Private equity's purchasing of ambulance firms delivers mixed results

Private equity firms have gotten into the business of providing ambulance and other first-responder services and often fall short when compared to public agencies, The New York Times has reported.

According to the newspaper, companies like Warburg Pincus have invested in or purchased ambulance companies outright, particularly after they have encountered financial problems or went into bankruptcy. Warburg Pincus acquired Rural/Metro in 2011 for $438.2 million, the first major foray into healthcare by the firm.

Warburg's experience with Rural/Metro led to an infant being billed $761 for being delivered in the back of one of the company's ambulances, including threats of sending the bill to collections, according to The Times.

Although some private equity firms have fared well managing such assets, some outcomes have been less than heartening: “Under private equity ownership, some ambulance response times worsened, heart monitors failed and companies slid into bankruptcy,” according to The Times' investigative reporting. Altogether, three of the 12 ambulance companies owned or managed by private equity firms went into bankruptcy, either as the result of being saddled with too much debt or miscalculating the market.

One significant operator, TransCare EMS, which serviced municipalities throughout the Eastern Seaboard, became insolvent and ceased operations after pursuing Medicaid patients despite rules against aggressively billing program enrollees. Its employees were eventualy reduced to clandestinely swiping supplies from hospitals after dropping off patients. Its owner, the private equity firm Patriarch Partners, was controlled by Lynn Tilton, who had her own reality television show. Tilton turned out to to be the sole member of the TransCare board of directors.

The issues of mismanagement among ambulance operators is not restricted to those operated by private equity firms. The Medicare program has begun moving toward prior authorizations in order to reduce fraudulent billing for non-emergent transports, a practice that has significantly cut down on charges.

- read The New York Times article