City’s ambulance contractor billed more than $5M for breaching contract
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(Photo by Bryan Oller)

American Medical Re-sponse has paid the city of Colorado Springs more than $5 million in penalties since starting its five-year contract for emergency ambulance service in 2020 and has failed to comply with contract terms for over a year.

Despite that, the city continues to allow AMR to operate, giving the company repeated chances to meet contract requirements — and the latest notification of contract noncompliance is no different.

In a Feb. 7 letter, the city gives AMR until March 31 to “cure” the deficiencies or the city “will consider all available Contract provisions regarding AMR’s continued material default status up to and including Contract termination.”

It’s a warning that has been employed numerous times over the last two years in response to AMR’s breach of contract terms by being late to both emergency and non-emergency calls and relying on the Colorado Springs Fire Department for backup.

AMR has been late to nearly 6 percent of the 110,600 emergency calls from April 2020 through January of this year, according to Sixty35 news magazine’s analysis of monthly compliance reports. (The February report is not yet available.)

AMR has blamed the delays on staffing shortages due to the COVID pandemic, which was just taking root in spring 2020 when the contract began.

Despite measures designed to bolster staffing, however, AMR’s performance had gotten increasingly worse until recently.

But such staffing problems for emergency ambulance services aren’t unique to the Colorado Springs operation. Paramedics are in short supply across the country, leading at least one West Coast city to open the door to multiple contractors to work in the same market to improve response times.

“We’ve done everything possible to increase staffing and get our local operation on track,” AMR Vice President of Operations Scott Lenn said in a statement.

AMR has served the region for nearly 30 years. When AMR’s previous five-year contract with the city was due to expire in 2018, the city sought competitive proposals. In two separate selection processes, the city chose a different provider, leading AMR to protest those contract awards while continuing as the city’s provider through contract extensions. 

Ultimately, AMR won the contract.

The expectation is for AMR to arrive within 8 minutes 90 percent of the time to emergency calls using lights and sirens. Time limits are more relaxed for other types of calls.

Fines are based on late responses (at $50 per minute). AMR also can be fined for relying on Colorado Springs Fire Department’s medical squads, a type of medical vehicle, to transport patients ($3,000 per trip) when AMR is unable to transport.

During the first year, AMR fell short of the time standard during four months. In 2021, it fell short during eight months, and last year, it violated the time standards all 12 months, with its lowest percentage compliance of the 8-minute rule at 67.5 percent in January and is highest at 87.4 percent in November.

Another contract requirement states that AMR is in default if it accrues response time penalties of $20,000 or more per month for three or more months in a rolling 12-month period.

In 2020, AMR exceeded $20,000 in fines six out of nine months and was billed a total of $231,020 in fines that year.

In 2021, the provider fell below the $20,000 penalty limit only twice, in January and February. Total fines levied that year: $1,381,250.

AMR’s compliance last year cratered. Its fines exceeded $20,000 all 12 months for a total of $3,489,500.

In January 2023, AMR achieved response time targets but incurred fines above the limit, at $26,850.

AMR has exceeded the $20,000 limit every month since March 2021 through December 2021.
— Fire Chief Randy Royal

Since the contract started, AMR has run up penalties totaling $5,128,620, the Sixty35 analysis shows.

In the Feb. 7 letter, Fire Chief Randy Royal cited the penalties provision, noting AMR exceeded $20,000 limit every month since March 2021 through December 2022, placing the contractor in material default of the contract.

However, on an up note, in recent months, AMR’s reliance on CSFD squads has fallen dramatically; its associated fines decreased from $189,000 in June 2022 to $18,000 in November and December. In January this year, it paid no fines for relying on squads.

In San Diego, California, fire officials announced in mid-February they would take over billing and staffing functions of its provider, Falck ambulance company, to enable increased ambulance coverage through hiring multiple companies, the Del Mar Times reported.

The action was triggered by Falck falling short of response times and staffing levels promised in 2021. (Falck was declared the preferred provider by the CSFD before AMR’s protests of the contract award led to AMR getting the contract.)

Asked about the possibility of CSFD turning to a multiple-provider model, CSFD Capt. Mike Smaldino says by phone the San Diego model wouldn’t work in Colorado Springs, because unlike San Diego, the city here doesn’t have authority to issue bills for transport.

One of CSFD’s responses to the AMR situation here was the deployment of four small firefighter-staffed medical units that handle more minor calls to which AMR is not dispatched “to relieve pressure on the system,” Smaldino says.

He says that while AMR met requirements in January for response times in all zones except suburban areas for emergent calls that don’t require lights and siren, “still, that isn’t meeting terms of the contract, though.”

In addition, its fines totaled $26,850 — above the level required by the contract.

So where does the city go from here?

“We are having high level leadership conversations between the City and AMR to discuss the next steps in the contract,” Smaldino said in a statement.

COVID hit the emergency ambulance business hard, thinning the ranks of personnel due to illness and medics who quit rather than face the prospect of taking the vaccine. While the vaccine was never required by medics working for private companies in Colorado, there were fears that it would be.

Paramedics have been known to work for ambulance companies until they qualify to be hired by fire departments, many of which offer pension benefits or higher pay or both.

In response to dwindling personnel, AMR has paid job candidates to get certified, mandated overtime, raised pay, paid sign-on and retention bonuses and more.

We made compliance in January,” Lenn said in his statement, “and although we don’t have official word back from CSFD yet, our internal data shows that we made compliance in February as well. The pandemic disrupted EMS companies across the country, but AMR’s commitment to Colorado Springs has never wavered …, and we’re heartened that the most recent data shows the progress we’ve made.”

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