Providing emergency medical services (EMS) transport has long involved a mix of public and private actors. Fire departments usually play an important role in the EMS process when not overseeing the operations themselves. Traditional fire departments have adapted well to becoming across-the-board emergency rescuers and first responders, as fighting fires becomes less of an issue in more densely populated areas. Some fire departments have even taken the responsibility of being full emergency medical services agencies themselves.
Unfortunately, fire departments in California have recently been pursuing what has been dubbed an “Alliance Model” that looks to give fire departments the decision-making power of a full EMS agency, but without the typical oversight of an EMS agency. The “Alliance Model” allows fire departments to call all the shots with respect to EMS operations, but as a shadow agency with the approving local agency serving as a figurehead. When a local EMS agency commits to the alliance model, fire agencies then take on the task of providing and overseeing all ambulance services.
While EMS agencies are required by California law to competitively bid contracts under the oversight of the Emergency Medical Services Authority (EMSA), which issues guidelines calling for competitive bidding processes for contracting, fire agencies pursuing the alliance model have ignored or otherwise deemed themselves exempt from having to competitively bid for ambulance service. The result is an ugly mismatch of power and accountability: Alliance fire agencies hold all the decision-making power of an EMS agency, but without the regulatory accountability or oversight of actual EMS agencies.
Since fire agencies pursuing this model must find an ambulance provider or procure equipment and staff to create their own department, what should be a competitive bidding process to find providers becomes a decision to ignore competition and find a subcontractor without any bidding or competing proposals. Where there is any attempt at a competitive bidding process to pursue the alliance model, it is to curry favor to the fire agency whose single decision rests on no such process. Any competitors who might be willing to try to compete against the alliance would quickly be discouraged from ever doing so, as the local EMS agency effectively hands all decision-making authority to the fire agency leading the alliance.
The case for the alliance model rests on analysis by fire agencies themselves as well as consultant analyses that make questionable assumptions that fail to illuminate, and possibly obfuscate, the more costly and difficult policy, fiscal and risk management considerations that come with having fire agencies expand into operating a full EMS authority.
The combination of focusing on perceived positives of the model while ignoring downsides produce poor analyses that fire departments have used as touchstones in justifying their pursuit of a flawed governance model that undoubtedly benefits fire departments and their employee associations greatly, but at the expense of competition and transparency.
Regardless of how a locale performs or contracts out for EMS, oversight and competitive bidding processes are crucial to getting the best services, in terms of cost and reliability. The alliance model looks to sidestep those crucial elements through avoidance of competition and less stringent oversight.
A proposed California law—Assembly Bill 389—would codify the alliance model by making it legal for fire agencies to bypass Emergency Medical Services Authority oversight and choose whatever partner benefits the fire department the most, not necessarily the local governments themselves or taxpayers—in a subcontracting decision not subject to competitive bidding.
Like all areas of public services, EMS has benefitted from innovation, which for the most part, has originated from the private sector. Keeping private sector innovation in EMS will continue to be crucial, but if the alliance model takes hold, the competitive pressures that drive EMS innovation could largely halt, and service could decline as private EMS providers and expertise leave localities where they feel that they cannot receive a fair bidding process.
“If You First Don’t Succeed…”
While California’s Emergency Medical Services Authority has pushed back and even rejected EMS implementation plans using the alliance model mostly because of its anticompetitive nature, fire departments continue to pursue them. A few are even currently operating under the model. The initial attempt at the alliance model came from the Contra Costa County EMS agency’s (CCCEMS’) 2016 annual EMS plan submission to EMSA.
EMSA found several anticompetitive practices leading to a process with a predetermined outcome, which further discouraged potential ambulance providers not already aligned with the Fire Protection District from participating. CCCEMS allowed the county Fire District to subcontract to an ambulance provider without undertaking the competitive bidding process required by the EMSA, in addition to noting the conflict-of-interest presented by County Board of Supervisors members being present on the board of the county fire district “competing” for the contract. EMSA stated:
Contra Costa County EMS failed to propose and prescribe a process that would be fair and competitive, and ensure that the political effects of County involvement did not influence the local EMS agency. Instead, the anti-competitive effect of the process, and the Alliance itself, was compounded by the fact that the same individuals awarding the contract (the County Board of Supervisors) were also the same individuals (the governing board of the fire district) competing for the contract, creating a situation that had a chilling effect on all other competition.
Despite the rejection, CCEMSS’ next annual submission (two years later, in 2019) was largely unchanged from the previous one, and no concern appeared to be given to the issues raised by EMSA. No attempt at a competitive bidding process was made after the initial rejection, and the fire agency, as well as the county, continued pursuing and implemented the alliance model. In detailing the “significant changes” since the previous submission, CCEMSS mostly praised the already-rejected alliance model’s being first accepted in 2017, even spoon-feeding a description of it to the agency that previously rejected it. CCEMSS said:
In 2017 Contra Costa has successfully implemented -the Alliance -emergency ambulance service delivery model. The Alliance is a contractor/subcontractor service model where Contra Costa Fire Protection District is the contracted entity for ambulance service who has subcontracted with Contra Costa legacy partner American Medical Response to provide the ambulance services.
The plan submission did not contain a single acknowledgment of the prior rejection, as if EMSA never expressed any concerns at all. As expected, EMSA rejected it, too, though the alliance model now operates in Contra Costa due to a stay of the contract’s termination. An amended extension for the original 2016 alliance contract was made last year, extending the agreement until the end of 2025.
It is notable that the contract makes no mention of a subcontractor, just that CCCEMS is contracting out ambulance service to the county fire district. But even if the fire district had the proper equipment and personnel to manage and oversee ambulance service without a subcontractor, the fire district was never subject to a competitive bidding process and instead used a pre-determined process that “stifled competition due to bid-rigging,” according to the EMSA. Alameda, Butte, Sonoma, and Santa Barbara counties are all considering or have implemented an alliance-based EMS model (and in Alameda’s case, had one rejected).
Questionable Analysis Leads to Questionable Results
The dynamics of how these plans come to fruition are complicated but have followed a predictable pattern so far. A Fire department/district in the locale where there’s already a local EMS agency hires a consulting firm to produce a report that makes the alliance model (and the power transfer from the local EMS agency to the fire district) look attractive from a revenue standpoint and imply that the department would be foolish not to pursue the model because of the alleged cost savings.
The fire departments for the cities of Chula Vista and Oxnard were both beneficiaries of such reports from consultants last year, though both are watermarked as “drafts.” While otherwise providing a careful analysis of some aspects of EMS services and their cost and revenue streams, cross-subsidies between types of customers, how providers are reimbursed, grants billing and collections, etc., it is what the reports downplay, misstate or downright ignore that casts doubt on the prudence of adopting the alliance model.
For instance, in trying to dispel what the consultants see as a common misconception of the private sector performing government services much cheaper than the public sector, the authors claim the public’s sector’s avoidance of taxes (for fuel, corporate, property taxes, etc.) as evidence that the public sector can be cheaper. Cost comparisons often underplay the extent to which public agencies avoid costs that private organizations must undertake: all forms of taxes are a given, but fuel and utility costs as well as the inspection and licensing of vehicles typically get avoided by public agencies but are mandatory for private providers. Revenue is not just avoided with public agencies but many cost components of agency operations may get downplayed or lost in a cost-comparison analysis, preventing a full “apples-to-apples” comparison.
But if it is revenues that make the alliance model so attractive, then treating avoided taxes as a benefit makes no sense. Instead, they should be considered a cost since tax revenue would be collected from a private contractor but not from a public provider. The authors of the report also depict private contractors as being overwhelmed with upfront costs of finding the appropriate buildings and equipment. But most ambulance companies operate in multiple jurisdictions and face such issues regularly. Public providers on the other hand have no prior experience overseeing an ambulance service. The authors claim:
(T)he general consensus is that private sector is less expensive than government. The reality of public ambulance providers is not only can they compete but in almost every case, the public sector can do it significantly cheaper that the private sector. Private providers of ambulance services must establish their entire infrastructure which includes offices, station locations, maintenance shops, training facilities, and management – which also includes HR, finance, operations, etc. In addition to the above infrastructure, private sector providers must also pay fuel tax, registration, and insurance.
This depiction ignores the fact that private companies operate in multiple locales and have extensive experience acquiring the very things he identifies as problematic, including shared functions such as human resources. Bear in mind that fire departments looking to control EMS in the alliance model must obtain new vehicles, personnel, and establish billing departments or otherwise contract them out (also without a competitive bidding process an EMS agency would otherwise be asked to employ).
Additionally, while the authors may not feel the need to get into greater detail on cost attribution in comparing public vs. private (a curious exercise for an EMS delivery model that relies on contracting with a private ambulance provider anyway), they appear to do a poor job anyway. Like many public agencies, fire agencies rely on other agencies to manage human resources, expenses, fuel, and other services that do not require additional funds from the fire agency itself but nonetheless are a cost borne by taxpayers for the service.
While private companies, especially large ones, also have the same sort of shared services arrangements, when private contractors rely on their internal resources, there is no extra cost added to account for that for taxpayers, just the contractor’s own bottom line. Their contract award remains their award, unless performance-based measures exist that can affect the award amounts. Contracted ambulance providers often enter contracts where poor service results in a reduced reward, though some performance-based contracting in the EMS realm is effectively prohibited by policy. Billing and collections in EMS are often outsourced to private firms, and in many places, the reward the contractor receives is at least partially based on the percentage of outstanding revenues collected. But in California, such a contract would result in eligibility for the state’s Ground Emergency Medical Transportation (GEMT) reimbursement program, which prohibits contracts that include:
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Fees paid to the billing agent based on the percentage of collections-regardless if such percentage was up to a flat amount, varying percentage rates triggered by collection thresholds, based on historical costs, total collection amounts, or any combination thereof
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Fees paid to the billing agent based on performance incentives, including a per transport or fixed term rate that may be increased by incentives for performance.
With government or in-house operations, taxpayers will be on the hook for everything. This includes simple procurement decisions like figuring out the right number of vehicles to lease or finding and funding fuel services. These are are cost decisions that do not get attributed back to the fire agencies themselves (and thus make fire agency operations appear cheaper than in reality) but taxpayers pay nonetheless.
In comparing employee costs between public and private entities, the authors resort to similar blanket statements without supporting data to corroborate such bold assertions:
While many assume public employees are paid significantly higher than private employees, the fact is that with pension reform, the cost has significantly narrowed that margin. Hourly rates in some cases are lower in the public sector than the private sector. Couple that with lower costs for retirement and benefit packages the difference between public ambulance providers and private are often not more than 10 percent.
These issues raise serious questions to the cost comparison and valuation methodologies employed by the authors, and resultingly, the mostly glowing consultant evaluation of the Alliance model. Regardless of what roles public and private partners play in EMS systems, those components should be transparent and accountable to the greatest degree possible. The key is to provide checks on profit or revenue incentives to focus resources on the best balance of costs and quality and to hold providers accountable such that their own revenues rest on the quality of their performance.
Local EMS agencies are being lured by fire departments to cede their oversight with promises of lower costs and improved performance, but the mechanics of how the model works and what it inherently does to competition make this system problematic. Ambulance provers have competed against each other for decades, but the Alliance Model’s reliance on fire agency subcontracting would remove any competition from bidding at all. This competition is a vital piece of successful contracting strategy, one EMSA recognized in its rejection of Alliance arrangements in Contra Costa County.
The fact that Contra Costa and many other locales operate ambulance service in “exclusive” service areas, where no other ambulance providers may participate, makes the element of competition in the procurement process even more crucial: Since exclusive zone contracts prohibit competition in day-to-day operations, the procurement process is the only place to introduce competition. But the Alliance model eliminates competition from the procurement process, too.
What Is a Public-Private Partnership Without Competition?
The supporters of the alliance model label its agreements as public-private partnerships (P3). While it is a term that may technically fit here—after all, there is a public entity and a private entity involved in a partnership to provide a public service in the alliance model—but the model also lacks the key characteristics of the processes that lead to successful P3s.
Public-private partnerships allow agencies to tap into private sector resources and knowledge to find mutually beneficial arrangements where the private and public sectors collaborate in handling all the risks associated with a project. For this process to be successful agencies must be committed to attracting potential partners and setting up a process where all willing participants feel the process they entered was sufficiently competitive, even if losing bidders think they did not deserve to lose.
The winning partner will have demonstrated they can provide the best mix of knowledge and resources to undertake functions and risks that the public agency feels less capable of handling successfully, a decision only made after formally soliciting bids, as well as scoring them on cost and quality measures.
The alliance model, in terms of how it has been pursued and the legislation seeking to effectively codify that pursuit, eliminates competition from any bidding process that emerges from it (if one emerges at all). This strips the alliance model of competitive pressures in most P3s that help drive value for taxpayers. That may be enough of a distraction to get an alliance model initially adopted, but the issues of lack of oversight and competition will rear their head eventually.
What if the alliance model is really not a public-private partnership at all but a brief stop along the way to government monopolization of EMS services? If the alliance model continues to be adopted despite its shaky foundation, it could be the end of private competition in the ambulance space.
A growing number of fire departments are likely to eventually embrace the opportunity to take over these subcontracts for themselves, effectively transferring all EMS decision-making to fire departments that lack the regulatory oversight of established California EMS agencies.
The best arrangement for EMS services may ultimately involve the fire district partnered with a private ambulance company in a different type of agreement. The alliance model abandons the competitive pressures that drive value for taxpayers. In addition to not falling under the same scrutiny as EMS agencies in their competitive bidding processes, the process will lead to diminished competition over time, as fire departments increasingly become gatekeepers for all ambulance service providers. Are they expected to continue contracting with their competition when there may be easy means to take it all over for themselves?
Where fire districts already are recognized as EMS agencies, they receive EMSA oversight that holds them accountable for designing competitive procurement requests, but the alliance model sought by fire districts that are not already EMS agencies allows local EMS agencies to transfer decision-making of an ambulance provider to the fire district—without the regulatory oversight of the EMSA.
While the alliance model might at first appeal to local officials on the surface and would certainly benefit fire districts and departments that pursue them by making heady assumptions about costs and revenues, a competitive bidding process can never take shape under the conditions it has so far proliferated. Such a system would be impossible to undertake without subjecting fire districts to similar regulatory oversight as established EMS agencies. Since the rush to the alliance model has included repeated attempts to evade such oversight, and its proponents seek this exemption through state law, one can reasonably conclude that a competitive process is the last thing on the minds of many alliance model supporters. This is further confirmed by consultant reports that give questionable treatment to many of the more difficult aspects of establishing effective EMS.
While fire departments are highly capitalized, subsidized and their members receive training and possess knowledge that makes them invaluable in the larger EMS picture, without a more transparent and competitive process, the alliance model fails to even attempt to harness the competition that’s essential in making public-private partnerships valuable for taxpayers and governments.
[1] California General Assembly, 2021–2022 Regular Session. “Assembly Bill No. 389: An act to add Section 1797.230 to the Health and Safety Code, relating to emergency medical services,” 2 February 2021. https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB389
[2] California Emergency Medical Services Authority. “Letter to Ms. Patricia Frost, Director, Contra Costa County EMS Agency,” 13 April 2018. https://emsa.ca.gov/wp-content/uploads/sites/71/2018/04/2016-ContraCosta-EMSPlan.pdf
[3] Contra Costa County Emergency Medical Services Agency, EMS System Plan Update, 2017. 30 April 2019. 1.
[4] Contra Costa County Department of Health Services – Emergency Medical Services, “Contract Amendment Extension Agreement #23-585: Advanced life support emergency ambulance services in Exclusive Operating Areas I, II, and V.” 12 May 2020. https://cchealth.org/ems/pdf/alliancefdcontract.pdf
[5] California Emergency Medical Services Authority. “Letter to Ms. Patricia Frost, Director, Contra Costa County EMS Agency.”
[6] AP Triton Consulting, “EMS System Valuation and Deployment Study for Chula Vista Fire Department.” 22 January 2020. https://www.chulavistaca.gov/departments/fire-department/emergency-medical-services/ambulancetransport (Note: Link labeled “AP Triton Report” at bottom of page);
—AP Triton Consulting, “EMS System Valuation and Deployment Study for Oxnard Fire Department.” 22 October 2020. https://civicclerk.blob.core.windows.net/stream/OXNARDCA/d328a91073.pdf?sv=2015-12-11&sr=b&sig=MEG percent2Fw51ttpZw0Uw2f9sQRIFqIiNkB4q5OihKp1rU5nY percent3D&st=2021-03-11T18 percent3A45 percent3A45Z&se=2022-03-11T18 percent3A50 percent3A45Z&sp=r
[7] Ibid., 21.
[8] State of California—Health and Human Services Agency, Department of Health Care Services, “ALLOWABLE REIMBURSEMENT OF GEMT CONTRACTED BILLING AND ACCOUNTING SERVICE COSTS,” 18 December 2014. https://www.dhcs.ca.gov/provgovpart/Documents/GEMT/PPL_14-001.pdf
[9] Ibid.