Early this month, AMR, an ambulance company that has proven to be one of the most generous and consistent donors to members of the San Bernardino County Board of Supervisors’ political campaigns over the years, sought permission from those same supervisors to pass its franchise on the exclusive provision of emergency medical transport service in a circumscribed area along to another company that is buying AMR out.
On November 14, The board of supervisors acceded to AMR’s request.
In granting that permission, the board was not acting directly but rather in the capacity of an adjunct governing panel.
The Inland Counties Emergency Medical Agency oversees emergency service provision issues in San Bernardino, Mono and Inyo counties. With the permission of the boards of supervisors in Mono and Inyo counties, the San Bernardino County Board of Supervisors acts as the governing body of the Inland Counties Emergency Medical Agency. The Inland Counties Emergency Medical Agency is known by its acronym, ICEMA. ICEMA is charted “to ensure an effective system of quality patient care and coordinated emergency medical response by planning, implementing and evaluating an effective emergency medical services system including prehospital providers, specialty care centers and acute care hospitals.”
On May 8, 2012, the San Bernardino County Board of supervisors, acting as the ICEMA board of directors, approved Agreement No. 12-254 with American Medical Response, which itself goes by the acronym AMC, to provide advanced life support services. Section XXII with the general provisions of that agreement states “This agreement shall not be assigned or transferred, nor may the duties hereunder be delegated, without the express permission from ICEMA. Similarly, any change in ownership equal to or greater than fifty percent (50%) of provider’s company shall be considered a form of assignment of this agreement, and must be approved by ICEMA, provided that ICEMA shall not unreasonably withhold its approval of such change in ownership.”
Recently, Air Medical Group Holdings, Inc. arrived at an agreement with American Medical Response to purchase 100 percent interest in the portion of American Medical Response’s division, AMR HoldCo, Inc., which includes all of its San Bernardino County operations.
In a report authored by Thomas G. Lynch, the emergency medical services administrator for San Bernardino County, which was dated November 14 but which was written prior to that date, Lynch stated, “Air Medical Group Holdings, Inc. will acquire 100 percent of AMR, but the name, provider number, management and local operations of the local AMR provider will not change. AMR’s transaction with Air Medical Group Holdings, Inc. will impact only the ultimate parent company of AMR. None of the terms and conditions of the agreement will be changed. In accordance with Contract No. 12-254 and its amendments, AMR is requesting ICEMA’s signature acknowledgment and approval of AMR’s assignment and change in ownership.”
Lynch recommended that the board agree to the transition, which it did.
It is unknown at this point whether Air Medical Group Holdings, Inc. will prove as generous toward the members of the board of supervisors as American Medical Response has been.
American Medical Response has been able to convert largesse provided to the electioneering efforts of the board of supervisors into highly lucrative franchise arrangements, including exclusive operating zones over large swaths of the county and within many of the county’s communities.
There have been charges over the years that the favoritism displayed toward American Medical Response is contrary to the best interest of some county residents in that the exclusive operating zones result in a monopoly by American Medical Response, and that lack of competition has allowed American Medical Response to escalate the prices it charges for the service it renders to its customers.
American Medical Response was not the first ambulance operator in San Bernardino County to utilize a formula of hefty donations to elected county decision makers to enhance its profitability to the detriment of county residents. That formula was first applied by Mercy Ambulance.
Mercy had formed in the late 1970s, when Terry Russ, Homer Aerts, Steve Dickmeyer and Don Reed, all of whom operated ambulance companies on the west and central portion of San Bernardino’s Inland Valley and had been competing against one another for years, smoked a peace pipe and resolved to merge their operations into one, consolidating and streamlining their dispatch service, and better coordinating it with local fire and police departments. Through efficiencies and the sharing of resources, they were able to overwhelm the other ambulance operators they were in competition with, lower their prices, and induce most of those competitors to either go out of business, merge with them or sell out to them. After pooling their money and initiating a program of making substantial political contributions to local politicians at both the city and county level, Russ, Aerts, Dickmeyer and Reed then used this newfound political clout and influence to have both the county board of supervisors and various city councils “regulate” the ambulance industry, which included essentially adopting as the minimum requisites for an ambulance operation within their jurisdictions the vehicle, equipment and employee training standards Mercy had in place. The politicians were able to do so by asserting that this enhanced public safety.
Thus, Mercy Ambulance established a political hammerlock on the region. Keeping up its pace of donations to the county’s top local elected officials, the consortium gobbled up ever more key franchises, making its operation yet more lucrative. In turn, the company would use a small percentage of the profits it was generating to increase the scope of its political contributions. In return, the grateful politicians ensured that Mercy retained its competitive advantage over its rivals, giving Mercy plum franchises in the county’s most heavily populated areas. While what Mercy established fell slightly short of being an outright monopoly, it was at that point capable of controlling the ambulance market at will. It then began raising its prices, making up for the rate cuts it had instituted to obtain market dominance and then raising its service rates to a point where customers were openly complaining about being gouged.
Those complaints had little effect, however. As Mercy solidified and expanded its domination of the local ambulance industry and it grew to become preeminent among the county’s campaign donors, the county and many of its cities moved to create franchises in which a single ambulance company was allowed to operate and from which any other companies were prohibited from operating. Not surprisingly, in San Bernardino County Mercy was granted the lion’s share of these exclusive franchises, not to mention the most lucrative ones.
As Mercy grew, so did the scope of its operations and its power. The company added helicopters to its line of service and extended its reach all over 20,105-square mile San Bernardino County – a land area the size of four New England states. But as Russ, Aerts, Dickmeyer and Reed aged and grew wealthier, they began, slowly at first, to disengage from and then inevitably pulled out of the stressful emergency response business entirely. A first step in that direction was selling off – at considerable profit – the Mercy Air wing. Thereafter, they sold or let their heirs take on the ground ambulance fiefdom that Mercy represented, and they withdrew into a retirement of luxury and comfort.
It was at that point that American Medical Response came into San Bernardino County as the new kid on the block. As Mercy withdrew, American Medical Response filled the vacuum, simultaneously taking a leaf out of Mercy Ambulance’s playbook, and it too made hefty political contributions. Over time, ICEMA came to confer upon American Medical Response favored status in San Bernardino County that would rival that of Mercy Ambulance a generation before.