Source: EMS1, June 28, 2016
A recent investigative report published by the New York Times sheds light on the growing trend of private equity firms purchasing and investing in EMS and fire services, and the potentially negative repercussions that may follow. Numerous ambulance and fire agencies acquired by private equity firms, the Times reported, are aimed at making a profit from emergency calls while cutting costs and increasing prices. … Out of 12 ambulance companies recently owned by private equity firms, three filed for bankruptcy in the last three years. All three had had issues prior to being taken over by a private equity firm. One service, Rural/Metro, was taken into bankruptcy by an equity investor, while another helped it out. During that period, the Times found that Rural/Metro’s response time slowed in some towns while billing practices dramatically increased. TransCare EMS services, acquired by Patriarch Partners, went through bankruptcy after a slew of supplies shortages, equipment failures and sending patients increasingly expensive bills.
When You Dial 911 and Wall Street Answers
Source: DANIELLE IVORY, BEN PROTESS and KITTY BENNETT, New York Times, June 25, 2016
The business of driving ambulances and operating fire brigades represents just one facet of a profound shift on Wall Street and Main Street alike, a New York Times investigation has found. Since the 2008 financial crisis, private equity firms, the “corporate raiders” of an earlier era, have increasingly taken over a wide array of civic and financial services that are central to American life. Today, people interact with private equity when they dial 911, pay their mortgage, play a round of golf or turn on the kitchen tap for a glass of water. Private equity put a unique stamp on these businesses. Unlike other for-profit companies, which often have years of experience making a product or offering a service, private equity is primarily skilled in making money. And in many of these businesses, The Times found, private equity firms applied a sophisticated moneymaking playbook: a mix of cost cuts, price increases, lobbying and litigation. … For governments and their citizens, the effects have often been dire. Under private equity ownership, some ambulance response times worsened, heart monitors failed and companies slid into bankruptcy, according to a Times examination of thousands of pages of internal documents and government records, as well as interviews with dozens of former employees. In at least two cases, lawsuits contend, poor service led to patient deaths. …
… In many of the fields where private equity now operates, it has not necessarily performed better or worse than the banks and governments it replaced. In some cases it financed projects that others wouldn’t fund and provided crucial public services, including emergency care. And because these firms do not rely on the government for loans, and are much smaller than Wall Street banks, they pose far less risk to the broader economy. … But the Times investigation of emergency services shows that hasn’t always been the case. …