Updated June 2015
A former longtime executive with Rural/Metro, Robert “Boo” Heffner made headlines in 2010 when he accused the company of cheating the city of San Diego out of revenues generated by San Diego Medical Services Enterprise (SDMSE). For years, SDMSE was cheered as an example of a public-private partnership done right, benefiting the city, the company and patients. But soon after Heffner’s charges were made public, the city auditor issued a report claiming the ambulance company had withheld millions between 1997 and 2007.
After months of investigations, negotiations and media coverage, an independent accounting firm found “no evidence” that Rural/Metro had fraudulently withheld revenue. Rural/Metro agreed in mediation to pay a $1.4 million settlement to cover the city’s costs, while the city announced that it would put the contract out to bid. (As of June that had not been done.)
Shortly before bringing his whistleblower suit, Heffner had been fired from his job for allegedly violating the company’s expense reimbursement rules. Shocked by what he viewed as a wrongful termination and knowing the city was preparing to audit SDMSE, he says he had to speak out to protect himself. “There were a lot of things I just blatantly and categorically disagreed with. I felt under no circumstance was I going to have any of that laid upon me,” Heffner says. “I had been let go by the company, obviously as a complete surprise. From a defensive perspective, I had stayed hush long enough and I felt it was time for the story to be known.”
Heffner was out of a job only briefly before being hired by Falck, a company based in Copenhagen, Denmark, that operates EMS, fire suppression and other services in 37 countries worldwide. During the time Heffner was with Rural/Metro, Falck held a 15% stake in that firm but sold its shares when a private equity firm bought Rural/Metro in March 2011. Of Falck, Heffner says, “Our values were 100% completely aligned. I had a close relationship with them over 10 years, and I made the decision very quickly that Falck was the company I wanted to go with.”
As the youngest of seven children growing up in Idaho, Heffner became an EMT and paramedic while in college at Boise State. “I fell in love with the career,” he says. After graduating with a bachelor’s of science in sports medicine, he went to work for Ada County EMS as a paramedic supervisor before leaving for Mercy Ambulance/MedTrans in Reno, where he was promoted to director of operations. In 1996, after Laidlaw purchased MedTrans, he moved to Houston to become divisional CEO of the ambulance companies acquired by Laidlaw along the Texas Gulf Coast. In 1998, he was hired by Rural/Metro as chief operating officer and later became president of the company’s West Emergency Services Group.
Having experienced the wave of acquisitions of the mid-’90s, Heffner says Falck is determined not to repeat the mistakes of the past. Then, the big companies snapped up ambulance services, immediately repainted ambulances with their new logo and fired long-time owners and senior staff, he says. That’s not Falck’s M.O.—the company respects local culture and believes in acquiring companies that are already well run, keeping staff and managers in place, he says.
“I was working for those companies during the roll-ups. I have a saying: I will never teach as I was taught and I would never manage as I was managed,” Heffner says. “I finally have been given the opportunity to build an ambulance company on a grand scale using the culture and values of this international company that are so much aligned with me personally.”
Heffner spoke with Best Practices about his EMS career and Falck’s plans for the U.S. market.
How did you get the nickname “Boo”?
When I was a kid, To Kill a Mockingbird was the biggest movie. Robert Duvall was Boo, and my sister started calling me that. The only time I was ever called Robert was when I was in trouble with my mom. I always know when someone knows me or doesn’t know me—they call me Robert if they don’t know me.
Why did Falck choose to enter the U.S. EMS market now?
Falck has been in the U.S. market for a while through its investments in Rural/Metro. Three years ago, we made the decision to go out on our own because we saw this potential. It finally materialized what the Affordable Care Act would be, and what it would look like, and it was going to change how prehospital care is delivered and reimbursed in the U.S. We’ve done this in other countries, and done it very well, and we know how to do it. Through our call centers, established transportation networks and resources, we are beginning to implement it here.
Falck operates fire services in other countries. Does it have plans to take on that role here?
It never has been Falck’s intent to get into the fire suppression business in the U.S. We do different services in every country—if you go to Scandinavia, Falck does roadside assistance sold on a membership basis, like AAA is here. In other countries, Falck’s healthcare division provides occupational and preventive healthcare services for companies and individuals. We also have a very large training division, including providing safety training for workers on offshore oil platforms throughout the world.
But you don’t come to the U.S., which has, hands-down, the best, most well-established fire suppression service in the world, and say, We can do it better.
We do have a very strong intention of building a strong EMS transportation network in the U.S. both on the interfacility side as well as the prehospital 911 side. We feel that we have a great deal to offer in today’s economy, in these stressful times for getting reimbursed, on how to partner with different entities to work together to provide the best service.
What can Falck bring to the U.S. from its European experience?
If you look at the reimbursement models here vs. Europe, they are completely different. In Europe, Falck has learned to be highly efficient. It’s a fixed-fee reimbursement model—you receive X dollars to run the service for a geographic area.
They are also performance-based contracts. In Europe, utilization is watched closely. You have to have enough units to meet the response time standards, although maybe not everybody goes to the hospital. Instead, paramedics determine if they can go out on a preventive basis to check on frequent users and check their blood pressure, etc., and make sure they are doing what their doctor tells them to do. There is a great deal of emphasis placed on preventive medicine rather than reactive medicine. This is what Falck does in Europe that they can bring to the U.S.
Some EMS operations are embracing community paramedicine and mobile integrated healthcare, even removing “EMS” from the name on their ambulances. What is Falck’s take on this?
There is no doubt the Affordable Care Act is going to change the landscape of reimbursement in the U.S. We are already working on a preventive medicine model in some of our East and West Coast operations. Either via phone or via a physical visit, we’re taking high system utilizers and implementing preventive measures to ensure these people are OK. We are working with insurance companies as well as certain healthcare organizations and other entities that will reimburse for such services. The challenge in the U.S. is to prove to the payers that this is the way to go.
As the system sits today, two of our largest payers, Medicaid and Medicare, do not reimburse providers for such services. That’s a challenge all providers face. We’re putting our emphasis on insurance companies and other payers that have responsibility for these patients and showing them the benefits of preventive healthcare to reduce unnecessary transports to the hospital.
We have non-transport vehicles that are not ambulances that are making some home visits to high system utilizers. But we haven’t gone so far as to take “emergency” off of our ambulances, and we’re not going to do that. An ambulance is an ambulance, and it’s going to be used as an ambulance. And when it’s not warranted, we’ll use another mode of patient interaction.
When Falck purchased Care Ambulance in Southern California in 2010, there was much speculation about whether it signaled the start of another round of acquisitions. Can we expect a repeat?
When we first looked at the U.S., we asked, Do we go in and purchase one of the big companies and put Falck on it? But culturally, that wouldn’t be the right thing to do. What Falck wants to do is to take the best of the best of EMS management in the U.S. and put together a great company using the Falck core values and business model that has been successful throughout the world.
If you had to take an ambulance company that mirrors the values and service delivery of Falck, it would be Care Ambulance. It is clean, professional and top grade. But most unique is the partnership with fire departments: Fire is the first responder and we work together in a public-private partnership.
When we acquired it, Care was not a company for sale. It was founded in 1961 and run by two brothers who are two of the most honest people you would find in EMS.
The roll-ups of the ’90s was a desecration of longtime, family-owned companies that the local communities knew well. If there is one thing that differentiates us from the other roll-ups and the two other large ambulance companies, it’s that we’ve always felt it is imperative that you keep the identity, the culture and the name of the company you acquired. Why come in and get rid of a name like Care and slap a Falck name on it? We don’t want to do that. We’re going to pick a target that is a lot like we are. We are going to instill our values. But it’s not going to be a humungous cultural change, because we did our homework ahead of time.
When we bought Care, I was the single employee of Falck USA. I’ve never believed in a big corporate structure—I don’t believe it’s healthy. Falck is a $2 billion company, but Falck USA is a very small corporate entity. I have nine people in our corporate office, and their average tenure with me is 14 years. My entire team worked for me at Rural/Metro; some have been with me since my MedTrans days.
Falck has become the third largest ambulance company in the U.S. in a few short years. How did that come about?
After buying Care, we wanted a platform on the East Coast. We acquired Lifestar Response, which operates in seven mid-Atlantic states. With those two platforms, we began our organic growth. The word got out: Falck is in town. People started asking, What’s Falck? What are their intentions? We had a lot of people who wrote articles who never picked up the phone to ask. They drew their own conclusions.
On both of the early acquisitions, we kept the owners in place and the management in place. We then acquired Cape Cod Ambulance, a company that’s been around for a very long time. We took a career firefighter in Cape Cod and made him the general manager. We then acquired American Ambulance in Florida. Over the next two years, we acquired five companies. We are now operating in 14 states.
It sounds like you have some bad memories of the wave of acquisitions.
It was cultural genocide. The new bosses would come in and say, Guess what? We’re in charge now. We saw a lot of great people from the industry who were basically gone. What I observed was that a lot of vendettas were settled. If you were the acquirer, you got rid of some people, downsized and settled some old scores. That happened from management all the way down to the field level.
The people who work in Orange County, Cape Cod and elsewhere are the fabric of the community. You don’t come in and do that to the fabric of the community.
What is Falck’s long-term objective?
I mean this from the deepest of our hearts: Under no circumstances is it our objective to be the largest ambulance company in the U.S. It is our objective to be the best and prove to the EMS community that a large private ambulance provider can be successful in the U.S. for a long period of time.
When we acquire an ambulance company, we retain the owners, the management and the culture. We allow them to prosper and grow with the resources that an international company brings. We also allow the owners of these companies to make an investment in the company they sold for the betterment of the company down the road.
Falck funds 100% of our acquisitions and capital expenditures out of our own operating cash flows. We don’t rely on private investment. The majority of our company is owned by two Nordic-based nonprofit foundations that take their proceeds and distribute them in the form of grants to healthcare and research entities. That’s significant because traditionally in the U.S., roll-ups have been held by private equity or publicly traded firms. We are a 107-year-old company. We’re not flipping the company. We are long-term players.
What’s next for Falck?
We are in play against our regional and national competitors. We consider ourselves to clearly be a very formidable competitor in municipal contracting and large institutional contracting. The only caveat is we will not bid against a municipal fire department that is providing transport services themselves. Communities are stretched right now, and we’re not going to go in and undercut them. However, if the fire department and the fire union said, ‘How could we build a public-private partnership?’ we’d do it.
We’ve also done greenfield startups in communities that haven’t met our criteria for acquisitions. [‘Greenfield’ is a term for starting a business from the ground up. It’s believed to come from the construction industry, referring to buildings constructed on what were green fields.] We did it in the Seattle-Tacoma area with Falck Northwest, where we’re currently doing critical care and BLS interfacility work and 911 work. We’ve also done that with Falck Northern California and Falck San Diego, where we’re currently doing interfacility and critical care work in and around San Diego. We’re waiting for the city of San Diego to put the city 911 contract out to bid.
You played a critical role in both the creation of the San Diego model and its unwinding. What are the lessons learned?
It’s very sad. We currently have some excellent public/private partnerships that are unequivocally transparent, but what happened in San Diego gave the perception that it can’t work.
You can’t be as financially tied to the hip as SDMSE was. You have to be careful who you go into business with. You have to have excellent controls in place to ensure that everybody knows what’s happening, and you have to be able to account for every cent that comes into the system. In San Diego, the patient care was second to none. But the further you can distance yourself from financial intertwining, the safer and better it is.
How has this affected you personally?
I look back on it now and realize that as difficult as it was to go through, it was the best thing that ever happened to me. With Falck, I was given what I always wanted, which was the ability to prove that a large nationwide ambulance provider can be a great company and it can work. And I don’t have the day-to-day interference of outside parties. There is a great deal of autonomy but a great deal of responsibility. When you have a large number of shareholders and people who are financially incentivized to make decisions, sometimes wires can get crossed. The values at Falck are different.
