Emergency Brake

The state tries to halt out-of-control ambulance contracts — but cities might have the last word

When Scottsdale officials were picking an ambulance company to handle 911 calls last year, they didn't look at the factors you might assume would be at issue.

Not price. The state sets the rate for ambulance trips, no matter who is the provider.

Not speed. Promising a faster "response time" didn't guarantee a single point on the city's 1,000-point assessment of would-be providers.

PMT Ambulance, led by former union honcho Pat Cantelme, won the Scottsdale contract in part by offering the city an attractive set of perks.
Giulio Sciorio
PMT Ambulance, led by former union honcho Pat Cantelme, won the Scottsdale contract in part by offering the city an attractive set of perks.
Workers at Southwest Ambulance fought to keep their turf in Chandler, but lost half the city. Now they're locked in a bitter battle to hold ground in Tempe.
Workers at Southwest Ambulance fought to keep their turf in Chandler, but lost half the city. Now they're locked in a bitter battle to hold ground in Tempe.

Instead, Scottsdale considered factors like experience (40 points), diversity awareness (10 points) and equipment (80).

And then the city looked at something known in the ambulance business as "enhancements."

That category was worth a full 300 points. And, in effect, points were awarded based on the ambulance companies' answer to a simple question: What are you gonna do for us?

For the winning bidder in Scottsdale, that meant offering to purchase special equipment: 175 portable defibrillators, each worth about $1,700.

And agreeing to hire city firefighters to staff four ambulances. Paramedics are much cheaper — but the company offered, generously, instead to pay some firefighters' salaries, benefits, and even overtime.

And, believe it or not, offering to finance two bomb-sniffing dogs for the Scottsdale Airpark at $10,000 a pop.

The Scottsdale contract represented a big shift in how ambulance contracts are won in the Valley. For almost a decade, Mesa-based Southwest Ambulance had a virtual monopoly on 911 calls. Just doing the work was good enough to keep municipal contracts, year after year.

But last year brought a competitor, PMT, to the Valley's suburbs, and with it a new way of doing business.

One of PMT's owners, Pat Cantelme, led the firefighters' union representing Phoenix, Chandler, Tempe, Peoria, and Glendale for 20 years. A master at retail-level politics, Cantelme knew how to sell his product to the Valley's powerful firefighters' unions, which exert considerable influence on the city politicians who choose ambulance providers (see "Ambulance Chasers," October 27, 2005).

And Cantelme also knew that municipalities would be eager to take whatever "enhancements" they could get.

And so, although Southwest Ambulance offered Scottsdale a faster response time and vowed to dedicate more ambulances to the city, it lost. Cantelme's company, PMT, won the contract, winning better marks for financial depth, diversity awareness — and, of course, all those enhancements.

The Arizona Department of Health Services, which regulates ambulance companies across the state, approved the contract in Scottsdale. But last month, the department wrote a letter to both companies, suggesting that its approval had been a big mistake.

While department regulators didn't reverse their decision about Scottsdale, they indicated that they regretted it — and that, in the future, similar contracts may be dead on arrival.

To that end, the department rejected Chandler's contract, which was based closely on the plan approved by Scottsdale.

The Scottsdale model, assistant attorney general Kevin Ray wrote for the health department, "has become problematic — other municipalities are requesting similar 'EMS enhancements' at significant cost to the ambulance providers."

And that, Ray wrote, could cause major problems down the road.

"These additional and unnecessary costs," he wrote, "if unchecked, will undermine the constitutional and statutory authority of the Department to set rates and charges for ambulance services, will jeopardize the financial health of ambulance providers, and could damage the overall health of the EMS system in Arizona."

The health department's decision will almost certainly change the playing field in the Valley, if not the state as a whole. A number of municipal contracts are set to expire in the next few years, including Tempe, which is currently in the midst of a competitive proposal process — and is already feeling the ripples from the Chandler decision.

And if the department's decision stands, not only could outsiders like PMT have a harder time winning contracts in these cities, but the cities can kiss hundreds of thousands of dollars in perks goodbye.

But if Chandler is any indication, it may not be that simple.

For city officials, getting ambulance companies to finance new equipment, or even pay for more firefighters, seems like a clear win. After all, it shifts costly burdens off taxpayers and onto private companies.

But, as assistant attorney general Ray indicated in his letter to Chandler, there are clear pitfalls to establishing such a system as the norm.

(Ray referred calls for comment to department spokeswoman Andrea Esquer, who deferred to the Department of Health Services. DHS spokesman Michael Murphy did not return repeated calls.)

One potential pitfall: In a desperate attempt to keep municipal contracts and out-enhance their competitors, ambulance providers could bankrupt themselves. That would take Arizona right back to the monopoly it started with.

Another potential problem? Ultimately, someone has to pay. Today the set rate is $643 for a ride in an ambulance in Maricopa County, but the state has been willing to increase rates when requested. Ambulance companies would certainly lobby for increases long before they'd pack up their bags and leave town — and fee increases are no good for sick people or their insurers.

And we all end up paying, eventually.

That's not because old age and death will claim us all in the end — although that's certainly true.

It's because, via Medicare, the federal government is the single biggest client of most ambulance companies. Any time rates go up, the feds get stuck with the lion's share of the bill.

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