The New EMS Imperative: Demonstrating Value

International City/County Management Association InFocus Report: The New EMS Imperative: Demonstrating Value

by Joseph J. Fitch, PhD; Steve Knight, PhD

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Despite a tremendous diversity in how emergency medical services (EMS) are provided in municipalities around the country, most U.S. EMS systems share one commonality: They remain primarily focused on responding quickly to serious accidents and critical emergencies even though patients increasingly call 911 for less severe or chronic health problems.

Simply put, the existing EMS response model has failed to evolve as community needs for emergent and nonemergent health care delivery have changed. Recent efforts in health care to improve quality and reduce costs, such as the Affordable Care Act, pose significant challenges to the existing EMS response model. Health care payers have become increasingly unwilling to reimburse for services that fail to prove their value. As a consequence, EMS agencies will soon be required to demonstrate their worth like never before. At the same time, municipalities continue to confront the economic realities of stagnant and even shrinking budgets.

It’s critical for city and county managers to know that despite these challenges, the changing health care landscape also presents  opportunities for EMS systems to evolve from a reactive to a proactive model of health care delivery—one that better meets the needs of their communities by preventing unnecessary ambulance transports, reducing emergency department visits, and providing better
care at a lower cost.

This InFocus is intended as a guide to identify challenges and opportunities, measure your efforts, and define success. This report explores
how EMS systems can improve service in tough economic climates and navigate new challenges and opportunities presented by the Affordable Care Act.

 

Current landscape in EMS

EMS treatment and transport

The standard model for treatment and transport of sick and injured persons by EMS systems
has changed very little since the 1960s, when growing pressure to reduce highway
deaths and injuries prompted Congress to fund improvements in EMS systems across the
country.

While several types of EMS systems exist (See Table 1), most follow the same basic
response model. Call-takers and dispatchers obtain critical information and then summon
emergency responders to the scene. First responders provide basic medical care until an
ambulance arrives. Ambulance personnel then conduct a patient assessment and perform
any necessary interventions before transporting the patient to the hospital. If the patient
declines transport to the hospital, they are considered to have refused care against medical
advice.

The EMS response model continues to emphasize emergency stabilization and rapid
transport to the hospital as the primary role of the EMS system. This is true despite
evidence that a significant proportion of 911 calls are for non-emergent medical conditions
that do not require immediate care and transport.1,2 And it ignores the fact that the
hospital emergency department is often neither the most appropriate, nor the most cost-
effective, destination for patients. This is especially true for patients who are only seeking
routine medical care that would otherwise be provided in a physician’s office or other
non-emergent setting.

For local governments, the growing mismatch between the capabilities of existing
EMS systems and the demand from constituents for non-emergent but “unscheduled”
medical care represents a failure in service delivery. It also poses a problem of resource
utilization; EMS resources such as ambulances are increasingly unavailable for emergencies
while they transport non-emergent patients to the hospital. Innovative approaches to
EMS delivery are necessary to ensure that EMS systems remain aligned with community
needs.

Table 1: Types of EMS Systems

There are six common models for EMS delivery in the United States: fire servicebased,
public utility, third government service, private for-profit, private non-profit, and
hospital-based.

Almost half of all EMS systems are based in fire departments. Depending on the system,
Fire department ambulances are staffed by “single-role” civilian EMS providers or “dualrole”
firefighter/EMTs, who also perform fire suppression functions.

The public utility model of EMS uses a separate governmental entity to manage emergency
medical services in a community, either with a private contractor or by providing the service
directly. Local government officials appoint leadership and also approve funding.

The third-service model provides for the delivery of EMS by a separate department within
the existing local government structure. This department exists alongside other public safety
departments (police and fire) and employs civilian EMS providers. Funding and day-to-day
operations, including support functions, are under the direct control of the local government.

Private for-profit provision of EMS is characterized by the contracting-out or franchising of
EMS to a for-profit provider. Service levels and performance can be specified in the contract
but the private contractor often has total control of operations.

The hospital-based model of EMS delivery is also defined by a contractual relationship,
in this case between a local government and a hospital (or a local entity associated with
a hospital). The hospital-based entity is often a non-profit and may require a government
subsidy. As in the private for-profit model, however, the local government has limited day-today
influence over operations.

In the private non-profit model, community-based or volunteer agencies provide emergency
medical services that are subsidized by a combination of government funding, donations, or
user fees. These organizations are self-governing and exercise complete control over dayto-
day operations. They may use volunteers, paid personnel, or a combination of the two to
staff ambulances.

Funding

EMS systems (whether public or private) receive very little in the way of federal or state
subsidies. Consequently, most EMS systems seek to offset a portion of their operating
costs by billing patients for transport to the hospital.3 This “fee-for-transport” funding
scheme is based on the federal government’s reimbursement model for Medicare and
Medicaid patients, which has also been adopted by most private payers.

Unfortunately, seeking reimbursement for transport to the hospital has proven insufficient
to cover the costs associated with EMS delivery. Reimbursement rates for ambulance
transport of Medicare and Medicaid patients (who account for approximately 60%
of patients transported by EMS agencies) have consistently failed to match the cost of
service.4 The resulting shortfalls have been only partially subsidized by reimbursements
from private payers, as patients with private insurance account for less than a quarter of
patients transported to the hospital by EMS agencies.5

The current fee-for-transport model of EMS funding also does not adequately account
for the non-transport costs of EMS delivery, including the cost of medical care rendered
to patients by EMS providers, the cost of caring for patients who ultimately decline
ambulance transport to the hospital, and the “cost of readiness” associated with maintaining
the capability to quickly respond to medical emergencies on a 24/7 basis. The
result is that EMS agencies have a financial incentive to transport all patients to the hospital
regardless of medical necessity—even if only to recoup a small portion of the overall
costs associated with providing emergency medical services.

As a consequence, most local governments find themselves in the position of having
to directly subsidize their EMS system. This is the case even in communities where
ambulance transport is provided by private contractor. For local governments then, especially
those still grappling with revenue shortfalls, the EMS system is yet another significant
cost to be managed—one that must be carefully aligned with the particular priorities
and needs of each community.

Challenges

How to demonstrate cost-effectiveness

Response times. EMS systems have often sought to demonstrate their effectiveness by
measuring the time it takes for a responding unit to arrive at the scene of an emergency.
Specifically, most urban systems have adopted a goal of 4 minutes for a basic life support
(BLS) unit to arrive at the scene and 8 minutes for an advanced life support (ALS) unit to
arrive.6

The origins of these response time goals can be found in early research on out-ofhospital
cardiac arrest, which showed an improvement in patient outcomes if CPR was
initiated within 4 minutes and defibrillation was delivered within 8 minutes.7 More recent
research, however, has called into question the value of using response times to measure
EMS system performance. Very short response times (4-5 minutes) may increase survival
for certain life-threatening conditions (such as cardiac arrest and allergic reactions), but
other differences in responses time (e.g., the difference between 6 and 10 minutes) likely
do not result in better patient outcomes.8 Consequently, each community’s response time
standards goals should reflect a careful balancing of medical necessity and community
expectations on the one hand, and community resources and attributes (e.g., urban vs.
rural) on the other.9

Two strategies for safely increasing response time standards in a community include:
• Allowing for longer ambulance response times if a first responder (often a basic life
support unit staffed by the fire department) is able to arrive within the first several
minutes and provide initial management and stabilization of a patient.
• Establishing different response time standards depending on the nature of the medical
emergency or the severity of the patient’s medical condition.

Unit hour utilization. EMS systems have also looked to measure productivity as a proxy
for system efficiency. One commonly used measure is unit hour utilization (UHU), a ratio
that is typically calculated by dividing the number of transports by the number of unit
hours.10 In other words, an ambulance that performs four transports in a 12-hour shift
has a UHU of 4/12, or 33%. However, some agencies will calculate UHU by using the
total number of hours that EMS units are engaged on calls by the total number of hours
that those units are staffed and fully-equipped. Neither method is right or wrong, and
each has advantages—an agency worried about recouping costs might want to focus on
transports, while an agency more concerned with staff performance and preparedness
levels would be more concerned with the percentage of time ambulances are available.

Unit hour utilization varies greatly among EMS systems, and there is no generallyaccepted
consensus regarding the ideal ratio. EMS agencies responding solely to 911 calls
typically target a lower unit hour utilization (between 0.30 and 0.50 UHU) than nonemergency
ambulance transport providers—in order to ensure that a sufficient number
of units remain available to respond to emergency calls. Agencies whose providers work
longer shifts, such as 24 hours, also often aim for lower UHUs due to concerns over
fatigue and safety.

It is important to note that unit hour utilization traditionally does not capture productivity
outside of responding to emergency calls, such as the completion of required documentation
and training. Moreover, if unit hour utilization is measured simply on the basis
of the number of patient transports during a specified period, the resultant UHU will also
fail to capture the time spent responding to emergency calls that do not result in patient
transports. Finally, increased unit hour utilization can result in provider fatigue and medical
errors, especially in EMS systems that have 24-hour shifts.

Shift schedules. Personnel costs account for the majority of an EMS system’s budget.
Accordingly, the staffing model employed by a system is a key factor. Several different
models have been adopted by EMS agencies across the country, each reflecting the unique
needs and priorities of particular EMS systems. However, four staffing models predominate.
Twenty-four-hour shifts are most prevalent in fire-based EMS systems. The 24-hour
shift model allows for the easiest integration between fire and EMS shifts and is bestsuited
for low-volume systems that prioritize reliable response times.11

The 12-hour shift is most frequently the choice of private or third-service EMS systems,
particularly those that serve large cities. This model allows for increased productivity
(in order to meet the demands of high-volume systems) while taking into
consideration the provider fatigue that is associated with longer work hours.12,13

Lastly, 8-hour and 10-hour shift staffing models have been adopted by several highvolume
EMS systems. These models allow for the highest level of productivity during
each shift in addition to providing the greatest flexibility for dynamic and peak-time
deployment of EMS units.14 However, they require more staffed positions than the other
models and have been associated with higher employee turnover and possibly increased
overtime costs due to the greater number of shift changes each day.

Health care reform

Triple Aim. Over the last decade, economists and policymakers have largely abandoned
the belief that better health outcomes could only be achieved through increased
spending. Instead, many changes to the health care system, including some of those
created by the Affordable Care Act, are now based on the “Triple Aim,” which states that
it is possible to simultaneously improve the patient experience, reduce health care costs,
and improve the population’s health.15

Proponents of the Triple Aim argue that by reducing inefficiencies, coordinating services,
and providing evidence-based, patient-centered care, costs can be reduced by eliminating
redundancies and avoiding unnecessary tests, procedures, and other health care
spending. This model also shifts the focus of health care to prevention and education,
with the belief that spending money to prevent injury, illness, and chronic disease will
decrease the high costs associated with treating those problems once they occur.

Fee for quality vs. fee for service and value-based payments. Concerns over the feefor-
service model and its incentives have given rise to value-based reimbursements and
the fee-for-quality model. While these changes have yet to impact EMS directly, hospitals
and other health care providers are already seeing changes to how they are reimbursed
by the Centers for Medicare & Medicaid Services, and many EMS leaders across the
country have predicted that within a few years, these changes will directly impact EMS
payments as well.16

Affordable Care Act

The Affordable Care Act, in addition to its efforts to expand insurance coverage, also included
some changes to the Centers for Medicare & Medicaid Services reimbursement system that
follow the Triple Aim model. In general, the goal is to incentivize hospitals and physicians
to keep patients healthier by no longer rewarding providers for ordering more tests and
procedures and keeping patients in the hospital longer. The Affordable Care Act does not
discuss emergency care or EMS at length. However, the law still presents challenges and
opportunities for the emergency health care system, including emergency medical services.

Medicare reimbursement

While Medicare patients only make up a small percentage of the population, they
comprise a large percentage of those who are hospitalized and make up a significant
chunk of total spending on health care in the United States. So when the federal
government changes Medicare reimbursement policies, the effect is typically seen across
the entire health care system.

As part of the Affordable Care Act, Medicare has changed how it reimburses hospitals.
One of the most significant changes is that hospitals now receive penalties for high rates
of readmission for certain conditions. In the past, when a pneumonia patient who was sent
home from the hospital returned two weeks later, the hospital could bill twice for the patient.
Now, in an effort to encourage hospitals to ensure the patient is able to remain healthy once
they leave the building, that return visit will result in a penalty. The hope is that hospitals
will now spend more time making sure that patients are prepared to go home, by providing
adequate discharge instructions and ensuring proper follow-up care (such as doctor’s visits,
prescription medications, rehab, and home health).

Accountable Care Organizations

The ACA also promoted the formation of Accountable Care Organizations. ACOs are
networks of providers, such as doctors and hospitals, that work together to treat a specific
group of Medicare patients, similar to HMOs. However, unlike HMOs, patients are not
restricted to seeing only providers within the network. Also, ACOs are held accountable
to certain benchmarks and quality measures. The goal is that rather than saving money
by denying care that will help a patient, ACOs will save money by coordinating care to
keep patients healthier and avoid duplication of efforts. Under the ACA, an ACO that
demonstrates a certain amount of savings is then eligible to retain some of the savings
among the providers and hospitals.

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