as many calls as those in more populated areas.

The ambulance service could save money by closing the low-volume stations, but Mayes is opposed to taking that action. The ambulance service has made a commitment to the residents of Sullivan County and must provide quality ambulance service, he said.

"We actually deal with life-threatening emergencies," Mayes said.

Another option would be to privatize the ambulance service, which means the county could pay a private company to provide the service.

But Mayes is reluctant to take that route. Several private ambulance services that provide transport to millions around the country have filed for bankruptcy recently.

First EMS, based in Wilmington, N.C., abruptly filed for bankruptcy in December. The company operated ambulance service in six states and the bankruptcy created major headaches for many small towns that contracted with the company. Rural/Metro Corp., which serves several Tennessee counties, also filed for bankruptcy, but plans to restructure and continue operating.

North said privatization is an option for some areas of the country.

"Government officials are looking at what is the most efficient way to run an ambulance service," he said.

The other option is asking county commissioners for tax revenue to supplement the EMS service. Mayes knows that is not a good option politically because commissioners are hesitant to raise taxes.

"I have no plan to ask the commissioners for money, but right now I would not rule out any solution," Mayes said.

The other option is to make Sullivan County an exclusive county. Currently, the county is the only one in Tennessee that allows other ambulance services to operate within its borders. Mayes said there have been discussions about making Sullivan County an exclusive county, but no formal proposal has been presented.

"Every county in Tennessee is franchised and given a single service except Sullivan County," Mayes said. "That is done to protect EMS service."

Elliott said competition is better for Sullivan County and he opposes any effort to have only one ambulance service.

"It makes us better when we compete against each other," Elliott said.

Caught in the middle

EMS employees are the ones caught in the middle of the financial challenges. Mayes said he met with all the employees recently and developed ways to reduce costs.

"They came up with ways to save money internally," Mayes said.

The problem, however, is a lot of the costs come from labor. An emergency medical technician averages about $20,000 per year and a paramedic makes around $32,000. Each ambulance is operated by a team of two professionals, one who drives the ambulance and the other who takes care of the patient.

The ambulance service has 100 full- and part-time employees, and Mayes said making any staff cuts would be difficult.

"Our staffing levels are pretty tight right now," he said.

Mahan said the employees are willing to do their part to save money, but it is difficult given the financial strains.

"We look at every nook and cranny to save costs, but you are not going to affect patient care," Mahan said.

He started as a volunteer and has worked his way up through the ranks. He said he sees the passion that the employees in the service have and the help they provide patients.

"We meet people for the first time at the worst time of their life," Mahan said.

Copyright 2014 - Bristol Herald Courier, Va.