EMERGENCY MEDICAL SERVICES FEES
COST ANALYSIS
CITY OF SANTA MONICA
Final Report
May 15, 2024
M GTCONSULTING.COM
ATTACHMENT C
M GTCONSULTING.COM
City of Santa Monica
Emergency Medical Services Fees Cost Analysis
May 15, 2024
TABLE OF CONTENTS
INTRODUCTION ............................................................................................................. 1 BACKGROUND AND OBJECTIVE .................................................................................... 1 STUDY FINDINGS ........................................................................................................... 2 METHODOLOGY ............................................................................................................ 2 FEES CHARGED VS FEES COLLECTED ............................................................................. 4 PEER COMPARISONS ..................................................................................................... 6 SUMMARY AND RECOMMENDATIONS ......................................................................... 6
ATTACHMENT C
City of Santa Monica May 15, 2024
Emergency Medical Services Fees Cost Analysis Final Report P a g e | 1
Introduction
MGT is pleased to present the City of Santa Monica (City) with this summary of findings for the Emergency Medical Services (EMS) fees cost analysis.
The City engaged MGT to conduct an analysis of the Fire Department’s cost to provide Basic Life Support (BLS) and Advanced Life Support (ALS) emergency transportation. The cost analysis also included what department’s projected revenue would look like if the City set fees at the Los Angeles County Emergency Medical Services Agency’s (County) maximum allowable rates for emergency ambulance transportation.
MGT performed the analysis using fiscal year 2023-2024 budgeted figures, staffing, and operational information.
City policy is to recover, through fees, the full cost of providing services that provide benefit to the person or entity using the service. However, the City Council has made exceptions to this policy when it has determined that a subsidy from the general fund would be in the public interest.
Background and Objective
The Santa Monica Fire Department (SMFD) currently contracts with McCormick Ambulance to provide emergency medical transportation within the City. McCormick Ambulance responds to calls for service with an ambulance and is accompanied by an SMFD fire engine.
McCormick charges rates published by Los Angeles County Emergency Services Agency. The most recent rates published by the County, effective July 1, 2023, through June 30, 2024, include the following:
Response to an emergency call with equipment and personnel at an ALS level: $3,252 Response to an emergency call with equipment and personnel at a BLS level: $2,171 Mileage rate: $28
Oxygen tank: $114
When McCormick responds to an ALS transport call, they pay SMFD the difference between the BLS rate and the ALS rate, or $1,081. They do not pay SMFD for responses to BLS calls or any other emergency services other than ALS transports.
On occasion, McCormick is not able to respond to emergency medical calls. When this occurs, SMFD staff must respond to the call and treat the patient and/or transport them to the hospital. There is no mechanism for SMFD to charge for these services; therefore, their cost is not being recovered.
This study only analyzed the estimated cost and revenue for EMS calls with ambulance transports. Treatno-transport cost was not included in the analysis. If the study were conducted on the costs and revenues associated with all EMS calls, then the cost recovery rate of the BLS and ALS transports would be much lower.
ATTACHMENT C
City of Santa Monica May 15, 2024
Emergency Medical Services Fees Cost Analysis Final Report P a g e | 2
SMFD is proposing that the City’s decision makers adopt the above County rates, giving SFMD the ability to charge for ALS and BLS ambulance transportation when McCormick is not available.
This report details the full cost of providing these services and shows that the cost would not exceed the revenue collected if SFMD charged the County rates listed above.
Study Findings
As shown in Exhibit 1, the analysis shows that the full cost of transporting patients at an ALS level is $1,644 and $829 at a BLS level. At an estimated 50 transports per year, the annual cost would be $57,740.
Although SMFD is proposing to charge the LA County EMS rates of $3,252 and $2,171 for ALS and BLS transports, respectively, the average fee collected for each is estimated to be $1,075 for ALS and $712 for BLS. The cost recovery for transports is therefore projected to be 74%, with 28% of the cost needing to be subsidized.
EXHIBIT 1. COST AND REVENUE SUMMARY
Methodology
A cost-of-service study is comprised of two basic elements:
Hourly rates of staff providing the service.
Time spent providing the service.
The product of the hourly rate calculation times the time spent yields the cost of providing the service.
Service Name Fee
Description
# of
Transports
LA County
EMS Rates
Average Fee
Collected Full Cost Cost
Recovery % Annual Cost Annual Revenue
Annual
Subsidy
ALS Emergency Transport Flat fee 20 $ 3,252 $ 1,075 $ 1,644 65% 32,875 $ $ 21,500 $ 11,375 BLS Emergency Transport Flat fee 30 $ 2,171 $ 712 $ 86% 24,865 829 $ $ 21,366 $ 3,499 Total User Fees $57,740 $42,866 $14,874
% of Full Cost 74% 26%
Per Unit Annual
Current
ATTACHMENT C
City of Santa Monica May 15, 2024
Emergency Medical Services Fees Cost Analysis Final Report P a g e | 3
Hourly Rates
The hourly rate methodology used in this study builds indirect costs into city staff hourly salary and benefit rates to arrive at fully burdened hourly rates. Fully burdened hourly rates are a mechanism used to calculate the total cost of providing services. Total cost is generally recognized as the sum of the direct cost together with a proportionate share of allowable indirect costs. The proper identification of all costs (including labor, operating expense, department administration and citywide support) as “direct” or “indirect” is crucial to the determination of the total cost of providing services.
Direct costs are typically defined as those that can be identified specifically to a particular function or activity, including the labor of persons working directly on the specific service for which the fee is charged, and possibly materials or supplies those people use for the task. Indirect costs are those that support more than one program area and are not easily identifiable to specific activities. Examples of indirect costs are: 1) departmental administrative and support staff, 2) training and education time, 3) public counter and telephone time, 4) some service and supply costs, and 5) citywide overhead costs from outside of the department as identified in the City’s cost allocation plan.
MGT’s hourly rate calculation methodology includes the following:
Personnel Services Analysis – each staff classification within the department or division is analyzed in the study. The first burden factor is comprised of compensated absences such as vacation/holidays/sick leave days taken in a year’s time. Staff classifications are then categorized as either direct (operational) or indirect (administrative or supervisory) labor. In some cases, a classification will have both direct and indirect duties. The total indirect portion of staff cost is incorporated into hourly overhead rates.
Indirect Cost Rate – a ratio of indirect cost to direct labor (salaries plus benefits) is established. There are three elements of indirect cost incorporated, including:
Indirect Labor – includes total compensation, administrative and supervisory staff costs. Other Operating Expenses – most services and supplies are included as a second layer of indirect cost and are prorated across all fees and services. There are some service and supply expenses classified as “allowable direct. Some examples of these are professional services expenses, or sports supplies. These allowable direct expenses would be directly associated with specific fees or programs, as opposed to being allocated across all activities through the indirect overhead. External Indirect Allocations – this represents the prorated portion of citywide overhead (from the City’s cost allocation plan) which is attributable to the service for which the fee is charged.
Fully Burdened Hourly Rates – incorporates all the elements that comprise the hourly rates used in this cost analysis.
Each direct or operational staff classification is listed, together with the average annual salary. The hourly salary rate is calculated by taking the annual salary of an employee and dividing by 1,624 available productive hours in a year.
ATTACHMENT C
City of Santa Monica May 15, 2024
Emergency Medical Services Fees Cost Analysis Final Report P a g e | 4
The benefit rate reflects the average benefit rate as a percentage of the salary rate. Multiplying this percentage by the hourly salary rate determines the benefit rate to be included in the fully burdened rate.
The overhead rate is derived by multiplying the internal and external indirect cost rates against the salary plus benefit rates.
The total combines the salary, benefits, and overhead rates. This is the fully burdened rate for each staff classification. MGT prepared indirect overhead rates and corresponding hourly rate calculations using Adopted FY 2024 budgeted expenditures.
Time Spent
Once fully burdened hourly rates were developed for city staff, the next step in the process was to identify staff time spent directly on each of the user fee activities. Each staff person involved in the user fee services identified time spent to complete each task associated with all user fee services. Annual volume statistics were also gathered in order to develop total annual workload information. This information is provided in detailed user fee workbooks which were provided to the City upon completion of the study.
Fee Calculations and Revenue Projections
Given this information, MGT was able to calculate the cost of providing each service, both on a per-unit and total annual basis (per-unit cost multiplied by annual volume equals total annual cost). As mentioned above, costs were calculated by multiplying per-unit time estimates by the hourly labor rates; additional operating expenses directly associated with certain services were also added in. Full costs are then compared to current fees/revenues collected, and subsidies (or over-recoveries) are identified.
Fees Charged vs Fees Collected
As shown in Exhibits 2 and 3 below, although SMFD is proposing to charge LA County EMS fees, the amount of fees collected is likely to be far less, due to the payor mix of patients being served. The exhibits show the estimated payor mix, based on historical data provided by the City’s billing vendor, the expected fee amount collected for each type of payor, and the average collection per transport.
EXHIBIT 2. ALS FEES COLLECTED VS CHARGED
ATTACHMENT C
City of Santa Monica May 15, 2024
Emergency Medical Services Fees Cost Analysis Final Report P a g e | 5
EXHIBIT 2. BLS FEES COLLECTED VS CHARGED
Given this expected payor mix, SMFD’s estimated cost recovery at the County’s EMS rates is projected to be 65% for ALS transports and 86% for BLS transports, as shown in Exhibits 3 and 4.
EXHIBIT 3. ALS COST RECOVERY AT LA COUNTY EMS RATES
EXHIBIT 4. BLS COST RECOVERY AT LA COUNTY EMS RATES
Description
Total ALS
Transport
Total Costs $32,875
Forecast Recoveries $21,500
Cost Recovery - ALS Transport 65%
Description
Total BLS
Transport
Total Costs $24,865
Forecast Recoveries $21,366
Cost Recovery - BLS Transport 86%
ATTACHMENT C
City of Santa Monica May 15, 2024
Emergency Medical Services Fees Cost Analysis Final Report P a g e | 6
Peer Comparisons
At least 17 cities in Los Angeles County charge ambulance fees conforming to LCEMSA’s allowable rates.
See Exhibit 5 below.
City ALS BLS Mileage Oxygen
Alhambra $3,252 $2,171 $28 $114
Arcadia $3,252 $2,171 $28 $114
Avalon $3,252 $2,171 $28 $114
Burbank $3,252 $2,171 $28 $114
Culver City $3,252 $2,171 $28 $114
Downey $3,252 $2,171 $28 $114
El Segundo $3,252 $2,171 $28 $114
Glendale $3,252 $2,171 $28 $114
Hermosa Beach $3,252 $2,171 $28 $114
La Verne $3,252 $2,171 $28 $114
Manhattan Beach $3,252 $2,171 $28 $114
Monterey Park $3,252 $2,171 $28 $114
San Gabriel $3,252 $2,171 $28 $114
San Marino $3,252 $2,171 $28 $114
Sierra Madre $3,252 $2,171 $28 $114
South Pasadena $3,252 $2,171 $28 $114
West Covina $3,252 $2,171 $28 $114
EXHIBIT 5. CITIES IN LOS ANGELES COUNTY CHARGING LA COUNTY EMS RATES Summary and Recommendations
At this time, SMFD is not currently charging a fee for ambulance transports when McCormick Ambulance is unable to respond to calls. SMFD recommends the City’s decision makers adopt the Los Angeles County EMS Agency rates for ALS and BLS emergency ambulance transports, mileage, and oxygen.
Adopting these fees will allow the City to recover approximately 74% of its cost for ambulance transports. SMFD proposes including the following language in the fee schedule:
Fees for emergency transports provided by SMFD shall conform to the current rates allowed by LA County Dept of Health Services, General Public Ambulance Rates.
ATTACHMENT C