Friday, May 8, 2015

A Funny Thing Happen On The Way To The Bank:

Five Southern California Ambulance Companies to Pay More Than $11.5 Million

By Scot Sturtevant, EMT-P, BBA
Quite sometime ago, I was sitting in an office with my boss, and good friend Kelvin, who just so happened to own an ambulance transport company, here in San Diego. I had been hire by K.C. to be the new Director of Marketing, following a prolonged 2-year absence of any formal marketing program at his organization.

K.C. wasn’t a fan of marketers. In fact, he had a bad experience with some of them many years prior to my arrival that nearly cost him his entire company. Had fate not favored him back then, I likely wouldn’t have been hired as their marketing director.

It wasn’t the first time that I was faced with being the one who was persecuted from the crimes of others, and had been tasked with the job of finding a new path for the company. My one mandate handed down to me by K.C. was that there would be absolutely no discounting on our services, period!

Mr. Carlisle’s orders were for a good reason. Prior to 1998, an ambulance company had tighter control of their fees and charges for levels of care being provided. But when the Department of Health and Human Services changed the rules on paying for a variety of services and procedures that healthcare providers had been billing for.

Back in 1998, the Department of Health and Human Services had made it clear that they were in charge, and there was to be no more “monkey business” in the healthcare business. Mr. Carlisle wanted to play “by-the-rules”, in a game where many providers seldom if ever do. Thus, his problem with marketers who didn’t know how to play that way, and really didn’t know the first thing about marketing at all.

The Competitive Market Environment
Marketing any thing is really very easy and quite simple. But many people in society seem to blur the lines between marketing and sales. As such, we get C-Level Executives with titles like “Vice President of Sales and Marketing”. When you see that title floating around, it simply means that those above that person who bestowed that title upon the person wearing it… don’t get it! (Hello!!!)

For the benefit of all…

Selling is trying to get people to want what you have.”
Marketing is trying to have what people want.”
When you have what people want, it makes selling unnecessary”
   Terrence Ryan
If you’re a healthcare marketer, be sure to write this down and stick it in your wallet, or somewhere convenient for easy reference.

Knowing “The Rules” of Marketing in Healthcare
The next time a nursing home administrator asks you for a discount on the transports they’re responsible to pay for, so that your company gets all of the calls from his or her facility, you can look them in the eye and say, “why would I discount a service this good? You won’t find another agency that will accommodate your need for ‘on-time’ performance, than my agency. As a provider, like yourselves, we can’t discount the services we provide any more than you can discount for patients that pay you cash every month.”

If they insist you discount to get their business… walk away, and report the incident to the Office of the Inspector General of Health and Human Services.


If it was discovered by Federal investigators that you were aware of discount swapping, it is possible that you could be found to be complicit if you don’t report it. If you end up debarred as a result of it, well you career in healthcare will be over. 

The Lessons Learned
For the many years I worked for K.C. I watched other companies start-up their operations, and watch them shut down their operations. In a saturated market with players that have been around for a while, it becomes harder and harder to break in and make some headway, when the older companies are throwing up roadblocks. It’s very difficult and in some instances, virtually impossible to get a leg up in the market as a “start-up” when you have older companies with deeper pockets blocking your ability to enter the market.

While I know how to run an ambulance agency, I wasn’t ever well financed enough to take up the challenge in this region and opted to not immerse myself in it. However, as a marketer with many years of experience in the field, you could generally tell the agencies that were not playing by the rules. Here’s an example of what I’m talking about.

A start up comes rolling into town from another state, with multiple ambulances, and sets up shop on the edge of town. After a short while you see that they are beginning to gain ground in the market, getting the business out of one nursing facility, then another and another, and so on. After a couple of years in business, they emerge as the forth-largest provider in the area.

Red flags have been raised! Officials have gone in and conducted audits, and have basically found little if any incriminating evidence. Background on the new provider is one where they were shut down in the state back east where they came in from originally, for violating a litany of regulations involving the safety of their patients.

Everyone is sitting there scratching their heads and wondering how they’re doing all of this, and getting away with it. Your gut tells you that they’re “dirty”, but you have no proof!

Then, a discovery is made by accident…

The new provider is running two different NPI numbers.

What’s significant about that? Simple enough!

When the Feds come in the front door to audit the company, generally all of the payments from Medicare are frozen. So, your company doesn’t get paid while an audit is underway. The Federal investigators may take as long as they want during an audit, there is no limitation as to the length of time or time limitation on how long an audit may go on. Therefore, many companies will begin to feel the financial weight of running an operation and depleting their cash reserves for such an event. Audits are almost always unannounced.

With the second NPI number, the company was able to process their claims during the audit and be paid for those claims. Additionally, they could divide up the claims that were more apt to throw-up a “red flag” because they’re historically a common source for fraud and abuse by ambulance providers.
 (e.g.; transporting dialysis patients or radiation therapy patients needing an ambulance when the need wasn’t real.)

While the audit was ongoing, and the investigators shut down the payments to the company, the second NPI number afforded the company the ability to continue to be paid. Since the NPI number was listed under ABC AMBULANCE, and ABC AMBULANCE 2, it was easy for the owner to just change the documentation by placing a big ‘ol #2 on each report before it was submitted to Medicare for processing. Had investigators not gotten a tip, it may have been quite awhile before the culprit was caught.

Criminally ingenious, don’t you think?

In Closing
On May 4th, my former employer “KC” won his “Qui Tam” lawsuit against five (5) different ambulance providers for providing illegal “kickbacks” in the form of illegal “discount swapping” arrangements that had provided many healthcare facilities – both acute care and skilled nursing, deep discounts that often times went well below the cost of providing the services, in exchange for the exclusive rights to transport all of the patients from the health facilities in question.

The fine… $11.5 million.

As to what will happen to the healthcare facilities that were complicit in the fraudulent action? That remains to be seen. However, on March 23, 2010, President Obama signed into law that tied the two parties together in their illegal activity, but as far as I know the law has yet to be tested.

So, as to “KC”, my former employer…

A funny thing happened on the way to the bank…
He seem to have an additional $1.7 million to include with his deposit.

And so it goes.