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How did we get to this point?

Perham Area EMS started out as a public ambulance service run by volunteers. Over time, the local units of government, townships and cities, formalized their ownership of the ambulance through a Joint Powers Board. What this means is that Perham Area EMS is owned by the 15 townships and cities that are served by the ambulance.

Having a public ambulance through a Joint Powers Board meant that Perham Area EMS was always able to prioritize keeping community well-being, because we were non-profit and no-one was getting rich providing ambulance services. It also ensured a lot of local oversight into our budget, operations, and decisions about service level, which were all decided through the Joint Powers Board.

For many years, Insurance payments covered the entire cost of providing ambulance service, and even allowed Perham Area EMS to have some savings at the end of the year that could be put towards necessary equipment and ambulances. During this time, Perham Area EMS was a volunteer agency, meaning that most of the staff were not paid unless they were responding to a call, and even then were paid at low rates. The combination of low wage costs and sufficient insurance payments meant that Perham Area EMS did not require any financial contributions through the joint powers board for the first few decades of operation.

What changed that made it so Perham Area EMS was not self- sufficient anymore?

There were several factors that affected EMS sustainability. The first and biggest one is that insurance reimbursement rates for ambulance services began to fall way behind. Pretty soon ambulances were only being paid 25-40% of their billed amounts by insurance providers, Medicare, and Medicaid. And even when ambulances were paid, it was usually 6-18 months later and following multiple appeals.

Also during this time period, the field of EMS was advancing. More and more treatments could be provided by EMTs and paramedics in the field, however insurance fails to recognize these as covered services, and still thinks of EMS as a “transport” service.

Meanwhile, ambulances have been getting busier and busier. When I started as a volunteer, I would maybe run 1 or two calls in a shift, and now we can easily run 4-5. And about a third of our calls are hospital to hospital transfers that require us to move patients hours away. We often go to Fargo, but may also go to the cities, Rochester, Duluth, Grand Forks, Sioux Falls, Bismarck, or anywhere the patient needs to go for specialized care.

When we were volunteer run we were less busy, so employers were ok if everyone once in a while their staff member left work for an hour or two to take an ambulance call. But now, it would be multiple times a day, and could take staff 3-4 hours to run a call, or longer for some transfers. So volunteers could not afford to leave work to volunteer anymore. As EMS became busier and more complicated, it also became more difficult to recruit volunteers that would be able to accept the risk and intense training requirements of EMS work for little or no pay. Because of this, Perham Area EMS transitioned to a “career” ambulance service, meaning that we began to pay staff for their time on-call for the ambulance.

Over the last 5-10 years, the combined increased cost of labor, and the insufficient insurance payments meant that pretty soon EMS was not breaking even anymore. In fact, we began having to dip into our savings year after year to cover our operating expenses.

Why is labor so expensive?

It really isn’t compared to other industries, but compared to free labor it was a big increase in our budget. A starting EMT makes about $17/hr, and the most experienced paramedic we have, with 15+ years of experience would make around $34/hr. These are competitive wages, and have improved in the last few years. But when you consider what other jobs are paying $17/hr it is hard to believe. Our staff work in extremely difficult and unpredictable environments, and literally make life and death decisions daily. There are very few professions with this level of training, risk, and responsibility that would pay those wages. Especially if you consider the skills of a nurse or CAN closely overlap with those of EMS employees, but pay substantially more while working in a team setting, indoors, with a doctor present.

How does geography affect ambulance sustainability?

The most efficient ambulance would be one that serves in a very populated area. But out here, people like to spread out. That means to serve a single patient may take hours to get, there, treat them, then get them to the right hospital to treat their illness. Meanwhile in a metro area, their transport times might be closer to 5-10 minutes. A staffed ambulance in Minneapolis could run 20 calls per vehicle per day, but out here it’s closer to 5 calls a day.

Why does it matter how many calls you run? Wouldn’t it be better to run fewer calls?

You would think so, but actually it’s the opposite. The best thing for our communities would be for the ambulance to sit unused. But the best thing for a financially stable ambulance is to be really busy. Ambulances need revenue to continue to pay staff, stock medications, and maintain our equipment. The only way to get revenue is to be paid by patients or their insurance for the services we provide. This is one of the reasons that the system that funds ambulances is so broken. We are accidentally incentivizing transporting as many patients as possible to get insurance payments, even though the EMTs and paramedics could potentially treat that patient on scene and avoid a trip to the ER.

The biggest cost of an ambulance is the “cost of readiness.” This is all the time that we need to have the ambulances staffed and ready to go, but there isn’t a call. Meaning we still have expenses, but no revenue during that time period.

If this has been happening over the last 10 years, why are we just hearing about it now?

The joint powers board has been receiving reports at least twice a year on the financial situation of the ambulance since its founding. But because we had some savings, the losses for several years were covered by past earnings. Unfortunately, those savings are now depleted which required the townships and cities to get involved. All along we’ve been keeping them in the loop, but the now desperate situation has called a lot more widespread attention to this issue.

As EMS providers it’s always been gut instinct to make things work and find a way to respond even in a tough situation. We are used to being limited resourced, so it was natural instinct to try and bridge the gap and make sure the ambulances kept responding- so patients wouldn’t have noticed much difference yet. The challenge is now it’s coming to a breaking point where if things don’t change, our communities may start to notice gaps in ambulance coverage, reduced service levels, or longer response times.

What are you doing to balance the budget for EMS, and why isn’t it working?

To start, we have been working to reduce our expenses by extending the life of our equipment and ambulances through preventative maintenance, we’ve switched up how we stock and rotate medications to decrease the amount of waste due to expiring, and we’ve transitioned our billing service to Perham Health, saving us about $20,000 per year and increasing our oversight. However, about 76% percent of our budget is labor, which cannot be reduced without cutting services. No matter what, we still need staff available 24 hours a day, 7 days a week.

To increase our revenue is a bit more complicated. Ambulances are heavily regulated in what we can charge and what is paid by insurance. Increasing our prices doesn’t mean that insurance will pay us any more for the services provided. And there is no mandate for them to negotiate with us or let us get “in network.” Insurance companies usually refuse to work with organization our size. We do try to maximize our revenue by working with patients to set up payment plans, appealing every denial, and transitioning to Perham Health billing so we can follow up on every account more closely. We have also been seeking other forms of revenue, such as billing for community services, applying for grants, fundraising, and advocating at the state legislature on ambulance aid packages- which last year brought in about $192,000 in state aid.

How is Responsibility for the Ambulance Distributed?

The below video shows a conversation between Perham Area EMS Director, Becca Huebsch, and the EMS Joint Powers Board Chair, Barb Felt. The video discusses how responsibility for the ambulance is decided, township responsibilities, and the potential EMS special taxing district.