HomeMy WebLinkAboutAgenda Statement 1985/12/03 Item 7 COUNCIL AGENDA STATEMENT
Item 7
Meeting Date 12/3/85
ITEM TITLE: Public Hearing: Considering the proposed rate increase for
Hartson' s Ambulance Service
Resolution / - 7/ Approving the new rate schedule for
Hartson's Ambulance Service and extending the current service
agreement to the newly annexed area
SUBMITTED BY: Director of Finance
Director of Public SafetjAAJ (4/5ths Vote: Yes No X )
REVIEWED BY: City Manager T `
Hartson's Ambulance Service has requested a rate increase for ambulance (EMT)
and paramedic (PM) services provided in the City of Chula Vista. The proposed
new rates would permit Hartson to charge the same fees in the City of Chula
Vista that are presently charged in the remainder of their regulated service
area. The last fee increase was granted to Hartson's three (3) years ago, in
November 1982. Additionally, the service contract and rate schedule would be
extended to the newly annexed area, effective with its formal annexation. The
annexed area' s current rates are higher than the new rates proposed for Chula
Vista.
RECOMMENDATION: It is recommended that Council :
1. Approve the new rate schedules as submitted (Exhibits A and B)
2. Approve the attached amendments to the contract documents incorporating
the new rate schedule and extending the agreement to the newly annexed
area.
BOARDS/COMMISSIONS RECOMMENDATION: Not appl icabl e.
DISCUSSION:
The proposed rate change would increase revenues generated in Chula Vista by
11 . 9%.
The current and proposed rate changes are detailed in Exhibits A and B.
Important points to note are:
-- The basic rate for ambulance service (Exhibit A) would increase by 11 .1%,
from $90 to $100; the mileage fee would increase from $6 per mile to $7
per mile. These two charges account f•r :: the average bill for
ambulance service.
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Page 2, Item 7
Meeting Date 12/3/85
-- The basic rate for paramedic service (Exhibit B) would increase by 17.5%,
from $166 to $195; the mileage fee would increase from $6 to $7 per mile.
These two charges account for 86% of the average bill for paramedic
service.
The table below details the impact of the proposed rate increase on the
revenue which Hartson generates within Chula Vista. As shown, the projected
revenue increase is a function of (1 ) the increase in the average bill and (2)
the collection rate. Based on these factors, Hartson's projected income is
expected to increase from $517,000 to $579,000, an increase of 11 .9%.
Annualized Revenue Impact of Proposed Rate Increase
Average Bill Current
Transport Number @ Current Collection Gross
Type Transports Rate Rate Revenue
EMT 3415 $ 144 67% $329,479
PM 1314 227 63% 187,915
$517,394
Average Bill Projected
@ Proposed Collection Gross
Rate Rate* Revenue Change
$ 164 65% $364,039
268 61% 214,812
$578,851 $+61 ,457 +11 .9%
* Decreased collection rate due to unavoidable "contractual disallowances"
for Medicare and MediCal patients.
Extension of the proposed rates to the newly annexed area would reduce
Hartson' s revenue.
The rates for EMT and PM services are currently unregulated in the the newly
annexed area. As shown below, the newly annexed area' s present rates are
significantly higher than the proposed rates for Chula Vista.
Page 3, Item 7
Meeting Date 12/3/85
Basic Basic
EMT PM Mileage
Rate Rate Fee
Current Service Charge $194 $326 $ 8 mi .
in the newly annexed area
Proposed Service Charges $100 $195 $ 7 mi.
for Chula Vista
Extending the lower proposed rates to the newly annexed area will reduce
Hartson's projected revenues by approximately $8,000. (This figure is based
on the service call volume which was readily identified as occurring in the
annexed area. It is likely that it somewhat understates the actual revenue
impact. )
Overall , the combined effect of the rate increase and the extension of Chula
Vista's lower rate schedule to the newly annexed area would increase Hartson's
projected income by $53,000. This represents a 9.2% increase over the
combined revenues for Chula Vista and the annexed area. This increase is, in
turn, supported by the following factors:
-- inflationary trends occurring over the last three years;
-- the Company's profit structure over the last two years;
-- comparative rates charged in other communities; and
-- recent improvements in Hartson's service.
Each of these factors is briefly discussed below.
Since December, 1982, the Consumer Price Index (CPI) has increased by 12 to
17%.
As shown below, the San Diego CPI for all items has increased by 17.3% since
December 1982. For all items excluding shelter, the increase has been 12.0%.
For the same period, general medical care items, representing both commodities
and services, have increased by 12.3%. As detailed earlier, the proposed rate
increase would increase Hartson' s net revenues by approximately 9.2%, after
adjusting for the lower rates to be applied to the annexed area.
San Diego CPI: All Urban Consumers
Dec. 82 Sep. 85 % Change
All Items 321 .7 377.3 17.3%
All Items Excluding Shelter 269.4 301 .6 12.0%
General Medical Care 329.1 369.6 12.3%
Page 4, Item
Meeting Date—T2/3/85
For CY 1983 and 1984, Hartson' s expenses have slightly exceeded revenues.
Hartson's financial statements for 1983 and 1984 are summarized below. As
indicated, company expenses exceeded revenues by 2.4% in 1983 and by 1 .5% in
1984. Personnel costs account for roughly two-thirds of itemized expenses.
CY 1983 CY 1984
Income $4,374,857 $6,843,923
Expenses 4,477,866 6,945,081
Net Income ( 103,009) ( 101 ,158)
The proposed service rates are comparable to rates charged in other
non-subsidized cities.
Exhibit C provides comparative rate information for cities in San Diego and
other California counties. Important points to note about the Exhibit are:
-- Several of the surveyed cities subsidize the cost of ambulance services in
their communities. In cities such as El Cajon, where private paramedic
services are not available, the city operates its own paramedic program.
In larger cities such as San Diego, the high proportion of medically
indigent residents necessitates large city subsidies to maintain a
"reasonable" rate structure. For the surveyed cities, annual subsidies to
support paramedic services ranged from $100,000 to $1 ,400,000.
-- The proposed rates for EMT and PM services in Chula Vista would be equal
to the rates currently charged by Hartson's in other regulated areas. The
rates compare favorably with rates charged in other cities and by other
contract providers.
Hartson's service has increased over the last two years.
In 1983 Hartson' s began an ambulance service in National City. This operation
has doubled the resources available to Chula Vista and the surrounding South
Bay and has enhanced response times to the northern and northeastern portions
of the City.
Over the same period, Hartson' s implemented a Critical Care Transportation
Service, designed for interfacility transport of critically ill/injured
patients. This new service was necessitated by regulatory changes implemented
by the regional EMT authority.
Page 5, Item 7
Meeting Date 12/3/85
In summary, the proposed rate increase is supported by cost/service increases
occurring over the last three years. The rates are in line with rates charged
in other comparison cities. The lower Chula Vista rates will be extended to
the newly annexed area.
FISCAL IMPACT: Not applicable.
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