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HomeMy WebLinkAboutAgenda Report - April 7, 1982 (34)2! �l 4 ME140RANDUM To: Honorable Mayor and City Council From: Assistant City Manager Subjects Lodi Ambulance Service Date: March 26, 1982 In accordance with Council direction at its regular meeting held February 24, 1982, the following information is submitted regarding the operation of Lodi Ambulance Service, Inc. SUMMARY The services provided by Lodi Ambulance Service is not unlike the services provided by the Fire Department. They must be able to provide immediate emergency response to the Northern San Joaquin County. The Lodi Ambulance Service has at least 4 people and 4 pieces of equipment ready to respond at all times. The Ambulance Service averages less than 10 -1- emergency calls per day within the Northern San Joaquin County; of these, 6 to 7 are within the city limits of Lodi. The financial statement provided shows a cast: flow deficit, of over is significantly more than $8,000. The change in fee schedule proposed by the Lodi Ambulance Service will result; in bills over 30% higher than before. The combined charges are not an induetry standard at this time. SERVICE LEVELS In evaluating ambulance service, it is important to note this is a 24-hour per day, 7 -day per week operation. The ambulance operation is manned by 4 persons at all times. In addition to the emergency ambulance service, Lodi Ambulance Service also operates a "medicab" which is used to transport wheelchair patients on a non -emergency basis. This latter service is provided trom 8 a.m, to 5 p.m., Monday through Friday, or on a pre -scheduled basis. They also maintain 4 ambulances in an "on-line" capacity. An ambulance service doing business in California and billing Medicare patients is a very closely regulated operation in that rules, regulations and guidelines from at least 25 Federal, State and local agencies efect the operation, -2- In 1981, the Ambulance Service responded to 3447 calls, an average of 9.4 calls per day. Approximately 70% of th6 calls were 1rA thD city 1 mi,r, of Cll.y of Lodi, The owners of Lodi Ambulance Service also own and operate Stockton Ambulance Service. The business operations of both Companies do operate from the same headquarters. The office is divided and functions separately with joint use of certain equipment. Four persons work in the offices and it was explained that two persons ere employees of Lodi Ambulance Service and two are employees of Stockton Ambulance Service. No effort was made to review the operations as they pertained to Stockton Ambulance Service. STAFFING The staffing of the Lodi Ambulance Service is: 2 Owner Operators 9 Certified Paramedics 1 wheelchair Driver 2 Clerical Staff These personnel are supplemented by a number of part time personnel to assure that minimum staffing levels are provided. -3- The certified paramedics are highly trained and skilled personnel. Certification is made by San Joaquin County and is granted only after conppleting an extensive co rs-I nfr study of 1060 hours including a -if ie l] qualify for this program, an individual must have had 2 years' previous experience. The hourly salary paid the paramedic staff is $3.40 per hour which is $.05 per hour over minimum. wage. I,ali Ambulance Service operates under the Fair Labor Standards Act and therefore can pay no less than $3.35 per hour and must pay cash overtime ($'5.10) per hour over 40 hours in a given 7 -day period. The paramedics work a 72 -hour week. The only way in which salary costs can be controlled is not through salary rate reductions, but through reduction ir, staff. -4- rM EQUIPMENT The equipment owned by the Lodi Ambulance Service is: 1 1978 Dodge paramedic van 1 1979 Dodge paramedic van 1 1982 Dodge paramedic van 1 1971 Cadillac ambulance 1 1979 Dodge -wheelchair van 1 1981 Buick Riviera Sedan All equipment is in good operating order and properly maintained. For the service area, the number of pieces does not seem to be out of line. OPERATING COSTS AND OVERHEAD An unaudited cash basis statement was submitted for analysis. The operating statement provided does showa "net" loss for 1981 of $8,312.90 on a cash basis.:' It must be, noted that the receivables increased by`$54 024:,68." -for the period March 27, 1981 to February 19, 1982: Some of 'the. receivables are uncollectible as patients are.­�either Medicare/Medical patients, or indigents, however, it,was:not determined what portion could be collected. This does,' -5- hewevea, point out the effect that uncollectibles has on cash flow. From the s t -, the exact costs of particular functions or items. For instance, the statement has salaries (defined as take home pay) and payroll taxes (both employee and employer contributions) as separate items. Determining total labor costs is further complicated because employee insurance is grouped with all other types of insurance. A few expense items deserve special consideration as direct questions have been posed; Medical Supplies - The owners of Lodi Ambulance Service are the: owners of another business which distributes and sells medical supplies in the San Joaquin Valley and foothills. This Company sells supplies directly to Lodi Ambulance Service at cast, or. 15% above cost at a maximum. This is less than the cost to other customers. The total cost of unrecoverable medical supplies for 1981 was $3,026.68 for over 3,000 patient trips which figures to less than $1.00 per trip. The hospital replaces much of the bandages and f,upplies and then bills the patient or includes those costs in the hospital fees and charges. W -M Rent - The owners of Lodi Ambulance Service own the building and property used by the Company. The rent is $1200 per month. The owner stated that the rent at the.i,r previous location was $1,000 per month, over 3 years ago. Officers' Compensation - The wives of the owners are officers of the Corporation. As such, they are given a monthly stipend or draw of $100. They are paid no other salary, however, they are reimbursed for travel expenses on Company business. FEE STRUCTURE The request for rates presented by Lodi Ambulance Service was presented in such a way that it appeared there was not a: large increase in revenue contemplated. The rationale given was that this new scheme was designed to be more efficient and to conform to new Federal criteria. A review of the practical implementation of this scheme reveals an average increase in bills of over 30%. Ten billings were selected at random and the proposed rates were applied to those billings. The results :)f that sampling is summarized: -7- The Ambulance Service points out that only 37% of their customers pay the entire bill as charged; that over 50% are Medicare or MediCal patients;. and that 10% of the bills are uncollectible. The Federal Government (Medicare) pays only 80% of recognized charges which today means that $64 is paid for the base rate. A State program for the elderly did pay the other 20%; however, AB 251 which recently passed the Legislature has eliminated this program. The State welfare program will only pay $57.61 for the base rate and that is scheduled to be reduced to $51.85. It is the Ambulance Company's contention that because of the previously -mentioned factors that rates must be increased by 32% in order to generate a cash flow increase of 12%. -8- Amount al.` �mvair 1a Bill Amount New Procedure Cost $ 264.50 $ 398.25 50.5 137.50 188.00 36.7 213.50 226.25 5.9 397.75 518.60 30.3 183.50 202.50 10.3 116.25 165.75 42.5 107.25 155.25 44.7 242.00 337.75 39.5 150.75 216.75 43.7 156.75 188.00 19.9 $1,969.75 $2,597.10 31.8 The Ambulance Service points out that only 37% of their customers pay the entire bill as charged; that over 50% are Medicare or MediCal patients;. and that 10% of the bills are uncollectible. The Federal Government (Medicare) pays only 80% of recognized charges which today means that $64 is paid for the base rate. A State program for the elderly did pay the other 20%; however, AB 251 which recently passed the Legislature has eliminated this program. The State welfare program will only pay $57.61 for the base rate and that is scheduled to be reduced to $51.85. It is the Ambulance Company's contention that because of the previously -mentioned factors that rates must be increased by 32% in order to generate a cash flow increase of 12%. -8- RATES OF OTHER AMBULANCE SERVICES Appendix A 1, ,. ti.. by other ambulance services in the area.. In most cases, the charges are greater than those of the other ambulance services in the comparison. There seems to be little effort on the part of government to regulate fees. Contra Costa County, for instance, grants exclusive franchises and then lets the ambulance charge what the market will bear. San Joaquin County makes no effort to regulate fees. The City of Stockton does regulate the ambulance fees charged within that City on an annual basis. None of these ambulance services have combined charges such as is now being made by Lodi Ambulance Service. The trend may be to this combined billing since Medicare has recently recognized a charge for Advanced Life Support. EFFECT OF COUNTY OPERATION ON THE CITY OF LODI Lodi Ambulance Service is geared to provide service to an area that is at least 10 times the size of Lodi but contains one-half the population. The bottom-line effect is the need for additional manpower and equipment to be available. If the need to provide service to such a large area did not exist, the need for manpower and equipment could be reduced. won EJ COMMENTS r The few people who did contact me were most concerned about the cost z : v c Y i.:a. emergency response and paramedic fee. The comments made were that in all cases in the City of Lodi, the ambulance is no more than 4 or S minutes from the hospital and that it would be preferable to transport the patient immediately rather than provide on -the -spot treatment for a period of time longer than the trip to the hospital. Each person did admit that when the distance was long, such as Victor, Lockeford, or Clements, there is justification for "paramedic service", but certainly not when the trip is across the street or around the corner. The Ambulance Service is, however, under standing orders from San Joaquin County Paramedic Committee and Board of Supervisors to respond in an emergency mode whenever there is a life-threatening problem or the request is for immediate response. Paramedic care is rendered upon orders of the physician at the Paramedic Base Station, an attendant, or in an obvious life-threatening situation. If the City Council is desirous of setting service levels, it certainly has that prerogative. As a matter of fact, the City's present ordinance does spell out minimum qualifications of the operators and drivers of the Ambulance -1Q- Service. In 1976, the Council authorized paramedic services with the understanding that the paramedic service would only be used on an as -needed basis. The past year indicates that paramedic service (ad-Vail"C approximately 20 percent of the time. If the City Council is desirous of becoming more involved, the following are available alternatives: 1. Contract with the Ambulance Service on a flat -rate basis for all emergency care provided in the City of Lodi. 2. Establish an ambulance service within the.City service. 3. The City become involved with the management of the service and set the maximum fees which the Ambulance Service may charge. Each of these are filled with pitfalls as the City does not have the expertise nor the :Honey to properly implement either one. The present policy allows the Ambulance Service to set service levels and method of operation. The City has taken the approach of monitoring the rates the Company has deemed appropriate to charge. To -11- this point, there is no recollection of the City exercising its right to modify the posted rates. The present ordinance places the C L y _ A a Va.r ° position. The Ambulance Service is not under the management control of the City either by contract or franchise. The City does not have the authority to become involved in the day-to-day management of the Ambulance Service. The City does, however, have the right to establish rates to be charged. The Ambulance Service is caught in a price squeeze: on one hand, their costs are going up, the amount of money to pay for services is being reduced and business is declining. If these factors do not change, their only recourse is to increase rates to the extent the people who pay the full bill will pay for all the additional costs; the level of service be decreased; or operating costs reduced. It is obvious that Lodi Ambulance Service has chosen the first alternative. -12- Description of Service Base Rate :'tileage :light Emergency Oxygen Paramedic EKG Defibrillation Resuscitator Suction Dnergency OB OB Pack Oral Airway Spinal Board Traction Splint Inflation Splint Burn Pack - Large Cold Pack Anti -Shock Trousers Esophageal Airway APPENDIX "A" AMBULANCE RATES MMPARISON Lodi Ambulance 3/1/82 4/1/82 5.00 � 85.00 90.00 4.50 5.25 17.75 33.00 17.75 60.00 21.25 21.25 49.50 100.00 35.50 50.00 14.25. 60.00 .. 35.50 - 14.25 - 35.50 - 14.25 - 4.25 - 14.25 - 14.25 - 10.75 - 35.50 - 11.25 - 28.50 - 35.00 - Antioch 95.00 5,td 2o.00 20.00 20.00 N.A. 15.00 15.00 N. C. 15.00 4.00 15.00 15.00 15.00 15.00 3.50 N.A. N.A. Stockton Ambuiac)ce Service 80.00 00 12.00 15.00 N.A. N.A. N.A. 35.00 12.00 25.00 15.00 No Fee w Superior Michaels Sacramento Concord Vbdest( 80.00 110-03 107.00- 5.00 � 15.00 25.00 35.00- 12.50 25.00 29.00 N.A. 25.00 45.00 35.00 50.00 60.00 .. 35.00 25.00 30.00:`_ N. C. 30.00 N. C. N. C. 2-0.00 35.00- 50.00 50.00 N. C. 20.00 2-0.00 N. C..' 4.50 5.00 N. C. 20.00 34.00. N. C. 20.00 40.00. N. C. 15.00 20.00, 11.00 18.00 13.00 3.00 6.00 5.00 N. A. 25.00 56.00 15.00 40.00 30.00 �.....:.. F.R. Lodi Ambulance Service, Inc. 1709 SOUTH STOCKTON STREET LODI, CALIFORNIA 95240 (209) 334-0830 .-b rZ T., v 10, 19,, 2 Lodi City Council 221 W. Pine St. Lodi, CA 95240 Gentleman: In accordance to the City of Lodi Code Section 2A-3, we are filing a 30 day notice to change and modification of our rates. We are submitting this letter for a change in the way we hill for our services. In todays mannor, we must change with the requirement of the government programs so we are able to serve the people in our community. In revamping the way we charge for services, dropping 32 now charged items, and adding three new charges that the government programs understand. Having each area of service recover the cost of that service. Only the patient receiving such service would he charged for that service. As you know, the State of California in their Medical Program greatly reduced the revenue to the Hospital. We also received cuts from the State payments that equal 20% of the bill; as of 1/1/82, we no longer receive those funds from the State. Also, we have indications that there is a 10% across the board reduction on all Payments from the State in the near future. Medl-Cab Lodi Medical Products `A) With these losses of revenue and increased number of governmental agencip,, plac rn rpquir�;nnts ?17cn ' Coupled wit;, todays inflation i t i s 3neC ,'!�; 1"] 1,-y L,iD ini:Y,e, s,: _i. _ cost to the patient. These increases would enable ourselves to continue a high quality of service for the people of our community. Be assured, we are doing everything possible to hold all increases to little as possible, without jeopardizing patient care. If you have any questions, please contact myself at our office. PS:jd NnYamrnnvmia+s.-.vav..zffars�-::s�c�aa:o.�,.......�: �w`r�aw::ai:a Respectfully, Perry Schimke Controller ...;,.. �. o d i Ambulance Service, Inc. 1M SOUTH STOCKTON STREET LODI. CALIFORNIA 95240 (209) 334-0834 PROPOSED RAT-S DESCRIPTION Base Rate 85.00 00.00 Sit-Up patient 85.00 00.00 Mileage (one way) 4.50 5.25 Night 7Pm to 7A�M 17.75 35.00 Fxiergency 17.75 Oxygen - per tangy: 21.25 21.25 Waiting, tire - per 15nin . 10.75 15.00 Paramedic Stand-by per 15min 14.25 IPPB respirator 42.50 Paramedic Service 40.50 Clinical spec - per hour 21.25 Defibrillator use 14.25 Emergency ENG 35.50 50.00 heart/lung resuscitator 35.50 Suction 14.25 resuscitator elder 14.25 Infant ambu 14.25 Adult ambu 14.25 Emergency child birth 35.50 O.B. Pack 14:25 Oral airway 4.25 Reactose 10.75 Flat stretcher 21.25 Orthopedic stretcher 21.25 Spinal board - short 14.25 Spinal board - long, 14.25 Traction splint 14.25 Ladder splint 14.25 Cardboard splint 10.75 Inflation sprint 10.75 Cold Pak 11.25 Burn pak - large 35.50 Burn pak - small 14.25 Sandbags 3.00 Anti-shock trousers 28.50E Multi-trauma dressing 7.25 ET tube 35.00 Esophogeal airway 35.00 Needle thoracotomy 75.00 Cricothyroid stick 75.00 Immediate Responce (Emergency) 60.00 Spiniai Care 50.00 Advance Life Support 100.00 Medl- Cab Lodi Medical (Products s E CADORNIA AMBULANCE ASSOCIATION 0 E. 1 RATE SURVEY JANUARY 1982 County Base Mileage NightFmev� enc w _Y _ ___ Oxy0en Alameda 85.00 4.50 20.00 15.00 14.50 Amador 85.00 5.00 15.00 20.00 15.00 Butte 105.00 0i� 5.00 :35>�)0 � r � Contra Costa 10 >i,) 0") Fresno 97.50 5. CIO 25.00 2 G0 Uj NumboIt 119. 50 7.00 30.030 30.00 20.00 Kern 110.00 7.00 35.00 15.00 15.00 Kings 85.00 4.00 20.00 20.00 15.00 Los Angeles 75.00 5.00 12.00 12.00 12.00 Madera 80-00 4.00 15.00 15.00 15.00 Mendocino 65.00 3.00 10.00 10.00 10.00 Monterey 81.00 4.00 15.50 18.50 13.00 Napa 87.50 4.50 15:00 20.00 13.00 Orange 75.00 5.00 15.00 15.00 15.00 Placer 110.00 6.00 30.00 35.00 30.00 Plumas 70.00 4.00 24.00 15.00 15.00 Riverside 105.00 5.50 40.00 50.00 30.00 Sacramento 80.00 5.00 15.00 15.00 15.00 San Benito 75.00 3.50 12.50 12.50 12.50 San Bernardino 81.50 5.25 16.50 16.50 8.00 San Diego 85.00 5.00 20.00 20.00 20.00 San Francisco 100.00 4.75 16.50 16.50 141.00 San Joaquin (Tracy) 130.00 6.50 28.00 35.00 23.00 San Luis Obispo 117.50 5.50 35.00 45.00 25.00 San Mateo 125.00 5.00 25.00 25.00 25.00 Santa Barbara 96.00 5.00 25.00 72.00 26.00 Santa Clara 115.00 4.00 20.00 25.00 15.00 Santa Cruz 95.00 4.00 13.50 13.50 13.50 Shasta 95.00 5.25 15.00 15.00 20.00 Siskiyou 95.00 5.25 15.00 15.00 20.00 Solano 90.00 5.00 20.00 20.00 15.00 Sonoma 12.5.00 7.00 40.00 40.00 30.00 Stanislous 107.00 6.50 28.00 35.00 29.00 Tulare 85.00 4..00 20.00 70.00 15.00 Tuolumne 90.00 4.50 15.00 15.00 15.00 Ventura 95.00 6.00 25.00 30.00 30.00 Yolo 115.00 5.50 20.00 25.00 26.00 Yuba 87.50 5.25 20.00 20.00 20.00 Percentage Break Downs t� Lodi Stockton 1135 37% Private Pay & Insurance 31.5% 1903 552 18% 1039 347. Medical 38 % 2263.'- 36 1% County 27. 117 295 10% Uncollectable 9% 583.,. 3048 100% Totals 1007. 6044: r 200 6.5% Dry Runs 177. s 1 Total Calls BASE RATE 90.00 1976 --- 2960 t MILIAGE 5.25 1977 --- 3487 NIGHT 35.00: ,97 1978 --- 3259 EKG 50:00. t 40% T 1979 ---,3629 ; OXYGEN 21.25 NONE r 1980 --- 3657 STAND BY 14.25 NONE; 1981 --- 3447 • ADD..5. 2 .T r; ADVANCE LIFE . " PARAMEDIC CALLS SUPPORT 100.00 New IMMEDIATE RESPONCE; 1977 --- 553 ' DIERGENCY" 60.00 New, 1978 --- 535 SPINIAL CARE 50.00 New s 1979 --- 566 1980 --- 757 "Drop 32 now charged idems" 1981 --- 654 C) LODI AMBUI0EE SERVICE, INC. INCO14E EXPENICE Salaries Insurance Interest Rent Advertisin- ot Promotion Telephor_e & Utilities Leagal & Accountin€, Radio & Medical Equipt. Medical Supplies Taxes & Licences Payroll Taxes Laundry & Cleaning Office Expence Auto Maintenance Gas & Oil Refunds Depreciation Expence Officers - Expence Misc. Expence 1980 1981 1982 $372,252.48 $416,777.18 $475,000.00 5 3,a49.8I 2,604.00 '30 35,881.89 43,651.60 47,500.00 37,643.88 18,666.67 21,375,,00 14,400.00 14,400.00 16,625.00 5,157.02 7,317.60 9,500.00 8,247.65 12,971.52 14,250.00 2,239.70 9,651.80 9,500.00 `,531.27 9,139.96 9,500.00 2,289.61 3,026.68 3,562.50 957.00 2,133.10 2,375.00 61,245.42 74,638.80 80,750.00 3„201.56 . 3,619.88 4,750.00 9,661.74 7,074.28 8,312.50 7,970.06 7,369.24 9,500.00 15,882.27 18,525.28 21,375.00 8,892.91 9,077.0.0 9,50:0.00 8,403.00 9,663.45 11,875.00 12,727.00 10,944.48. 14,250.00 614.74 366,558.85 425,090.08 475,000.0`0 NET INCOME OR LOSS 5,693.63 -8,312.90 0.00 ;1. z 9✓ k 4 i 5 LODI AMMIJUNCE SERVICE, INC. A CALIFORNIA CORPORTION Income Statement (Cash Basis) For the 12 month Period Ending Dec. 31,1981 INCOME: Total Cash Basis Income from Ambulance Services: $416,777.18 OPERATING EXPENCES : Salaries $162,604.00 Insurance 43,651.60 Interest 18,666.67 Rent 14,400.00 Advertising & Promotion 7,317.60 Telephone & Utilities 12,971.52 Leggal & Accounting 9.651.80 Radio & Medical Equipment 9,139.96 Medical Supplies 3,026.68 Taxes & Licenses 2,133.10 Payroll Taxes 74,638.80 Laundry & Cleaning; 3,619.88 Office Expence 7,074.28 Auto Expence 7,369.24 Gas & Oil 18,525.28 Refunds 9,077.00 Depreciation Expence 9,663.45 Officers- Operating Expence 10,944.48 :disc. Expence 614.74 Total Operating F:_ -pence $425,090.08 Net Income or Loss -8,312.90 The Accompanying Letter is an integral part of this statement. (unaudited)