The EMS Economic and Staffing Crisis Creates an Opportunity for Improved System Design

Using data to evaluate your community’s EMS costs, ambulance staffing levels, and response time expectations to help prevent your EMS systems from collapsing.

by Matt Zavadsky | Oct 01, 2023 | PM MAGAZINE – ARTICLE

Fifty-five. That’s how many communities lost their ambulance provider in the past two years, according to local and national media reports tracked by the American Ambulance Association (AAA) and the Academy of International Mobile Healthcare Integration (AIMHI). That media tracking system has identified 1,089 local and national media stories focused on emergency medical services (EMS). Of these, 641 (59%) highlighted the EMS staffing crisis and 363 (33%) highlighted the EMS economic crisis. Common sense tells us those two themes are likely linked.

This article will articulate the extent of the root causes of the EMS delivery crisis, as well as the steps many communities are taking to help prevent their EMS systems from collapsing.

EMS Economics 101

EMS agencies are funded typically from two sources: fees for services provided and public funding (i.e., tax subsidy). If the cost of operating the system is greater than the fees generated from service delivery, a tax subsidy will most likely be required. Fee for service reimbursement for EMS comes from several sources: Medicare, Medicaid, commercial insurance, or the patient. The percentage of patients in your community covered by insurance, and the insurance type, is referred to as the “payer mix.” Medicare generally reimburses less than the cost of providing the service, and Medicaid reimburses even less than Medicare. Commercial insurers are generally required to pay a percentage of the usual and customary rate (UCR), typically 80%, but the determination of the UCR is left up to the insurer, resulting in a classic “fox watching the hen house” scenario.

When an insurer underpays the cost of ambulance service, the patient is often sent a “balance bill,” the balance of the ambulance bill remaining after insurance pays what they want to pay. Balance billing has been a point of consternation for consumer advocacy groups for years. Often called a “surprise bill,” perhaps the term could be more appropriately called a “surprise payment.” Oh, and patients without health insurance (about 20% of the payer mix in most communities) generally do not pay their ambulance bill at all.

Here’s an example of how this works. Anytown, USA, has a fire-based ambulance service. The community of 10,000 people generates 1,100 EMS calls and 825 transports annually. (Not all responses result in a patient being transported to the hospital.) To effectively respond to those 1,100 EMS calls, the fire department staffs one ambulance 24 hours per day. This ambulance costs $850,000 a year to staff and operate. Simple math reveals that the cost per call for Anytown Fire Department (FD) is $772.73 ($850,000 divided by 1,100 calls) and the cost per transport is $1,030.30 ($850,000 divided by 825 transports). Since EMS is only paid for transport, to break even, Anytown FD would need to generate, on average, $1,030.30 of revenue per transport. Anything less than that amount would require a tax subsidy to cover costs. For point of reference, the average Medicare reimbursement for an emergency ambulance call is $480, and Medicare typically represents about 40% of an EMS agency’s payer mix.

EMS Workforce and Economic Crisis—Connected!

The most expensive part of EMS service delivery is the cost of readiness, that is, having enough resources available (i.e., not committed to a response) to meet the community’s desired 911 EMS response time. Personnel costs are the largest investment for an EMS agency, regardless of the agency type (fire-based, third governmental service, private, etc.) The shorter the desired response time, the more “ready” units that are required to be standing by waiting for a call, meaning higher cost. The longer the desired response time, the fewer units that will need to be ready to respond, meaning lower cost.

ICMA members are aware of what’s been happening to wages prior to, but more significantly after, the pandemic. The national workforce shortage is affecting virtually every profession, and EMS is no exception. However, the demand for EMTs and paramedics has grown dramatically, which has resulted in wages for EMS workers skyrocketing much faster than the general market. The demand increase is rooted in two main factors. First, volunteer agencies are less able to attract and retain volunteers, and as result, they are hiring EMTs and paramedics. Second, hospitals, saddled with their own nurse staffing crisis, are alternatively hiring EMTs and paramedics to work in hospitals and other healthcare settings. In Fort Worth, Texas, the average wage for a paramedic is $30/hour. A local hospital recently advertised for paramedics to work in their emergency department at $48/hour to start, with an $8,000 sign-on bonus. A local fire department recently advertised for paramedics to staff their ambulances at a starting annual salary of $90,000 ($31/hour) with a $10,000 sign-on bonus. This is what is driving up 70% of the cost of providing EMS.

To make matters worse, the pipeline for certified EMTs and paramedics is drying up. Many training programs shut down during the pandemic, decreasing the number of people able to become certified. And many people making career choices weigh the work-life balance of a 24/7, nights and weekends EMS schedule, time away from family and friends at holidays and life events, plus the risk of death. A career in EMS is not favorable to a work-life and personal safety balance, especially when compared with the frequent utilization of work-from-home hours in other industries.

The EMS staffing crisis is across all types of agencies. Baltimore, Maryland’s fire department was recently the subject of media reports regarding poor EMS response performance, and they cited staffing as the major cause.

To attract people to EMS, the wages must be significantly higher than they can get paid working at Amazon or Walmart. That drives up costs.

Additionally, costs are dramatically increasing for ambulances, equipment, supplies, medications, and everything else it takes to run an EMS agency. A recent survey by the National Association of Emergency Medical Technicians revealed cost increases for these essential items of over 12% since 2019. Despite skyrocketing expenses, the reimbursement rates for EMS from Medicare, Medicaid, and commercial insurers have been essentially unchanged for years.

Approaches to EMS Redesign for Sustainability

Necessity is the mother of invention, and crisis makes the previously unthinkable acceptable. Many innovative EMS systems are making logical, evidence-based system design changes to help mitigate the economic and workforce crisis.

Tiered Deployment

Many systems put a paramedic on every ambulance, sometimes even two. The reality is that most EMS calls do not require Advanced Life Support (ALS) care, and even fewer calls are truly life-threatening. The Metropolitan Area EMS Authority, the public EMS agency better known as MedStar Mobile Healthcare, in Fort Worth, Texas, recently reviewed over 400,000 911 EMS responses and found that only 2.05% of the patients received potentially life-saving medical interventions, and only about 30% received ALS care. This means that for most EMS responses, a Basic Life Support (BLS) response, comprised of two EMTs on the ambulance, would be more than fine. Since EMTs are more available for hire than paramedics, you can increase your staffing by hiring and deploying BLS units with EMTs to respond to calls not likely to require ALS care (most of the calls).

Houston Fire Department staffs 56 of its 103 daily staffed ambulances (54%) at the EMT/BLS level. The Colorado Springs Fire Department recently won an Excellence in EMS Award from the Congressional Fire Services Institute (CFSI) for the innovative practice of sending a community paramedic only to low-acuity 911 calls and not sending an ambulance unless the community paramedic requests the ambulance response. This preserves ambulance resources for higher acuity calls.

MedStar implemented a tiered deployment model in 2022. Since then, the average daily staffing of ambulance unit hours (a “unit hour” is one ambulance on duty for one hour) covering MedStar’s 430 square mile, 1.1 million population service area jumped from 752 in 2021 to 871 in 2023. This has reduced personnel workload and helped mitigate a rising cost per unit hour. A recent benchmark survey of AIMHI members revealed that 36% of the member systems have transitioned from an all-ALS ambulance deployment to a tiered deployment (ALS/BLS) to better match resources with EMS response needs and enhance ALS provider utilization and experience.

Right-Sizing Response Times

The vast majority of 911 EMS responses are for patients not experiencing life threatening medical issues, and, as we know, the biggest cost driver for EMS delivery is response times. In recent months, some innovative, data-driven EMS systems have changed response time goals based on the acuity of the patient, with life-threatening calls still getting the shortest response times (10 minutes or less)and very low-acuity calls having longer response time goals. In October 2021, the response time goal for a subset of low-acuity 911 EMS calls in Charlotte, North Carolina, was changed to 60 minutes. According to John Peterson, executive director of MEDIC, the Mecklenburg County public EMS agency, they’ve responded to 21,000 EMS calls over the past 20 months that met criteria for the 60-minute response time goal with no adverse patient outcomes. And, they have received minimal complaints about the response time. Peterson credits the low complaint rate with the practice their 911 call takers use when taking a call that is determined to be low priority. They inform the caller that their call is important to them, and they will be there within the hour, and that if anything changes, to call 911 back. This practice sets the caller’s expectations to the response time goal.

Very, very few 911 calls for EMS are for life-threatening emergencies that require a fast response and advanced life support care — generally less than 10%.

To further focus on maximizing response times for high-acuity calls, in April 2023, MEDIC implemented widespread response configuration changes based on the initial learning to include low-acuity response time goals ranging from 15 minutes up to 90 minutes depending on the Emergency Medical Dispatch Pro-QA determinant.

In Richmond, Virginia, to control rising public expenses for the public EMS agency, the Richmond Ambulance Authority is implementing a similar plan, with low-acuity 911 EMS responses having a response time goal of 60 minutes.

Balancing Service Level with Economics

The EMS economic crisis leaves communities with a tough decision to make: maintain current service levels and increase (or initiate) public funding or use evidence-based processes to modify service levels based on actual data from the community. With response times being the largest cost driver for EMS, this will likely mean changing response time expectations for some low-acuity calls and using the right response plans based on patient need.

Community leaders should keep two important things in mind when engaging in discussions regarding EMS performance goals. First, very, very few 911 calls for EMS are for life-threatening emergencies that require a fast response and advanced life support care—generally less than 10%. Prioritizing patients based on clinical need has been done in hospital emergency rooms for decades. In the ER, patients with low-acuity conditions wait, sometimes for quite a while, while higher-acuity patients are treated. Twenty-seven percent of the patients MedStar brings to their large public hospital by ambulance following a 911 call are brought directly to the waiting room to wait, just like those who walked into the ER.

Second, most studies that have been done comparing ambulance response times to patient outcomes have found no difference for any response time greater than five minutes, and the five minutes only matters on about 2% of EMS responses. A frank, transparent, and data-driven community conversation regarding things like costs, ambulance staffing levels (ALS vs. BLS), and response time expectations can help build support for logical EMS system redesign.

We often say that the community expectation regarding EMS service levels, especially response times, is the intersection of what your wallet can withstand and your stomach can bear. Be strong, be bold, and lead!