MIDDLEBURY — Businesses experiencing a revenue shortfall often end up scaling back staff and services.
But Middlebury Regional EMS is taking the opposite approach.
The nonprofit organization formerly known as Middlebury Volunteer Ambulance Association has just launched four substantial new programs it believes will solidify its financial bottom line during a period of sweeping changes in Vermont’s health care system.
“Our costs are exceeding what the government is willing to pay us,” Middlebury Regional EMS Director Bill Edson explained.
“The problem is that our lack of revenue is being driven by a system with nothing built into it to recognize those deficiencies.”
Middlebury Regional EMS is best known for providing a variety of ambulance and heavy rescue services to 10 Addison County communities covering a population of roughly 18,000 people over 400 square miles. The organization has a yearly budget of nearly $1.2 million with 60 full- and part-time workers, half of whom are volunteers. Edson said he and his colleagues respond to approximately 2,200 calls each year.
But conventional ambulance and rescue operations have found themselves under increasing financial pressure, according to Edson. They operate under a fee-for-service business model that has been chronically shortchanged — particularly by federal health care programs. Edson said the nation’s Medicaid program reimburses roughly 15-18 cents of every dollar that Middlebury Regional charges for patients covered through that offering. Until recently, Medicare paid 60 cents on the dollar, a percentage that has now dropped to 57 cents.
Medicaid and Medicare patients account for 72 percent of Middlebury Regional’s total annual business, according to Edson.
Unfortunately, the organization has to make up the shortfall through charges to clients who have private insurance or who can pay for the service out of pocket. It’s the “stranded cost” problem that folks in the hospital industry know all too well.
So Middlebury Regional officials have been looking at other ways to enhance the revenue stream. There is not much appetite for raising fees and there is virtually no appetite to ask for taxpayer assessments.
The solution, Edson said, is not asking people to pay more; rather, it lies in fixing what he called a “broken system,” a fix that he believes requires an entrepreneurial solution. That’s what led to the establishment of the four new programs that Middlebury Regional began offering last month. They include:
•  Taking on additional inter-facility transfers. That means the organization is scheduling transfers of patients from the Middlebury area to medical facilities throughout the Northeast. This allows Middlebury to charge a basic fee and a per-mile charge for transports.
•  An around-the-clock communications center that offers dispatching and pager services to public and private organizations and individuals throughout the country. The organization has already taken on all of neighboring Porter Medical Center’s switchboard operations. That affiliation has helped create an economy of scale to allow Middlebury Regional to offer dispatching and paging services at roughly half the market rate, according to Edson. Middlebury Regional is shopping its communications service to health care-related industries and other unrelated businesses, including plumbers, towing companies and electricians. Edson has also been reaching out to area fire and rescue groups to bring them on board.
“We want to work with other people,” Edson said. “The idea is to reform the system so that everyone’s costs are lower.”
•  Educational programming. Middlebury Regional has a roster of trained professionals deliver such classes as “standard first aid,” “oxygen administration,” “pediatric first aid for caregivers and teachers” and “disaster response.” Those classes are offered to schools, businesses, civic organizations and other groups.
•  Billing for ambulance and emergency services. Edson explained the organization has refined its own billing system to the point where it is able to perform that chore for other, similar groups — at lower-than-market rates. As with dispatching and paging, Edson said Middlebury Regional could deliver the service to clients throughout the country.
Edson and his colleagues note the new programming fits nicely within the organization’s new, 11,860-square-foot headquarters completed in 2010. Middlebury Regional continues to pay down the mortgage for that $2.4 million project, an expense that Edson stressed is separate from the organization’s operating budget.
Officials are hoping to share their new programs and facilities with other ambulance and rescue groups in the county.
“We are all carrying redundant personnel, equipment and costs,” Edson said.
And he hopes some of the state’s other rescue organizations can emulate Middlebury Regional’s new business plan, which has been successfully implemented in other states.
“We are being seen as a model of reform,” Edson said.
Reporter John Flowers is at [email protected].