Ambulance firm’s troubles mount as another executive leaves

Adrienne Packer

Tuesday, March 7, 2000 | 11:04 a.m.

In the midst of negotiations with three local governments, Southwest Ambulance is downplaying rumors of bankruptcy and the recent resignation of another executive at its parent company.

When Mark Liebner, Rural/Metro Corp.'s chief financial officer, resigned Friday, he became the third administrator to abandon the struggling ambulance company since mid-January.

And the spinning front-office turnstile isn't the only challenge for the Scottsdale, Ariz., company.

The firm's stock has plummeted, and its ratings have been downgraded by Moody's Investors Service and Standard & Poor's, which mentioned in a February report the possibility Rural/Metro could file for Chapter 11 bankruptcy protection.

John Wilson, Southwest Ambulance executive partner, said Monday that his company's applications to compete with American Medical Response in Las Vegas, North Las Vegas and unincorporated Clark County are not affected by recent events.

Rural/Metro, which acquired Southwest Ambulance in 1997, is expected to fund the local operation.

Wilson and officials in Rural/Metro's corporate office said rumors of bankruptcy are ludicrous and reiterated their commitment to Southern Nevada.

"That comment was probably made by some overzealous, young Harvard analyst," Wilson said. "Yes, technically that could happen but, yes, that could happen with Laidlaw (AMR's parent company)."

Southwest Ambulance's applications were approved -- with varying conditions -- by the three Southern Nevada governments.

Clark County and North Las Vegas staffs are working on final agreements that would allow Southwest Ambulance to compete with AMR for emergency and nonemergency calls. The Las Vegas City Council will only allow Southwest Ambulance to provide nonemergency service.

Rural/Metro spokeswoman Liz Merritt said the company's financial woes stem from Medicaid and Medicare programs failing to reimburse the company for nonemergency service. She said it's a problem the entire health care industry faces.

The company is in the midst of restructuring to become more efficient and, in doing so, it had to increase its reserve for bad debt. As a result, Rural/Metro lost $42 million last quarter.

Part of the restructuring process will be to lay off about 1,000 employees nationwide and pull out of 30 communities. Merritt said Rural/Metro will void contracts that are solely for nonemergency service.

"What we're having to do is, through a restructuring plan, find ways to operate more efficiently and to improve the revenue stream," Merritt said Monday. "We're taking action to make sure everything gets back on track, and it is."

Although Southwest Ambulance's agreement with Las Vegas is for nonemergency service -- the type of contract the company is trying to shed -- Wilson said Rural/Metro fully supports the proposal.

He noted a significant difference between Las Vegas and the southern United States where Rural/Metro is dropping nonemergency service.

"There are certain markets in the Southeast where Medicaid and Medicare reimbursable levels are so low," Wilson said. "The allowable charges in Nevada are significantly larger. It's a very different market."

Stocks for Rural/Metro reached a 52-week low last month when shares were sold for less than $2. In June, shares sold for as much as nearly $11.

In addition to its stock troubles, Rural/Metro has lost its chief executive officer, executive vice president and chief financial officer.

"We've had a number of changes at the top level, but for large publicly traded companies, that's not completely unusual," Merritt said. "We have a strong leader with a strong background in finance. We have absences, but we are not without talent."

Trace Skeen, AMR's acting executive, said he is empathetic toward Rural/Metro's situation but suggested the company reaffirm that it has the wherewithal to post its letters of credit, which is about $3 million.

Skeen said AMR's primary concern is making all contracts with the three government entities consistent so that the public isn't put at risk.

"I don't know if they know where they're headed," Skeen said. "Our position is we feel we have a responsibility to advocate for a good, financially viable system and make sure patients are served as well as they are currently."

Skeen also emphasized that he would prefer the two cities and the county wait until AMR's contract expires in 2003 before opening up the service to bidding.

Wilson, however, said his company is concentrating on final agreements and setting up a dispatch center that will be compatible with the valley's regional fire alarm system.

He foresees no wrinkles when Southwest Ambulance begins transporting nonemergency patients in the early summer.

"To the end user it's seamless," Wilson said. "We have five fire departments in the valley; there is no reason in the world why two private ambulance services can't operate together."

Adrienne Packer covers county government for the Sun. She can be reached at (702) 259-2310 or by e-mail at adrienne@lasvegassun.com