A Danish company trying to take over ambulance service in San Diego is facing questions about its track record in labor negotiations and whether its plan to put 20 percent more ambulances on the road is financially viable.
Critics say Falck, the largest ambulance operator in the world, has a long history of trying to cut pay, overwork employees and discourage unionization. They say the company’s approach leads to low morale and poor patient care.
Officials from Falck, which has ambulance contracts in Alameda and Orange counties, say they are committed to paying their employees a living wage and giving them annual cost-of-living adjustments.
A consultant also criticized Falck’s business plan for San Diego ambulance service as potentially too optimistic regarding revenues, which could create a crisis where Falck must either raise ambulance rates or slash service.
Falck officials say they stand by their financial projections, which are based on the company’s vast experience around the world and in California. They say the consultant made unwarranted assumptions that artificially lowered the consultant’s revenue projections for Falck.
City Council members say the answers to these questions about Falck’s labor practices and financial projections may determine whether they allow Falck to replace the city’s incumbent ambulance provider, American Medical Response.
The council’s public safety committee voted unanimously last week to have the city’s independent budget analyst study those issues, so the full council can make a well-informed decision on switching ambulance providers this spring.
Key to that analysis will be a 16-page evaluation of Falck’s business plan for San Diego by AP Triton Consulting, which has significant experience and expertise with ambulance contracts.
While AP Triton praised Falck, calling its business plan robust and an improvement over AMR, the consultant said Falck may be “overly optimistic” about how much revenue it will get from certain ambulance patients.
The key point of dispute is how much Falck will be able to charge patients with health coverage through Scripps, Sharp, Kaiser and other local health care providers.
AMR has made “capitated” deals with many local providers that decrease what AMR charges for 9-1-1 ambulance trips, in exchange for the health care companies agreeing to use AMR for other ambulance trips and services.
AP Triton based its projections, which are lower than Falck’s, on assumptions that Falck will make similar deals that would lower its revenues from 9-1-1 ambulance transports.
That assumption, coupled with AP Triton’s data on payment trends for ambulance service, prompted the consultant to call Falck’s annual revenue estimate of $75 million too high.
“This is not to imply that Falck is not capable of meeting this projection,” said AP Triton, acknowledging that Falck uses sophisticated modeling. “However, using standard payment history we believe this will be a significant challenge.”
Falck’s chief commercial officer, Troy Hagen, said AP Triton is off the mark.
“The AP Triton report incorrectly assumes Falck will be subject to existing agreements that AMR currently holds with insurance companies and hospitals,” Hagen said. “This assumption artificially lowered revenue projections.”
Hagen said the company is confident in its projections and the tentative deal it reached with the city in December.
“The bottom line is we stand behind the contract we signed,” he said. “We’ve done financial modeling for many different systems, each with their own financial nuances, and we’re confident in our projections for San Diego.”
Falck chief executive Matt Gallagher said part of the problem is that AMR was not required to provide the details of its deals with local hospitals and insurers, so both Falck and AP Triton made their assumptions with incomplete information.
“This is the business we’re in, making assumptions, which does carry some risk, but it’s risk we accept,” Gallagher said. “We looked at the demographics of San Diego, and we made educated assumptions on the payer-mix make-up.”
Regarding Falck’s track record with workers and labor unions, several Falck emergency medical technicians from Alameda County criticized the company during last week’s public hearing in San Diego.
They said Falck tried to cut pay after taking over service in Alameda County two years ago. They also said employees have been shorted pay and that service reductions have been necessary in some cases.
“Morale is the worst it has been in the five years I have worked here,” said Dominic Curcuruto. “Our benefits and paychecks are constantly inaccurate or deactivated.”
Katelyn Hailey, an official with the United Domestic Workers of America, said such reports from elsewhere should matter.
“Falck’s brief history in California is fraught with poor treatment of its workforce,” she said. “It’s vital that the city doesn’t turn its back on these poor labor practices in other jurisdictions.”
Gallagher said the company has made five separate offers to Alameda ambulance workers during more than a year of negotiations, asserting that each offer included increases in the company’s costs for wages and benefits.
“It’s misinformation that there would be a takeaway,” Gallagher said of employee claims that Falck initially sought pay cuts.
While Hailey was joined by several other local labor officials in criticizing Falck, Councilman Raul Campillo noted one key exception: the leader of the labor organization that represents San Diego’s ambulance workers.
Anthony Sorci, president of the San Diego Association of Pre Hospital Professionals, said his group is neutral about the city’s decision between Falck and AMR.
“We hope the City Council’s final decision will not be influenced by outside entities,” Sorci said last week.
Campillo said that stance “carries a lot of weight” with him.
The city’s independent budget analyst’s report on Falck’s financial projections and its labor track record is scheduled to take a month, so the council’s decision on whether to replace AMR with Falck would be mid-March at the earliest.
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February 14, 2021 at 09:00PM
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Critics question revenue projections, labor practices of San Diego's potential choice for ambulance provider - The San Diego Union-Tribune
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