As Iowa nonprofit ambulance service's costs rise, officials seek sustainability

The ideas to keep MEDIC afloat include establishing a tax levy, reorganizing, keeping the status quo or dissolution


Sarah Watson
Moline Dispatch and Rock Island Argus, Ill.

SCOTT COUNTY, Iowa — When most Scott County residents call 911 for a medical emergency, a staffed ambulance from the nonprofit service MEDIC arrives to take them to a hospital for what can often be life-saving care.

But as costs rise and revenues stagnate, county and city officials are debating what to do to keep the ambulance service sustainable for the long term.

Costs per trip for MEDIC outpace revenues from insurance payments.
Costs per trip for MEDIC outpace revenues from insurance payments. (Photo/MEDIC)

Costs per trip for MEDIC began outpacing revenues from insurance payments in the last several years. And more recently, MEDIC has faced challenges hiring and retaining staffers during the pandemic and has needed to raise wages in a competitive health care labor market, Executive Director Linda Frederiksen said.

Frederiksen presented options this month to the Scott County Board of Supervisors and Bettendorf City Council to keep MEDIC afloat as a county-wide ambulance service. One option, she said, is to establish MEDIC as a taxing entity and another option would be to form an intergovernmental organization. A governmental designation could unlock federal EMT monies that would be a revenue stream for the ambulance service.

"We see a storm in the distance," Board of Supervisors Chairman Ken Beck said. "And we need to be proactive how can we keep a service that has proven to be effective moving forward."

MEDIC, which is governed by a 15-member board, receives an up to $200,000 annual subsidy from Scott County to cover budget shortfalls. In eight of the last 10 years, MEDIC reported losses, most of which were covered by the county's subsidy. The ambulance service finished in the black in 2020 due to pandemic-related loans forgiven through the federal paycheck protection program. Its annual losses from 2017 to 2021 ranged from $8,844 to $170,178.

MEDIC is authorized at 167 employees and has 20 Advanced Life Support Ambulances.

"Revenue drives budget and we have reached the point that we don't see that we can have any more expensive efficiencies and technically be fair to our employees," Frederiksen told the Scott County Board of Supervisors. "So we want to continue to work collectively, really, to try to, you know, pursue this governmental option and basically take advantage of additional revenue streams that have never been available to (nonprofits)."

An increasing share of ambulance users over the last several years have been low-income, elderly and disabled Iowans covered through Medicaid and Medicare. Both government-funded insurance programs reimburse at a lower cost than that of private insurance, making it more difficult for MEDIC to recoup actual transportation costs.

"Unfortunately, both Medicare and Medicaid have fallen well behind the cost of ambulance transportation," Fredericksen said.

Iowa typically ranks in the bottom five states in the country for the share of costs reimbursed, Fredericksen said, sometimes falling 50% below other states.

One option: MEDIC as a taxing body

Under one proposal, the ambulance service would come under the county's umbrella as a "county essential service." This would allow MEDIC to levy a dedicated tax to pay for its services and would require 60% voter approval in a countywide election.

That would allow for a local surtax up to $0.75 per $1,000 of assessed value for up to 10 years. That would generate $7.5 million in fiscal year 2023. Scott County Budget Director David Farmer, however, told the Bettendorf City Council county officials would likely only need to raise a fraction of that — up to $1 million — from county taxpayers, depending on how MEDIC's costs and revenues change.

Two of Iowa's 99 counties use such a system, which would require the creation of an advisory council to oversee the taxing body and MEDIC's financial operations, Farmer said.

"It's very similar to the schools and their revenue purpose statements for their local option save bonds and so forth," he said.

Frederiksen said this method is relatively new, and MEDIC's board has not yet reviewed that option.

Option 2: governments pooling resources

Another option is reorganizing under a 28E, which would be an intergovernmental agreement between city governments and the county to pool money to pay costs not covered by insurance reimbursements. This option, Farmer, said has been evaluated and approved by MEDIC's board.

This option would allow MEDIC to unlock federal Ground Emergency Medical Transportation funds that the Iowa Legislature approved for Iowa's ambulance governmental ambulance services.

Options 3 and 4: status quo or dissolve

Keeping MEDIC as a nonprofit subsidized by Scott County's budget long-term would mean MEDIC would have to rely on static and uncertain revenue streams, which down the road could threaten its existence.

Asked by Bettendorf Mayor Bob Gallagher how long it would take until MEDIC would be in "crisis mode" if city and county governments did nothing, Frederiksen said it was hard to say. But, likely within the next three to five years, some change would need to be made, she said.

"We're seeing the losses continue to progress," Frederiksen said, adding the cost of ambulance service has at least doubled over the past 18 years since she became director.

If MEDIC dissolves, Frederiksen said, the cost to provide ambulance service would fall back on the shoulders of local municipalities and the Scott County Board of Health. Communities would be faced with either incorporating ambulance service as part of the duties and responsibilities of their local fire department or contracting with other nonprofit or for-profit ambulance providers.

A countywide service would ensure a cohesive response regardless of geographic location within Scott County, Frederiksen said.

Bettendorf and Scott County elected officials seemed to favor a countywide system, with the goal to continue some kind of ambulance service.

"We need to do whatever we can to continue your operation," Scott County Supervisor Brinson Kinzer. "We owe it to everybody in Scott County to show them we're not only going to continue but we're going to improve and enhance."

Greg Adamson, Bettendorf's 4th Ward alderman started as a Bettendorf police officer in 1972, and called the ambulance service at the time "horrid."

"I shudder to think of the people that could have been saved that weren't," he said.

"...I just cannot see going back to everybody having their own ambulance. It's just crazy. It's life and death and quality of life for lots and lots of people, so I think whatever we need to do to keep doing what we're doing is so important."

Davenport city council hasn't yet discussed in a public meeting the options for the county's ambulance service.

"The city is actively researching the different service provision models that exist in the state of Iowa and evaluating how ambulance services may be provided in Davenport in the future," City Administrator Corri Spiegel responded in an email. "We remain in the due diligence phase of our work, and I cannot currently predict when the Council might take action."

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(c)2022 Moline Dispatch and Rock Island Argus, Ill.

McClatchy-Tribune News Service

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