Dangers Facing EMS: For-profit Takeover

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Dan Sullivan, the founder of The Strategic Coach Inc. and creator of the Strategic Coach® Program, developed a methodology for assessment named D.O.S., which stands for Dangers, Opportunities, and Strengths.

Dangers refer to things we are afraid of losing, opportunities offer the possibility to gain something, and strengths encompass our unique skills and abilities. In the upcoming blog series, EMERGICON will utilize this methodology to assess the Emergency Medical Services industry and offer insight on how to mitigate dangers, capitalize on opportunities, and develop the strengths that are most impactful.

Danger: For-profit Takeover

Ambulance service companies are attractive to private equity firms, who often swoop in to buy them out of their financial troubles. These firms are attracted to the emergency services industry for several reasons such as exploiting marketplace inefficiency and servicing communities with no regulations to provide 911 emergency services.

Private equity activity is increasing across the board, and the healthcare industry is no different. Advisory firm Triago reveals private equity firms have increased their investment management assets from $1 trillion to $4.3 trillion since the 2008 financial crisis. Warburg Pincus was the first investment banking firm to move into the healthcare market by purchasing Rural/Metro in 2011, one of the nation’s largest ambulance services, for more than $400 million. Rural/Metro, however, is one example of a private equity firm that plunged the organization into bankruptcy while another firm jumped in to turn it around.

A 2016 New York Times investigative piece revealed the harsh reality of these financial arrangements, based on analyzing internal records and interviewing former employees. It showed ambulance response times worsened, prices increased, and litigation ensued. The private equity firms’ money-making approach to turning a profit was at odds with people’s needs during an emergency.

Residents in these communities suffered – and some even died — as a result of slow response times and mismanagement. Bankruptcy followed for three of the 12 ambulance companies owned or managed by private equity firms, according to S&P Global Market Intelligence, which tracks more than 1,100 major ambulance companies in the United States.

Protecting the emergency services industry

Emergency service agencies can protect themselves in several ways, as one expert shares. It’s important for emergency service agencies to share their story that goes beyond what community leaders hear in the national media. Explain what local response times are, how patients are served, and how EMS is locally funded. Education is powerful, especially when it’s based on data.

Other measures are to diversify revenue – such as Fire Billing for Fire-based EMS services, invest in the moneymakers, and encourage field providers to get out during troubled times before investors take over.

What is your perspective on the danger of for-profit takeover of EMS agencies? Join the conversation on Facebook and LinkedIn.

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