Ambulance Services
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Industry Overview
The US ambulance services industry includes about 3,000 firms with combined annual revenue over $7 billion. Major companies are American Medical Response and Rural/Metro Corporation. The industry is fragmented: the 50 largest companies represent 45 percent of revenue. Most ambulance companies are small and local with one location and fewer than 15 employees; only about 200 have revenue over $5 million.
This industry profile doesn't include public, fire department, and hospital-based ambulance services, or non-medical transportation services for the disabled or elderly.
Competitive Landscape
Emergency medical events and an aging population drive demand for ambulance services. The profitability of individual companies depends on quick and effective response and operational efficiency. Large companies have advantages of scale in contract negotiations, service capabilities, technology, and geographic coverage. Small companies can compete effectively by providing superior service in specific locales. The industry is labor intensive: average annual revenue per worker is a relatively low $54,000.
Products, Operations & Technology
The major service is medical transport of patients, which provides over 90 percent of industry revenue; sales of medical equipment, supplies, and other items provides 3 percent. Other services each provide less than 1 percent of industry revenue, and include patient care and rental or lease of goods and equipment. Medical transport services are for emergency and non-emergency patients; emergency calls often require medical assistance. Non-emergency services include transportation for medically unstable patients and medical transfers between healthcare facilities.
Ambulance service companies respond to emergency calls by dispatching vehicles and personnel to attend to patients at their location and en route to a hospital. A dispatched ambulance usually has a driver with some first aid skills and may have a non-medical attendant, an Emergency Medical Technician, or a more highly trained paramedic, who can administer life-saving procedures and medicine. Ambulance firms generally receive emergency calls from the local 911 center, but some may operate the service. Firms use their own dispatch systems to communicate with their vehicles and other facilities in the public's Emergency Medical System, such as hospitals, police, and fire departments. Firms handle non-emergency calls by request or on a schedule.
Ambulance companies provide services to clients, such as medical facilities or towns, either on a master contract and/or on standby. Contracts generally range from one to five years with renewal options, and require the ambulance service provider to meet response time and other performance criteria. Contracts with public entities, including towns, counties, and fire departments, usually require a formal bidding process and response to a Request for Proposal. Ambulance firms may serve as subcontractors to other entities or may hire subcontractors, such as paramedics. Almost half of the 200 largest US cities outsourced ambulance services to private providers in 2005, according to the Journal of Emergency Medical Services. Private companies are the primary providers of non-emergency ambulance services.
The key industry metric is response level. For emergency ground ambulance service, the response level is the percentage of sites a company reaches within the industry standard of 10 minutes or less from the first call. Contracts for emergency ambulance services often specify meeting the response standard in over 90 percent of cases. For emergency aircraft, the response metric is the number of minutes from call receipt to liftoff. Quick response is crucial for patients with life-threatening conditions; many in the industry refer to the first 60 minutes from illness onset or injury as the "golden hour" within which to save lives. For non-emergencies, the response metric reflects reliability in picking up patients on time. Internal operational metrics include transport volume, amount collected per transport, and cost per transport.
Payment for services comes mainly from third-party payers, such as Medicare, Medicaid, and commercial insurance companies. Bills also go directly to self-pay patients, typically those who don't have insurance or government benefits. Third-party payers don't always pay the entire bill and self-pay patients have a high rate of non-payment; partial or non-payment results in write-offs. Accurate documentation of patients, services, and processes is extremely important to comply with government, insurance, and financial requirements; to get paid; and to avoid or address complaints.
Equipment and supplies are generally bought through distributors. Emergency vehicles include ground, helicopter, and fixed-wing ambulances; critical care trucks; and supervisory vehicles. Medical equipment and supplies for emergency patient care include heart monitors, automatic blood pressure cuffs, head immobilizers, stretchers, and gurneys. Ambulance service companies maintain vehicles and equipment in-house or outsource it.
Technology is critical to operations. On-board medical equipment is highly technical and computerized. Computer-aided dispatch and deployment systems function 24/7 year-round using dedicated radio frequencies licensed by the FCC. GPS tracks vehicle locations, helping deploy the nearest ambulance to the emergency site. Communication systems enable ambulance personnel to describe patient status to the hospital emergency medical team, who advise en-route treatment. On-board monitors detect driver safety infractions and document activity. Post-call and while on-board, medics record and send patient data wirelessly to billing and backoffice systems. Status planning and management systems gather and analyze data for operations review. Compliance systems track adherence to government requirements, such as for healthcare operations, corporate reporting, and patient privacy.