By John Woolfolk
The San Jose Mercury News
SANTA CLARA COUNTY, Calif. — Santa Clara County officials have recommended a new ambulance company they say promises better service at lower cost than longtime provider American Medical Response.
But with the Board of Supervisors poised to authorize negotiations with Arizona-based Rural/Metro Corp. for a five-year contract valued at $375 million, officials in San Jose and Milpitas are urging them to hit the brakes.
“The city of Milpitas is really happy with the ambulance service we’re getting now,” said Mayor Robert Livengood. “We want to make sure first and foremost that the county doesn’t screw that up.”
He and San Jose Mayor Chuck Reed have sent letters asking supervisors to allow more public review before authorizing any contract talks.
The cities question whether the smaller Rural/Metro can really deliver more ambulances on the street at a lower cost, as its proposal claims. The company this year replaced its chief executive, who quit for unspecified personal reasons, and has faced takeover rumors from foreign investors.
“This involves a lot of money and public safety, so we need to give it however much due diligence it takes to get it right,” Reed said.
San Jose officials also have a financial interest in the outcome: They worked with AMR in preparing its proposal, with an understanding the deal would increase payments to the city for first-response emergency services.
County Executive Jeffrey V. Smith said he’s not opposed to a delay of a few weeks, but he believes it’s unnecessary.
Tuesday’s scheduled discussion is just the beginning of a public process that will continue for months, Smith said. The board is not scheduled to award the ambulance contract until December.
City officials, however, argue that starting negotiations with one company tilts the analysis in its favor.
“Once you start, that signals that’s the direction you’re going,” Livengood said.
Bryan Gibson, Rural/Metro’s chief operating officer, declined to comment, saying the county’s bid conditions prohibit “any attempt to influence this process.”
But AMR, which has been the county’s ambulance provider in one form or another since the 1930s, agrees with slowing the march toward its potential replacement. “We think we have been providing innovative service year over year,” said Tom Wagner, the company’s regional CEO for Northern California.
County staff explained their recommendation in a nine-page report released earlier in the week. It said the bid evaluation team gave Rural/Metro higher marks in six categories: clinical quality management, price, emergency medical system enhancements, deployment plan, work force and fleet, and equipment.
AMR outshined its rival in one category: financial management.
The report noted that Rural/Metro’s ambulance fleet is larger, and the company deploys those ambulances in a way that produces “a less-strenuous workload for employees.”
And the county report found that Rural/Metro’s costs were 12.8 percent lower overall than AMR’s. “AMR’s proposed rates would result in significantly higher charges to the patients, citizens and visitors of the county,” the report said.
Critics, however, note that San Mateo County two years ago agreed to a new 10-year contract with AMR despite a bid committee’s recommendation to go with Rural/Metro. County supervisors cited the larger company’s financial stability in making their decision.
AMR, the largest private U.S. ambulance service, is a subsidiary of Colorado-based Emergency Medical Services Corp. The parent company has a market value of $2.26 billion and saw 2009 net income grow nearly 36 percent to $115 million, according to business research firm Hoovers.
Rural/Metro, which provides private ambulance and fire services in 20 states, has a market value roughly a tenth the size of AMR’s parent. Its 2009 net income was $5 million, up nearly 23 percent from a year earlier, Hoovers said.
But Smith, a physician who previously ran Contra Costa County’s public health system, said his team has examined Rural/Metro’s numbers and believes its proposal is solid.
“There’s great confidence that they’re accurate and real,” Smith said.
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