Ambulance Services: Build Your Own or Contract Out?

Transport/EMS services can change care models to help meet the Triple Aim

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With health care rapidly transforming, hospital and health system executives are increasingly focused on how existing service lines can be adapted to provide better patient outcomes at lower cost. Ambulance services provide unique opportunities to help leaders address those and other dimensions of the Triple Aim.

More patient care is happening outside of the hospital, and patient navigation and logistics are becoming even more critical, as health care providers prepare for widespread adoption of value-based payment models. Hospitals and health systems must objectively analyze whether the organization’s ambulance services — whether in-house or contracted — are helping to achieve hospital or system goals efficiently and effectively.

Nationally, a number of forward-thinking ambulance services are adopting new and innovative models, including community paramedicine programs and alternate destination transports to help hospitals and systems meet their patient care goals. These models often offer paramedic-managed in-home care and chronic disease management. For hospitals, these new care models can help avoid 30-day readmissions and increase patient satisfaction.

Many hospitals and systems choose to create their own ambulance services in order to have more control over patient care and transport and to help reduce costs. Yet the decision to own and manage an ambulance service or contract with an outside organization is more complicated than many health care executives realize — and one that can have a downstream impact on outcomes and cost.

Making the choice

A hospital or system must weigh a number of factors when deciding whether to build or contract ambulance services: its community’s demographics, the local competitive landscape for ambulance services, and the importance of maintaining direct control over quality of care and patient experience. Other factors include the investment required to develop a fleet of ambulances, the region’s emergency medical services system model and how ambulance services may influence market dynamics.

  • Quality of care and patient experience considerations: Some hospitals may prefer to build their own ambulance services to have increased oversight over staffing, personnel and the quality of care. This necessity may be particularly true in environments where hospitals are operating under a population health or bundled payment model. Hospitals may also see the value of operating in-house ambulance services if they plan to offer specialized transport services, such as neonate transport, or if they want to exercise more control over the patient’s experience during interfacility transfers.
  • Serving a rural versus an urban community. In many rural communities, where a small population is spread out over a large area, transport times may be long — meaning ambulance care may have a more significant impact on patient outcomes. Hospitals in smaller communities may also be pushed toward building an ambulance service because fewer ambulance services exist in the region, limiting the ability to conduct a successful competitive bidding process. With a growing number of rural hospital closures, larger health care organizations that continue to serve rural areas may no longer be able to rely on the presence of nearby community hospitals to stabilize patients prior to transport to higher levels of care. In these cases, it becomes even more critical to have reliable, high-quality clinical care during transport.
  • Investments in building a service and other considerations. The capital expense and human resources required to build an in-house ambulance service can be one obstacle for some health care organizations. However, this decision may depend on the size of the fleet needed, as well as the history of how ambulance services are provided in the community (including 911 responses and interfacility transports).

In addition to capital expenses, operating an ambulance service requires other investments. More than ever, regulators are focusing on ambulance services’ compliance with billing rules and privacy laws. Education, quality management and logistics also require resources. A hospital system must balance these costs with the potential benefit of direct control over these services, which they may believe decreases liability or the risk of becoming entangled in a compliance problem due to an outside organization’s negligence. At the same time, hospital employees in billing, compliance and quality departments may be unfamiliar with the requirements for ambulance operations and clinical care and may require additional training.

Two examples

The following case examples show how hospital systems have employed ambulance services in ways that would best meet system goals:

Example 1: One growing health care system in the Southeast recently decided to bid out its ambulance services and use one provider systemwide. The hospital system had been providing ambulance services on one of its campuses, as well as specialty-care transports. In addition to these transport services, the hospital system also had contracts with other ambulance services, including arrangements for air transport.

The hospital system, however, found that timely service was an issue for its multiple contracted ambulances, which were also serving other hospitals and communities. The ambulances could not quickly move patients out of the hospitals and into their homes or nursing facilities in rural areas, which became a throughput issue for the hospitals. The hospitals’ leadership recognized it would need to continue to move patients from outlying facilities to the anchor hospital and, after a review, determined that using a singular transport provider made more sense.

Example 2: A large, multihospital system in an East Coast urban center was using contracted ambulance services to move patients between its hospitals. The system relied on a sophisticated control center to monitor bed availability and to dispatch ambulances appropriately.

In an effort to control quality and save money, the system’s leadership considered bringing the ambulance services in-house. The leaders conducted an independent study of the ambulance service, which involved creating a model of best practices in utilization and deployment. Following the analysis, however, the leaders made the decision to renegotiate their ambulance provider contract rather than develop their own in-house transport service. As part of the contract negotiations, and to improve the terms, the leaders added specific performance measure indicators and additional protections for the organization. Those protections allow for step-in rights for the vehicles and equipment to help the contracted ambulance services better meet the system’s needs.

Other considerations

When hospital and health system leaders decide a third-party vendor arrangement for ambulance services is the best fit for meeting their goals, they should consider including six elements in the contract:

  1. Electronic-data sharing provisions to integrate patient data from prehospital and hospital systems.
  2. Driving performance review specifications.
  3. Quality standards or improvement metrics around ST elevation myocardial infarction, stroke and other time-critical diseases.
  4. Patient experience metrics.
  5. Best practice clinical qualifications for EMS staff.
  6. Assignment of (and pricing details for) the payer of last resort.

Finally, in negotiating contractual arrangements, health care organizations must consider ambulance service contracts carefully. For example, leaders must ensure their organization is not at risk of running afoul of Office of the Inspector General regulations. Leaders must also avoid committing Medicare/Medicaid fraud by accepting a discounted price or an arrangement with the contractor that could be viewed as a kickback or volume incentive.

With prudence and determination, leaders can contract for services that will help their organizations achieve the Triple Aim and thrive under value-based payment models — or, if it better serves their organization, build an in-house ambulance service to meet these goals.

Christine Zalar, B.S.N, M.A., is a founding partner at Fitch & Associates in Platte City, Mo. Jay Fitch, Ph.D., is president and founding partner at Fitch & Associates.