Analysis: Ambulance firms waged war before

Adrienne Packer

Friday, Dec. 17, 1999 | 11:43 a.m.

Each time a lucrative ambulance contract expires across the country, American Medical Response and Rural/Metro Corp. are at the scene to convince governments they can resuscitate ailing service performances.

If one of the country's two leading ambulance providers is making its case for a change, it's usually the other that's fighting to hold onto the contract.

The war between AMR and Rural/Metro, which owns Southwest Ambulance, has already played out in Florida, Texas, Colorado, Georgia and California. Now the two companies are engaged in heated battles in Las Vegas and Tucson, Ariz.

In Las Vegas, AMR is defending its turf and franchise agreement from Southwest Ambulance, which wants a piece of the profitable market. Just down the highway, the roles are reversed.

With both the Clark County and Pima County contracts up in the air, both competitors are accusing the other of making sales pitches based solely on what the governing bodies in each jurisdiction want to hear.

In Clark County, AMR officials have repeatedly said a single ambulance provider system is most efficient. But Southwest claims its competitor spins a different tale across the border in Arizona.

John Wilson, Southwest's executive co-partner and former AMR administrator, used the following quote from AMR's application in Arizona to prove his point: "In Pima County, essentially, a monopoly exists. As such there is no opportunity for limited competition based on service quality."

Likewise, in Pima County, Southwest Ambulance officials insist AMR must show a need for a second provider before it is granted a certificate to do business. In Las Vegas, Southwest disputes that same point, which was made by AMR.

AMR Chief Executive Officer Mike Williams said Southwest's interpretation of the application is typical of the way his competitor has spun AMR's statistics and statements throughout the country.

"We didn't go down there to argue that monopolies are bad," Williams said. "We don't speak out of both side of our mouths."

Because the two competitors have clashed so frequently, they are both well acquainted with each other's strategies.

Wilson said AMR's most transparent strategy was the lawsuit filed Monday against Clark County. The lawsuit claims the county violated its own code by accepting Southwest's application even though it failed to address a need for a second provider or explain how it will setup its dispatch center.

It was filed two days before the North Las Vegas and Las Vegas city councils were scheduled to consider the same application.

What Wilson called a "delay tactic" worked. The lawsuit paralyzed both city councils, which opted to postpone the decision until the lawsuit is resolved.

Wilson said AMR is fighting Southwest's application because it is up for sale by its parent company, the Ontario-based Laidlaw Inc., and a monopoly is worth more money.

Williams disputed Wilson's claims and reports that Laidlaw put AMR on the market in September because of stagnant investments in health care.

"Laidlaw is a public transportation company, and I think they have decided after a number of years that ambulance transport doesn't fit into their portfolio," Williams said. "It's in their investors' best interest."

AMR is the country's largest ambulance service provider. It has a fleet of 5,000 ambulances in 37 states and employs 23,000 staff members, according to the Denver Business Journal. Last year, it reported a revenue of $1 billion, the Journal wrote. "They are (selling AMR) in such a way to make sure a qualified bidder takes ownership of AMR," Williams said. "You have to have at least $1 billion to take a look at AMR's portfolio. There aren't too many people with $1 billion that will come in and pare a company up. They want to grow and do good things with it."

The Las Vegas market is important to AMR, but the reason why depends upon who is asked.

Williams said AMR's operation in the Las Vegas Valley is touted as one of the most effective systems in the country. The quality of service is the pride of the company.

But Wilson offers a different opinion. He said AMR's grip is slipping in the tug-of-war game, and Las Vegas is an extremely valuable market for the ambulance service.

"Pound for pound, Las Vegas is the most lucrative operation AMR has nationwide," Wilson said.

AMR has suffered some noteworthy losses during its battles with Rural/Metro. In February, the company lost a five-year contract worth $53 million in the Dallas/Fort Worth area, which is where Laidlaw's U.S. headquarters are located.

In 1998, Rural/Metro took over the contract in AMR's hometown of Aurora, Colo., but Williams emphasized that its contract had expired and AMR chose not to compete in the bidding war.

He said the competition in Nevada and Arizona differs from the battles that have taken place in other states because the contracts have been put before the governing entities before they expire.

AMR's contract with Clark County and the two cities expires in 2003.

"When contracts go out for (requests for proposals), then we consider whether we wish to bid on them," Williams said. "We think you should compete for the market not in the market."

Muddling the decision for the Las Vegas City Council is its recent decision to allow its fire department to handle 10 percent of the transports that previously were taken by AMR.

Aside from the lawsuit, the council delayed its decision Wednesday to allow time to evaluate what role its fire department will play in providing the service.

Wilson and partner Sharon Henry, also a former AMR administrator, urged council members to allow Southwest to be a part of the discussions with city fire officials.

The request might be a clue about Southwest's strategy.

In 1998, Rural/Metro underbid AMR by $6.5 million when it entered an agreement with the San Diego firefighters to jointly provide fire and emergency medical services, according to news reports. The savings in overhead costs are expected to save taxpayers $10 million over five years, the report says.

"We have always said we want to look for the most cost effective and best service models we can put together," Wilson said. "We will work with each fire department if that provides the best service."

Analysis