These are difficult times for the ambulance industry.

A new contract may emphasize patient outcomes more than response time.

Nationwide, emergency transport companies are facing a double whammy of trying trends that have strained their ability to do the one thing everyone wants from an ambulance service: respond quickly to calls.

First is a struggle to maintain trained staff, which for ambulances means emergency medical technicians (EMTs) and paramedics. Second is a struggle to unload patients in a timely fashion at hospital emergency rooms, which are themselves facing staffing and resource crunches.

Both of those struggles predated the COVID-19 pandemic, but the increased stresses on the healthcare system that hit in 2020 has greatly exacerbated them.

“I believe the pandemic exposed what was already a problem,” said Josh Spencer, regional director for American Medical Response (AMR), the nation’s largest private ambulance company and the current contractor for emergency response in Knox County. “It didn’t necessarily make a problem.”

Still, the challenges have reached a point where the county has decided to update its ambulance agreement for the first time in a decade to reflect the new realities. County officials plan to issue a request for proposals this June or July and award the contract in August or September.

AMR’s current contract with the county runs through the end of January 2024, and the company has signaled its intentions to compete for the new one and continue its local service.

One of the handful of competitors it may face is already operating in Knox County, and is in fact based here. Priority Ambulance was founded here in 2014 and has headquarters on Cogdill Road just off Pellissippi Parkway. It provides both emergency and non-emergency services across 13 states, including transports to and from Knoxville nursing homes and residential facilities.

“We do a lot of long-distance transports from the hospitals to residences,” said Bryan Gibson, Priority’s president and CEO. “Knoxville is a tertiary care center, and a lot of patients come from the surrounding market, not just Knox County.”

Depending on which metrics you use, Priority is either the second- or third-largest player in the industry nationwide. It is interested in the Knox County contract, but Gibson said he will wait and see the details of the RFP before deciding whether to respond.

But a look at both companies’ operations helps illuminate the current state of the ambulance industry and the challenges either would face in serving the county’s nearly half-million residents.

AMR: The Incumbent

According to the National Association of Emergency Medical Technicians, about half of all ambulance services in the United States are run by municipal fire departments. That includes almost all of the country’s largest cities.

About 15 percent are run by separate government agencies, 7 percent by hospitals, and 18 percent by private companies.

Knox County is in the latter category. Although the Knoxville Fire Department has trained EMTs who respond to 911 calls — and often arrive before an ambulance gets to the scene — it does not provide transportation. AMR responds to 911 calls throughout Knox County, both inside and outside city limits.

Knox County does not directly pay for ambulance service. Instead, it contracts with a provider that is paid on a fee-for-service basis by patients who use it (either through insurance or out of pocket). The county last let the contract in 2013, with Rural Metro winning the bid.

But in 2015, AMR purchased Rural Metro and assumed the ambulance contract. Rural Metro — now an AMR subsidiary — still provides subscription fire protection service outside city limits. In 2017, AMR itself was purchased by the private equity giant KKR, which combined it with other healthcare companies to create Global Medical Response.

None of that affected the Knox County Contract, and in 2017 Commission approved a five-year renewal. Commission extended that again last year to 2024, with the goal of rewriting the contract and putting it back out to bid.

Spencer said AMR supports revisiting the contract. “From 2013 to 2023, the world has changed dramatically,” he said.

Some parts of the current contract, including mandatory response times, have become difficult to fulfill since the onset of the COVID-19 pandemic. The contract requires an ambulance to arrive anywhere in the county within 17 minutes of a call, and penalizes the provider $250 a minute for each minute over.

If AMR hits what the industry calls “level zero” — meaning no ambulance is free to respond when a call comes in — that brings larger fines, starting at $5,000 per incident. Because of persistent late response rates, which AMR says are caused primarily by backups at emergency rooms, County Commission has waived millions of dollars in fines for AMR in the past three years.

Spencer said AMR could technically leave patients at hospitals before they’ve been checked in, but that would leave them with no medical personnel monitoring them.

“We as an EMS provider are here to take care of patients,” he said. “The way the current contract is structured, it almost forces us to choose between penalties or patients.”

AMR currently has about 250 employees running its Knox County service, with about 80 percent of them EMTs and paramedics. It has been aggressively raising starting salaries in recent years to recruit new staff, and it also will pay EMTs to attend further education to become more highly-skilled paramedics.

It has taken other steps in recent years to address the current challenges, including:

• equipping a non-ambulance rapid response vehicle that can respond and begin providing medical help to a patient while awaiting an ambulance;
• developing telehealth capacity so that patients whose reported symptoms don’t appear to require an ambulance can speak to a medical professional remotely;
• working with hospitals to create and staff “departure lounges” for people who are being discharged but awaiting transportation, to free up hospital beds more quickly.

Spencer said he isn’t opposed to time and performance penalties in the new contract, but he thinks it should take account of response options beyond just ambulance arrival and transport. In other words, what actually happened to the patient? Did they receive the medical attention they needed?

“If I was going to pick, it would be more focused on clinical outcome than response time,” Spencer said. “I think that’s absolutely key.”

Last year, AMR entered into a new contract in Blount County built around outcomes-based performance. 

Although Spencer acknowledged that any incumbent provider could be perceived as having an “inside track” on a new contract, he said he expects the county to fairly evaluate and weigh any bids it receives. On the other hand, it has been on the receiving end of any complaints about current service delays.

“Truthfully, we don't know if we have an advantage or not until we see what the RFP looks like,” Spencer said.

Priority: The Potential Challenger

Gibson is waiting to see the RFP as well, for more or less the same reason. Although Priority provides emergency ambulance service in cities and counties across the country, it only bids on contracts it thinks have reasonable terms. 

“We say on the front end, ‘What you’re asking for might or might not work,’” Gibson said. “Our company just doesn’t want to get into situations that we have to (ask for amendments).”

As an example, he cited the Blount County contract, which Priority did not bid on last year. It had bid the previous time the contract was let but with exceptions.

“We said basically, we think your RFP does not work without amendments,” Gibson said, noting that that contract did end up being amended.

The new Blount County contract was drawn up with help from Fitch & Associates, the same consultants Knox County has hired to guide its RFP process.

Gibson started in the business as a paramedic with the Memphis Fire Department and then decided to start his own ambulance company that he called Priority. It was subsequently purchased by Rural Metro in 1997, and Gibson went to work for that company, becoming head of its Southeast division — which included Knoxville.

“Ironically, the contract AMR’s operating under has my signature on it,” he said.

He rose through promotions to become Rural Metro’s national chief operating officer, moving to Scottsdale, Ariz., where the company’s headquarters were. But he departed in 2011 when the company was sold to yet another investment firm.

When that firm ended up in bankruptcy two years later and AMR moved to acquire Rural Metro, Gibson — who, he said, “thought I was retired” — saw both an opportunity and a need for another player in the marketplace.

“I knew that the industry itself, the private side, needed a yin for the yang, if you will,” he said.

Gibson took on investors and started with a small ambulance company in Alabama that he was already operating for a hospital system. From there, he started strategically acquiring existing services across the country. For the name, he went back to the original company he had first sold to Rural Metro.

Although Priority has built up a sizable footprint, its name may not be familiar even to many of those it serves — as part of his business strategy, Gibson has maintained the existing names and brands of most of the companies he has acquired. He said people tend to trust companies they already know.

“If you go to Atlanta, we’re Central Ambulance,” he said. “If you go to Chattanooga, we’re Puckett. If you go to Athens, Georgia, we’re National.”

And if you go to Knox County, Priority — despite not having the local emergency contract — is something that AMR is not: a local company. Gibson was already familiar with Knoxville from his previous work with Rural Metro, and he and his wife decided to settle here when he founded Priority.

The company now has about 4,500 employees nationwide — just over 1/10th the size of AMR, which has about 40,000. When it wins a new contract, Gibson said Priority tries to absorb employees from whatever company previously had it. So, e.g., AMR employees currently working in Knox County would have the opportunity to become Priority employees.

Rob Webb, Priority’s vice president for East Tennessee, said the company currently has about 17 ambulances stationed in Knox County to handle its nonemergency services here, and another two in Blount County. They provide “interfacility transfers” — between hospitals and residential facilities, e.g. — and other nonemergency transports.

“We’re moving ventilator patients between hospitals, we’re making emergency transfers between hospitals, and we’re doing some routine dialysis trips, skilled nursing facilities,” Webb said. “And we do respond to emergency calls at AMR’s request when they’re on overload.”

Priority does provide emergency service one county over, in Loudon County. Travis Estes, who directs that service, said the company is responsible for anything requiring an ambulance throughout the county, from emergencies to transfers to providing standby crews at public events. 

Estes said Priority also runs into long wait times at emergency rooms, including Knox County emergency rooms. “I don’t think there’s a service in the United States that does not have to deal with this,” he said. “This is a national and international problem.”

He said Priority, like AMR, is working with hospitals to try to address the problem.

Next Steps

AMR and Priority are not the only possible contenders when the county’s RFP is released, but they are the two most likely. Both appear to be gearing up for possible bids, including with public relations and lobbying assistance.

AMR is an existing client of local communications veteran Mike Cohen, who will no doubt help with the company’s messaging and outreach. Priority is working with Moxley Carmichael and Dean Rice, former chief of staff to then-Knox County Mayor Tim Burchett. 

However, both will no doubt take a careful eye to the county’s requirements.

“I applaud Knox County for doing what they’re doing,” Spencer said. “They’re trying to get ahead of a major problem in the community as it relates to health care and EMS in general.”

Gibson said he’ll be looking for a contract that seems sustainable.

“It should be a reasonable bid that the operator could do,” he said. “And they should hold them accountable for it.”