Coronavirus puts $1 million dent in local EMS provider FASP’s finances

6 min read742 views and 44 shares Posted December 1, 2020

If First and Safety Patrol’s (FASP) finances were compared to a hospitalized patient’s health, its diagnosis would be in satisfactory but guarded condition.

Pushed to the financial brink by the COVID-19 pandemic, which crippled its annual income by $1 million in lost revenue, operational creativity and much-needed federal financial aid have been lifesavers for the ambulance service, according to FASP CEO Gregg Smith.

“We are cautiously optimistic that we have weathered the storm for now, but none of us are immune to this pandemic,” said Smith, who heads the nonprofit which serves as the primary service provider for six municipalities in Lebanon County, as well as mutual aid throughout the Lebanon Valley.

“You would think an ambulance service is immune, but we aren’t. It has permeated every segment of the business community.” 

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FASP F-150. (Provided photo)

Read More: How COVID-19 is impacting ambulance services in Lebanon County

The financial impact to FASP from the pandemic was felt predominantly in its non-emergency services sector, which includes ambulance transports and various forms of pre-scheduled patient transportation that account for half of the firm’s annual revenue.

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Pre-scheduled transports include taking patients for dialysis or to other medical appointments, and moving patients from one hospital to another or to a rehabilitation facility for ongoing treatment, among others. 

“In the beginning of March, volume was good and, basically, 15 days after the governor’s emergency declaration, our volume plunged overnight,” Smith said. “We lost over 40 percent of that pre-scheduled, pre-COVID volume. Those transfers just dropped off the map.”

Smith added this drop in non-life threatening services was exacerbated by a downturn in services offered by hospitals, including elective procedures, diagnostic testing and other forms of non-emergency healthcare, leading to “a grinding halt” in pre-scheduled ambulance services provided by FASP. (About one percent of the company’s overall business is the support it provides at large gatherings: rock concerts, high school football games and other large-scale public events like the annual Antique Car Show in Hershey, which was cancelled this year due to the pandemic.)

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There was even a drop in the overall number of 911 calls that FASP normally responds to on a daily basis, according to Smith, at the onset of the pandemic that continued to reverberate throughout much of the summer.

“A total of 15 percent of our emergency call volume also dropped because people were staying home more and they weren’t, quite frankly, calling 911 in an emergency,” Smith said. “Would you want to risk going to the hospital and getting COVID because of an ankle fracture?”

Smith added that FASP ran some public service announcements highlighting the risks of avoiding healthcare in life-threatening situations like a heart attack.

“The chances of dying from a heart attack are 12 percent versus one percent from contracting COVID,” Smith added. “So you really need to weigh the risks and severity of each individual emergency.”

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Realizing the potential financial severity and ongoing potential loss of revenue due to the uncertainty connected to a novel virus like COVID-19, Smith took immediate corrective action to lessen the financial impact to a business that provides essential services to the community.

“I furloughed 10 people immediately, and we had to find ways to reinvent ourselves a little bit,” Smith said. “It’s important to note that this happened prior to the announcement of financial aid programs like the Payroll Protection Program (PPP) and CARES Act funding.”

Creativity came when Smith approached three area manufacturers and offered five medical responders to monitor workers’ temperatures and other COVID-related services to those businesses, who Smith said, “wanted to do all they could do to protect the health of their employees.”

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“It was a great stop gap for us and we did it into the summer for these businesses,” Smith said, adding this maneuver was a first for FASP in the 25 years he’s been associated with the ambulance service. “It allowed us to rehire those individuals who had been furloughed. That program was great through the summer months until that work was outsourced. They now have kiosks, or machines, to do their temperature checks.”

Another “Godsend,” according to Smith, was the financial aid provided by PPP and the CARES Act funding, which totaled $827,000 and $50,000, respectively. These two financial aid packages should lessen the hit FASP has to its gross revenue in 2020, Smith said, leading to a projected loss of about $100,000 by the end of this fiscal year in December. 

Receiving the PPP funding permitted FASP officials to bring back the other five individuals who had been furloughed, and also ensured that no one has been furloughed since the organization received the forgivable loan in late April. 

“We were a part of the first wave to apply for and receive payroll protection funding at the end of April,” Smith said. “We were able to immediately bring back the people we had furloughed and increase our headcount to 100 percent, which was the very purpose of the payroll program. An even bigger impact is that we haven’t had to re-furlough anyone since we’ve received the funding.”

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Read More: SBA data shows nearly 1,400 Lebanon County businesses received PPP loans

Smith added that he is extremely grateful for the payroll program, noting how important that funding was to FASP and the continuation of services to the community. Smith added he’s also thankful to the Lebanon County commissioners for approving their CARES Act funding request.

“That was a lifesaver for us,” Smith said about PPP. “Otherwise, we would have been in a vicious cycle of hemorrhaging cash, we would have had to reduce expenses, lay people off and be unable to fulfill our essential mission.”

Smith also believes FASP is fortunate this year to receive funding from an initiative that began in 2018. The six municipalities it services and another municipal government voted two years ago to increase their per capita tax by $4 per tax-paying individual, beginning in 2020 and running through fiscal year 2022, to fund EMS capital improvement projects at FASP.

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“These tax dollars can only be used for capital projects, and not fund payroll,” Smith added. 

FASP is the primary EMS provider for the City of Lebanon, Cornwall Borough, North Lebanon, North Cornwall, South Lebanon, and West Cornwall townships. All of those municipalities are participating in the capital improvement program. A seventh municipality, South Annville Township, which receives its primary emergency medical services from Lawn EMS, is also a participant in the capital funding initiative.

“Thanks to the municipalities we service who approved the per capita tax increase, we were able to purchase three new vehicles this year (at a cost of $150,000 per vehicle),” said Smith. “It was great timing, right? Because we would not have been able to put anything towards our aging fleet, which believe me, is really aging. So we are extremely grateful for this support to help us replace our aging fleet.”

Smith added that FASP owns 30 emergency vehicles and will be able, thanks to the capital improvement tax program, to replace about one-third of its fleet through 2022. Smith highlighted how thin profit margins are for EMS providers, saying the capital services is “another lifesaver that we can’t say enough (good things) about.”

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The thin margins within the EMS world are evident to Smith after FASP recently went through a troubling period of financial instability. About two years ago, FASP, Lebanon County’s largest provider of EMS, faced a financial crisis that threatened some of its 126 employees’ paychecks.

In 2018, FASP was in financial straits stemming from its decision to outsource billing invoices to a Berks County firm. The transition to this company put a strain on FASP’s financial reserves.

Read More: First Aid and Safety Patrol enters 2020 with improved financial condition

“Last August, thanks to a financial turnaround of our own making, we were able to turn our financial situation around and go from the red to the black,” Smith said. “Come March, we were in a great position going forward, having gone from the red to the black and the financial projection was that we would continue to do well and then, boom, covid hit.”

WIth the 2018 debacle in the rearview mirror and finances stabilized through the end of November, Smith is still cautious about FASP’s financial future.

Although the number of coronavirus cases is currently raging across Pennsylvania and around the world, there is hope with the recent news of a vaccine, which is shown to have a 90 percent efficacy rate.  

If the rate of infection doesn’t improve within the next 10 months, Smith said he’ll have to re-examine the company’s finances come August since cash reserves will have been spent. This assessment is based on receiving no additional federal aid nor mass distribution of a vaccine to the general public. 

“In five months I’ll have to be proactive if there’s no resolution by the end of spring, meaning no vaccination program or additional gov’t assistance,” Smith said. “We’re in a critical six-month window to see what’s going to happen. I believe we’re going to be OK and we are going to weather the storm but if this (the virus) doesn’t turn around, we’ll have to address it at that time.”

A vaccine is key for all businesses, as far as Smith is concerned.

“The singular thing is a vaccine for our business to return to normal, what society needs to return to normal,” Smith said. “The sooner that society returns to normal, we will be able to return to normal. I am sure that this is true for every business, all of whom are in the same boat as us. We’ve been fortunate to stay in business, and so I am very grateful.”

FASP helped recognize veterans at a Veterans Day event earlier this year at the fairgrounds. (Provided photo)
See more LebTown photos from the event here.

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