Last month, PCG had the opportunity to co-present with the National Association of EMTs (NAEMT) on a critical topic: the true cost of EMS, the burden of uncompensated care, and the path to financial sustainability for EMS agencies.
EMS Systems Are Under Financial Pressure
Emergency Medical Services (EMS) are a vital part of every community. Yet, many EMS agencies are struggling financially. Why? Because they rely heavily on reimbursements from Medicare, Medicaid, and commercial insurers and these payments often fall short of covering the actual cost of service delivery.
To bridge the gap, agencies turn to local subsidies, grants, or creative financing. But even with these efforts, EMS providers are caught between rising operational costs and limited funding, all while delivering high-quality, 24/7 emergency care.
What Does EMS Really Cost?
A major theme of the webinar was the importance of understanding the full scope of EMS costs. It’s not just about the obvious expenses like salaries, ambulances, and medical supplies. Indirect costs, such as administrative overhead, dispatch services, billing operations, and facility maintenance, are just as critical, yet often overlooked.
National Data Highlights the Funding Gap
To bring this into focus, we shared national data from the CMS Ground Ambulance Data Collection System (GADCS) cost survey analysis for the Year 1 and Year 2 cohorts. The findings were eye-opening. According to the analysis, on average, the cost of a single EMS transport is $2,673 across all provider types, and $3,127 for governmental agencies. Meanwhile, the average reimbursement per transport is just $1,147. That leaves a revenue shortfall of about $1,526 per transport.
When looking at the breakdown of costs, unsurprisingly, labor is the biggest cost driver, accounting for 69% of total EMS costs. This includes salaries, overtime, benefits, and retirement. The next largest category, vehicles and facilities costs, makes up 14%, covering everything from ambulance maintenance to fuel and utilities.
For a deeper look into the Year 1 and 2 GADCS cohort analysis, take a look at what providers should know about here: What EMS Providers Should Know About the CMS GADCS Report – Fire and EMS Blog | Public Consulting Group
Do You Know Your Department’s Cost Per Transport?
So, how does your department compare? Do you know your average cost per emergency transport? What about non-emergency or specialty transports? Each type of service draws on different resources, and understanding those differences is key to identifying where your department may be losing money.
Department Structure Matters
It’s also important to consider your department’s structure. Are you EMS-only? Fire-based? Hospital-based? Volunteer-run? Each model requires a tailored approach to cost allocation to ensure that all indirect costs supporting ambulance operations are accurately captured.
What Costs Should You Include?
When calculating your average cost per transport, make sure to include:
- Direct medical costs (e.g., medications, supplies)
- Facility expenses (e.g., building operations)
- Capital expenditures (e.g., vehicles, major equipment)
- Operational costs (e.g., uniforms, fuel, office supplies)
- Administrative overhead (e.g., HR, accounting)
Use detailed financial documents like your general ledger to allocate shared costs more accurately.
Know Your Financial System
To calculate costs effectively, you need to understand your department’s financial structure:
- What’s your fiscal year?
- What’s your capitalization threshold?
- Do you have a depreciation schedule with appropriate asset lifespans?
It is important to make sure you are also keeping up with changes in regulations. For example, as of October 2024, CMS set the new maximum capitalization threshold for Ambulance Supplemental Payment Programs (ASPPs) at $10,000. This means that if your department is participating in an ASPP, any individual asset $10,000 or more must be depreciated rather than fully expensed in a cost report. If your department is participating in a similar program, it may be helpful to make sure your financial system is aligned.
Allocating Shared Costs for Dual-Service Providers
If your department provides both fire and EMS services, it’s especially important to allocate shared costs accurately. One CMS-approved method is to use call data to calculate “time on task” which is the time from dispatch to call clearance for both fire and EMS calls. By dividing EMS time by total time, you can determine the EMS percentage and apply it to shared expenses.
Don’t Forget Indirect and Allocated Costs
Even if certain costs don’t come directly out of your EMS budget, like dispatch services, they still contribute to the delivery of care and should be included in your calculations. If your municipality has a cost allocation plan, make sure any costs assigned to your department are factored in. However, be careful not to include expenses unrelated to ground ambulance services, such as community paramedicine or mobile integrated health programs.
How to Calculate Your Average Cost Per Transport
Once you’ve gathered all relevant cost data, the next step is to determine your total number of transports during the same time period. This ensures consistency in your calculations. Use billing data to identify claims that resulted in a transport, and make sure the dates align with your cost data.
Bringing it all together, divide your total EMS costs by the number of transports to find your average cost per transport. This simple formula, when backed by accurate, comprehensive data, can be a powerful tool for your agency.
Want to Learn More?
If you missed the live webinar, we encourage you to check out the presentation slides here. They go even deeper into topics like the cost differences between ALS and BLS transports, the hidden cost of EMS readiness, and how to calculate the cost of treatment-in-place and non-emergency transports.
Have additional questions?
If you have additional questions, please feel free to contact our PCG EMS team at EMSstrategies@pcgus.com.
