MOORLACH UPDATE — Voice of OC — April 19, 2013

The Voice of OC provides two detailed articles below. The first concerns the use of private company paramedics. The reporter was very conversant on the topic and had done an incredible amount of research, which shows in the piece. I attended the California State Association of Counties (CSAC) Executive Committee meeting yesterday and had a chance to discuss the matter with Alameda County Supervisor Keith Carson. His perspective was that Alex T. Briscoe, Director of Alameda County Health Services Agency, strongly encouraged the Alameda County Board of Supervisors to contract with Paramedics Plus because its bid was much lower than that of the predecessor, AMR (American Medical Response). And, just like many of the low bid nightmares I’ve observed here in the OC, where a vendor overreaches to win, Paramedics Plus now realizes that they underbid the contract and want to propose change orders and rate increases. This is a follow up to a recent article on the topic (see MOORLACH UPDATE — Privatizing Paramedics — March 28, 2013). As the article states, the ambulance industry in the OC has a hybrid model that everyone is comfortable with. The recent pilot project by Dr. Stratton of the OC’s Health Care Agency has generated reactions that may be based more on assumption than reality. But I affirm him for the attempt to improve on the hybrid model.

The second piece provides an interesting recounting of one of Tuesday’s Board decisions, this one concerns the Dana Point Harbor. It involves a sole source contract renewal where the prior financial arrangements came under significant scrutiny. In fact, I needed to ask a few questions myself. Supervisor Bates recommended changing the billing relationship from a monthly retainer to actual time and materials billings, which made me more comfortable approving the item.

BONUS: If you are a golfer or know someone who enjoys golfing for good causes, then check out the Chapman University Alpha Kappa Psi golf tournament invitation at the conclusion of this UPDATE. I have had the privilege of speaking to this business fraternity a couple of times in the last two years. (I’ve encouraged them to do well financially in their future careers and to do their best to remain in California, as we need their earning power to pay down the governmental unfunded retirement benefit liabilities that the previous generations have laid at their feet.)

Alameda Experience Reveals Downside of Private Paramedics

By REX DALTON

Last month, when Orange County bucked a 30-year tradition and began an experiment with private paramedics, it brought to the fore a long running debate regarding the wisdom of privatizing the work of lifesaving.

Currently, the experiment is limited only to paramedics doing hospital transfers. Nonetheless, there is a growing concern that this is a first tangible step toward a larger privatization effort.

“I’ve been in this profession for 33 years,” said Wolfgang Knabe, Fullerton and Brea’s fire chief, who heads the Sacramento-based California Fire Chiefs Association. “I’ve seen every model; I know what works and doesn’t. Emergency medical services are not there to make money…a public service provides the most accountability.”

To illustrate the consequences of privatization, Knabe and others point to the recent experience of Alameda County. The Bay-Area county has contracted out its paramedic services for years. But in November 2011, Texas-based Paramedics Plus a new firm took over with a five-year contract.

But things got ugly this year when the company revealed that it had so far lost $9.5 million on the contract and accumulated $3.9 million in county fines for failing to meet performance standards.

Despite these problems, Paramedics Plus is seen by independent authorities as one of the more enlightened emergency firms, and is owned by a non-profit, hospital group based in Tyler, Texas. It primarily operates paramedic systems for public emergency authorities.

And as of now, officials at Alameda County and Paramedics Plus say they won’t fail, but are moving to correct major economic challenges. Company officials say they also likely will seek a rate increase in June.

The key message from Alameda’s experience is that there must be rigorous regulatory oversight for such private operations — something some see as missing in Orange County. “We don’t trust anyone," said Alex T. Briscoe, director of Alameda County’s Health Services Agency, pointing to the heavy fines as proof. “We hit them hard” if they don’t comply with requirements.

The Orange County Fire Authority provides public paramedics to 23 municipal jurisdictions, partnering with a mix of private ambulance companies to transport 911 patients to the closest appropriate hospital. This hybrid model — public paramedics, with for-profit ambulance firms — shifts risk for transport bills to the private firms, as they do most billing; fire agencies generally only receive reimbursement for rescue expenses.

But in contrast to Alameda, Orange County’s system for scrutinizing basic ambulance services is so outdated that firms facing sanctions in other jurisdictions can continue to operate here.

For instance, the city of Los Angeles a year ago fined Shoreline Ambulance Corp. of Huntington Beach $33,750 for improper operations there. Orange County Health Care Agency officials say they don’t have the power to take action against Shoreline Ambulance — to whom the city of Westminster last year granted a new contract to provide ambulances for OCFA paramedic transports.

The firm’s overall track record now is exceeding the contract stipulations, meeting response times in more than 90 percent of the runs.

Despite the issues with its Alameda contract, Dale Feldhauser, the firm’s new manager, says it is the "biggest myth" in emergency services that public paramedics provide higher quality clinical care than private paramedics.

Feldhauser added: “If they do proper cost accounting, they can’t touch [a private firm’s] cost structure.”

Such statements are well received in Orange County, where elected leaders are more than happy to hear someone extol the virtues of private enterprise. Supervisor John Moorlach, for one, has mused publicly about what would be required to have a private paramedic program in the county.

“It is an interesting industry, one I’ve tried the best to figure out,” said Moorlach. However, Moorlach also insisted that "I don’t have an agenda on paramedics."

The Orange County experiment, which will consist of 100 paramedic-assisted calls, is designed to take pressure off busy hospital emergency rooms, HCA officials say. But the Orange County Fire Authority’s firefighters union took strong exception and suggested that it is a stealth campaign to open the door eventually for private paramedics for 911 emergencies.

Alameda’s Briscoe said officials there have no issue with an ambulance company being in business to make money. Yet the county takes its responsibility "to curtail the shameless profiteering in health care" seriously.

“Paramedic companies want to make a profit; we want them to earn a buck," he said. "But our job is to get the highest service at the lowest possible cost for our constituents.”

Alameda even caps Paramedics Plus’ annual profit at 7 percent of net earnings.

The firm won the Alameda contract with a bid for a charge of $1,500 per paramedic transport, officials say, with the losing firm bidding $3,000.

But these numbers are deceiving because in most cases the companies don’t receive that much revenue for the service. Consider, for example that Medicare will only pay around $400 for an ambulance transport and Medi-Cal closer to $200.

Although private insurance can pay considerably more, on average, Paramedics Plus earns about $500 per transport while its costs have been about $600 per run, Feldhauser said.

With such margins, ambulance companies are known for fraud and abuse of governmental programs.

Consider the issues surrounding the private ambulance company that has served Dallas-Forth Worth metro area, the fourth largest in the country.

In 2005, the public ambulance authority for Greater Forth Worth booted Arizona-based Rural/Metro Corp., one of the largest ambulance services, for performance issues.

Fort Worth’s paramedic system now has an annual operating budget of about $35 million, ending last year with $2.8 million in “net returned earnings” to plow back into a better-performing system, said its chief executive, Douglas R. Hooten.

But in Dallas, they faced a potentially disastrous federal lawsuit over years of alleged illegal billing for the city’s fire/rescue service. Dallas had used Southwest General Services, a billing company, that was a subsidiary of Rural/Metro. Now-defunct, Southwest General was alleged to have defrauded Medicaid and Medicare, records say.

In 2011, Dallas paid nearly $2.5 million to settle the case; with a dozen other outlying cities paying $1.7 million for similar irregularities.

Other California governments have followed Alameda’s crackdown course. Since July 2011, Santa Clara County officials say they fined Rural/Metro $4.5 million for failing to adequately meet paramedic response times.

Already, Orange County’s experiment with private paramedics is attracting interest from small ambulance firms in Los Angeles — where authorities have cracked down on wayward operators.

On March 29, Orange County officials received a letter from Impulse Ambulance Inc. of North Hollywood criticizing the county’s method for launching the paramedic transport program, alleging violations by other ambulance firms here, and seeking to participate in future paramedic endeavors. Impulse Ambulance is permitted by the Orange County HCA to operate ambulances staffed by emergency medical technicians here, but uses paramedics and nurses for interfacility transports in Los Angeles.

In an April 1 letter, Dr. Samuel J. Stratton, the HCA’s emergency/disaster services’ medical director, responded:

Disputed criticism of the program’s launch, said allegations of staffing ambulances with unlicensed personnel would be investigated, and noted other private paramedic operators can seek to be interfacility transport services.

Rex Dalton is a San Diego-based journalist who has worked for the San Diego Union-Tribune and the journal Nature. You can reach him directly at rexdalton

Controversial Dana Point Harbor Contract Extended Five Years

By NICK GERDA

Orange County supervisors on Tuesday approved a $4.7-million, five-year extension of a controversial contract to oversee the massive revitalization of Dana Point Harbor, a project that’s long been mired in controversy and delays.

Under a 2003 project management contract that has been extended five times, Project Dimensions Inc. (PDI) has been paid an average of $834,000 each year so far. With this week’s approval, it will now receive as much as $1 million annually to manage the project.

According to county records, the contract was originally for $7 million and scheduled to expire in 2008. It is now for $13.2 million and set to end in 2018.

Accusations flew at Tuesday’s meeting that county officials turned a blind eye to incompetence by PDI that allegedly cost thousands of dollars.

Bruce Heyman, president of Boaters for Dana Point Harbor, told supervisors that PDI submitted a land use plan to the California Coastal Commission that wasn’t formatted correctly.

The firm then spent the next five months correcting the submission at county expense, said Heyman.

“Why was PDI not held accountable? It was their expertise that was hired for the crafting of the LCPA,” said Heyman. “Good contract management would have held PDI accountable and forced them to correct the errors on their nickel, not ours.”

Supervisor Pat Bates, whose district includes the harbor, replied that concerns about PDI had been addressed by a county staff review.

“They have consistently performed in a manner benefiting the harbor,” said Bates, adding that questions raised by Heyman and a former policy aide to Chairman Shawn Nelson have been examined by several county departments.

PDI didn’t respond to request for comment.

The former policy aide, David Zenger, said he found a hornet’s nest of bad management and inefficiency by PDI.

“It is absolutely asinine. It is complete and total mismanagement,” said Zenger, questioning whether PDI is even qualified for the job.

Zenger, who was fired last week by Nelson after looking into the contract, said he couldn’t find any evidence that PDI has prior experience managing a large, critical public works construction project.

And he questioned why the contract has been extended from five years to 15 without going back out to bid.

“They have no incentive to get the project built on schedule,” said Zenger.

Chairman Nelson said Zenger’s dismissal was not related to his investigation of the PDI contract, adding that he valued Zenger’s work at his office.

"Dave and I were asked by Supervisor Bates to look into it," Nelson said, adding that the contract needed "lots of clean up to get it right."

Zenger also questioned why PDI’s contract was changed in 2006 so the firm got an automatic monthly payment regardless of the work they performed.

The staff report to supervisors incorrectly stated that the flat fee arrangement already existed, according to Zenger.

Several speakers on Tuesday praised PDI’s work, with Jim Miller of the Dana Point Harbor Association saying he’s been “consistently impressed” with the firm’s level of service.

The firm’s supporters cited PDI’s involvement in public outreach meetings and extensive knowledge of the project.

Supervisor John Moorlach questioned the monthly retainer structure of the contract, pointing out to Brad Gross, director of the Dana Point Harbor Department, that payments seem to keep increasing over time.

“I’m a little concerned, Mr. Gross,” said Moorlach.

Gross replied that the county was fully utilizing PDI’s two employees for the project — one paid $190 per hour and the other $78 per hour.

“They’ve been involved all the way through,” said Gross, pointing to PDI’s involvement with two environmental impact reports and more than 20 boater outreach meetings.

Moorlach ultimately said he was comfortable with the contract extension.

At the end of their discussion, supervisors decided that the contract extension should be structured with fixed time and materials, though it was unclear how that would affect cost.

Norberto Santana Jr. contributed to this report.

You can reach Nick Gerda at ngerda, and follow him on Twitter: @nicholasgerda.

FIVE-YEAR LOOK BACKS

April 19

2008

With an opening for County Sheriff-Coroner, the applicants started rolling in. There were up to 20 candidates a week prior. By Thursday there were just over 30, and on Friday, there were 47 candidates. It gave me the sense of an eBay auction when everyone jumps in during the final minutes. On Saturday, Christian Berthelsen and Stuart Pfeifer of the LA Times provided the results in “Dozens apply for Orange County sheriff’s job – Applicants from 14 states and three countries are on the list of candidates. Supervisors invite the public’s opinion at a May 6 meeting.” You know the results of this process, so I’ll provide the article in full. The winning candidate was so obscure in this piece, that you may enjoy the drama that unfolds in upcoming LOOK BACKS.

Nearly 50 candidates from 14 states and three countries have applied to become the next sheriff of Orange County, ranging from the executive director of Interpol in France to an electrician’s assistant in Garden Grove, according to a list the county released Friday.

The list includes several local candidates who had already expressed their interest in the office, including current acting Sheriff Jack Anderson, Santa Ana Police Chief Paul Walters, former Orange County Sheriff’s Lt. Bill Hunt and Los Angeles County Sheriff’s Cmdr. Ralph Martin. Walters, Hunt and Martin all ran against former Sheriff Michael S. Carona and lost.

Among the candidates are six current and former city police chiefs and three current and former county sheriffs. None of the candidates has led an agency as large as the Orange County Sheriff’s Department, which is the second-largest in the state with about 1,900 sworn personnel.

Five of the candidates are current or former members of the department. There appeared to be only two women on the list.

Among the other more high-profile applicants were the undersheriff of the Bronx, N.Y., department; the head of the FBI office in Jackson, Miss.; an assistant director of the U.S. Department of Homeland Security; and the director of the Miami-Dade County corrections department.

The more obscure applicants included the owner of a liquor business in Bel Air, Md.; the retired police chief of Duck, N.C.; and an office manager for the Hamilton County, Ind., Superior Court.

The county hired a recruiting firm to seek candidates for the post Carona vacated in January, when he stepped down to focus on fighting a federal corruption indictment. The county Board of Supervisors has invited public comments on the search at its May 6 meeting; the board plans to conduct public interviews of the final candidates on May 27 and make a decision June 3.

John Moorlach, chairman of the board, said the list of candidates rapidly expanded during the final week of the application period, to the 47 on Friday.

"I’m real pleased with all the response," he said. "It caught us off guard."

"In light of the way that Carona left office, it was important to me that they do this nationwide call so at the end of the process whoever is selected is validated and helps restore confidence in the organization," Anderson said Friday. "Of course, I hope that’s me."

Wayne Quint, president of the deputies’ union, said the number of applicants was a sign that the job and the department are among the best in the United States.

He said he hoped the Board of Supervisors was not afraid to look outside the region for a new sheriff.

"The old Carona regime must go," Quint said. "Anyone associated with Carona must go. I hope the county hires someone who truly will put the interests of public safety first and foremost above politics and they hire the most qualified candidate, local or not."

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