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Companies see dwindling profits

Cost of fuel a growing headache for emergency services

Prices at the pumps for gasoline and diesel are becoming more and more of a concern for ambulance companies across the state. The companies have no way to accurately gauge or predict how much fuel they will need during any given period, much less how much that fuel will cost. And because their services are contracted, many ambulance services have no way of defraying that cost.

Factor in issues involving Medicare reimbursement, and ambulance companies are seeing a major erosion of their profits.

Prices up, reimbursement down

The situation at Willie Goss Ambulance Services is a prime example. The company provides emergency ambulance service in Attala County, and also is under contract with the Veteran’s Administration (VA) to serve its facilities from Grenada to the Mississippi Gulf Coast.

When Willie Goss Ambulance Services negotiated its contract with the VA, it called for a budget of $1.50 per gallon of diesel. However, the company is now paying around $3.30 per gallon, and has no recourse but to swallow the increased expense.

“We went to the VA and asked for more money, but they had none,” said Willie Goss, president of the company. “We’ve tried to figure out something to do to offset the cost, but we’ve come up with nothing. It simply comes out of our profits.”

While there is nothing ambulance companies can do now about the cost of the fuel, some were far-sighted enough to allow for the extra cost. Vernon McCammon, fire chief for the City of Southaven who also oversees the Southaven Ambulance Service, said his group readjusted its budget for fuel last year, and that has allowed the North Mississippi ambulance service to weather the current at-the-pump storm.

Southaven Ambulance Service is also sitting prettier than many of its peers concerning the other issue impacting ambulance companies’ bottom lines — Medicare reimbursement. An independent study commissioned by the American Ambulance Association found that Medicare pays, on a national average, 27% less than the cost of service provided to Medicare beneficiaries.

McCammon called Medicare “an interesting animal. If you don’t get your paperwork just right, they can really hurt you.”

He added that Southaven Ambulance Service outsources its Medicare reimbursement work to an outside company, which does an excellent job and frees him from Medicare worries. “Every now and then, Medicare will ask us why we took a patient to Memphis rather than our hospital in DeSoto County,” McCammon said. “We tell them it’s because the patient requested it, and they are satisfied.”

Goss said he does not enjoy that luxury. He said those cuts give his company just that much less “wiggle room” to play with.

Got fuel?

A factor in the fuel price hikes has been the recent hurricanes, which wrecked production and distribution facilities in the Gulf of Mexico and South Mississippi. And Hurricane Katrina caused a double-whammy in Mississippi. The storm created massive power outages, which prevented service stations from being able to pump gasoline even if they had it. This brought about lines for gasoline that sometimes could be measured in miles in the immediate days after Katrina’s landfall.

This left ambulance companies — and the victims they were trying to reach — in a precarious position. They had a hard time finding open gasoline stations with fuel, and often found it impossible to get to the pumps due to the long lines when an open station was found. Lives hung in the balance while ambulances sat with near-empty tanks waiting for fuel.

“We had some of our ambulances turned around at Hattiesburg because there was no diesel available there or south of there,” Goss said. “We were promised there would be fuel when we left, but there was none.”

Goss said a number of fuel providers did a great service by calling his company and promising to reserve fuel for its ambulances. In other instances, law enforcement personnel held pumps open for emergency vehicles so they would not have to wait, though it made more than a few motorists unhappy.

“They got mad at us for breaking line,” Goss remembered. “Can you believe that? Here we were trying to save lives, and they got angry.”

Goss said he has heard no talk of any measures being considered to head off similar problems in the future.

Southaven Ambulance Service had both ambulance and firefighting crews on the Mississippi Gulf Coast in the storm’s aftermath. McCammon said his crews did not see any fuel availability problems, but he knew it was a big concern for others. He, too, said he had heard of no plan to ensure the situation does not arise in the future.

Hospitals hurt, too

Ambulance companies are not the only component of the healthcare industry feeling the bite of higher prices at the pumps. Hospitals, too, have to cope with the skyrocketing fuel prices.

Sam Cameron, president and CEO of the Mississippi Hospital Association, said his members are being affected indirectly by pump prices by paying higher prices for items they need to operate. In short, hospitals’ vendors are passing on the increased fuel costs.

“Suppliers are assessing higher surcharges for fuel, which is driving up the cost of materials, equipment and supplies,” he said.

Cameron added that the increased fuel costs are creating an extra headache for hospitals, which are already facing higher utility bills due to the increased cost of natural gas.

Contact MBJ staff writer Wally Northway at northway@msbusiness.com.

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