Determining the Costs of and EMS System, and Why It Matters, Part 2

This article is the second of a three-part series examining the cost of modern EMS systems and how these systems can be funded. Read part one.

Where to Begin to Fund a High-Performance U.S. EMS System

Today there is a patchwork of over 20,000 private and government EMS organizations that covers most of the U.S; these agencies are staffed by personnel including basic life support emergency medical technicians (EMT) and advanced life support paramedics.¹ Because there is a paucity of finance data from these organizations, one way to approach the funding question is to design a theoretical system that provides high-performance care and estimate its costs. To improve a system, one must have some ideas about what an improvement is. The best way to do that is to design an ideal high-performance system and evaluate improvements on whether they move the status quo closer or further away from the ideal.²

EMS Today

Of course, one might wonder how much is being spent to organize and deliver EMS today but that is a much more difficult question to answer. There is no single resource, for example, where one can see how many patients are treated on site but referred to follow up clinical care, or transported to a medical facility, as the result of a call for help to 9-1-1 in the U.S. each year. Nor is there a resource that identifies the actual amount that is spent annually in the U.S. for those transports and the system components needed to plan, organize, and perform those responses and transports.³

A Rational System Design

Structuring a national system on a regional, multi-jurisdictional basis is the most efficient design. There are many different system models, but the model described in the American Ambulance Association’s (AAA) "EMS Structured for Quality" model⁴ is well-suited for use nationwide. It is a high-performance EMS system model not restricted to the private or public sectors. Even though the AAA created the model, any ambulance provider, public or private, may operate within its framework. The model includes a detailed description of how an ideal “system” should operate.

• There are five “hallmarks” or system design principles upon which this model operates.
• Hallmark 1: Hold the EMS agency accountable
• Hallmark 2: Establish an independent oversight entity
• Hallmark 3: Account for all service costs
• Hallmark 4: Require system features that ensure economic efficiency
• Hallmark 5: Ensure long-term high-performance service

In this system, typical ambulances will be staffed with advanced life support personnel including a minimum of one paramedic and one EMT using the usual urban, rural, best-effort response time standards, in addition to all the customary high-performance standards. The model includes:

• Average work week of 42 hours
• Average paid time off for sick and vacation of six weeks
• Three weeks of paid training time each year
• Average paramedic salary of $110,000
• Average EMT salary $65,000
• Benefit package 15%

Regionalization

There are enormous economies of scale when EMS is provided on a regional basis to populations of more than 1 million and where populations contain a mix of about 80% urban and 20% rural.⁵ Such a mix allows the fixed costs of the entire system to be spread over a large number of unit hours and transports. In addition, by including both urban and rural areas in the same region it allows the cost savings from efficiencies in urban areas to be shared with rural areas. It also allows rural areas to share in the efficient provision of overhead services such as human resources, risk management, training, quality improvement, purchasing, administration, and payroll.

As seen in Table 1, operating stand-alone EMS systems in rural areas with low efficiencies in this example requires three times more unit hours per transport, which results in transport costs 300% higher than in urban areas.⁶ A smaller number of calls also results in much higher overhead costs per call even if total overhead or fixed costs are the same in an urban and rural region due to the difference in call volumes in the regions.

Utility Market

What is known today that was not known in 1974 is that the ambulance market most closely resembles a utility market. There are extremely high infrastructure costs as well as peak load demand patterns. The lowest average cost is achieved when a single provider exclusively serves the market. For example, in the electric utility industry if two companies string two sets of power lines in the same geographic area the cost (not price) of the service would be higher than if there was one set of lines.⁵

As Jack Stout explained in 1985, retail competition does not produce the best quality for the lowest cost in ambulance markets for many reasons including a whole host of information asymmetries between patients, providers, payors, and those who call, as well as between employers and employees.⁷

Ideal size of an EMS system

Data collected by Jack Stout and Frank Heyman showed that the economies of scale derived from serving an exclusive market leveled off when serving a population of 1 million; that is an old number, but it is the best we have.⁸ If the U.S. has a population of 340 million then one may infer that there should be no more than 340 regional EMS systems if the full impact of economies of scale is to be captured.

Dartmouth Medical Atlas

The Dartmouth Medical Atlas has identified 3,436 Hospital Service Areas based on ZIP codes of the hospitals where residents sought care. Those areas were then used to create 306 Hospital Referral Regions (HRR). These are discrete and contiguous regions and were determined by identifying where patients were referred to for major cardiovascular surgery and neurosurgery. Some HRRs overlap state boundaries and 100 had populations of more than 1 million.⁹

Hospital referral regions would make an excellent basis for designing EMS ambulance regions with populations of more than 1 million each. To allow rural areas to enjoy the economies of scale it’s necessary to create regions with a mix of rural and urban populations containing approximately 20% rural residents per region.

Estimating System Cost: Transports, Efficiency, Unit Hour Costs

To estimate the cost of this system it’s necessary to estimate the number of patients transported and determine the number of unit hours it will take to transport these patients while meeting response time standards. The ratio of transports to unit hours is known as Unit Hour Utilization and is the exact measure needed to estimate efficiency. Further, once the number of unit hours needed has been determined it is a simple exercise to multiply that number by the average cost of a high-quality unit hour.

Estimating Transports

There is no source documenting the annual number of patients transported in the U.S. from a scene to hospital as the result of a call to 9-1-1. For the purposes of this discussion the “transport” number does not include routine patient transfers, critical care transfers arranged between facilities, nor specialty care transports.

The “estimated transport percent” in Table 1 quantifies that from a population of 340 million,10 approximately 15% will be transported by ambulance annually. This is a conservative estimate based on factors including:

• a yearly call volume of 42,583,534 (and 30,887,679 transported) in 2020,3 up from a call volume of 36,698,670 (and an estimated 28,004,624 transports) in 2009,¹¹
• an aging population,¹²
• and the recognition that the percentage of ambulance calls that result in a patient transport can increase by eight-fold for older patients compared to younger patients.¹³

One relatively small study found that approximately 23% of the population was transported by ambulance in one year.¹⁴

Stout and Heyman found that transport rates varied from 7% to 15% of the population being served in full service public utility model systems. The number of systems was small, but this provides a range to estimate transports; the highest reported percentage was 15% and thus is the conservative choice.⁸

As announced by the Census Bureau in December 2024, the U.S. has a population of around 340 million; using the 15% transport rate results in an estimated 51 million transports per year.¹

Using state population data from the Census Bureau, the percentage of urban and rural populations were calculated and then the transport volumes for rural and urban populations were calculated for each state. In the U.S., 80% of the population lives in urban areas which would generate 40.8 million transports. The remaining 20% live in nonurban areas which would generate 10.2 million transports.

Estimating Efficiency

In 1983, Jack Stout created the modern measure of ambulance efficiency using “unit hours” and then deriving unit hour costs and unit hour utilization. A “unit hour” is one hour of a fully equipped and staffed ambulance either assigned to a call or available for a call.¹⁵

Unit Hour Utilization (UHU) is the industry standard for describing efficiency in ambulance operations. It is the ratio of transports to Unit Hours expressed as the result of the fraction: Transports divided by Unit Hours for a given period.¹⁵

Heyman found that in urban areas, high performance standards could be met using a UHU of 0.45. This means an ambulance transports a patient about once every two hours. In rural areas there was a wider range of values, there a UHU of 0.15 (one transport every 6 hours and 40 minutes) is practical.⁸ These high performance standards include response times of 8:59 with 90% reliability for life threatening emergencies in urban and suburban zones, with best efforts in rural and wilderness areas, and include 10-minute response times with 90% reliability for non-life threatening emergencies in urban and suburban zones.

If rural transports are equal to 10.2 million and urban transports equal 40.8 million then the number of unit hours needed for rural areas is 10.2M divided by the UHU of .15 = 68 million unit-hours; and in urban areas 40M / a UHU of .45 = 90.7 million unit-hours.

Estimating Unit Hour Costs

Jack Stout was often asked to estimate how much jurisdictions might be required to pay for distinct levels of ambulance service. Using the data from the high-performance EMS providers who kept track of both unit hours and transports he was able to calculate a “cost per unit hour.”¹⁶ By dividing total expenses by the total number of unit hours produced, a cost per unit hour can be calculated.

As seen in Table 1, we have made an estimate of $220 per unit-hour based in part on the original research by Stout and Heyman, and including updated costs and personal experience.

Estimating System Costs

If total unit hours equal 159 million, then at $220 per unit-hour the total cost is approximately $35 billion. By extrapolation, this means that if an EMS system in the U.S. were completely funded by tax dollars, it would cost about $103 per person per year.

Alternatively, with no subsidies there would be an average cost per transport of $684 for every patient. If one were to charge an urban rate and rural rate the prices would be $490 and $1470 per transport.

Alternative twp would be for CMS to pay upfront the anticipated full costs for the 40% of the population on Medicare and Medicaid, for private health insurers to collectively pay up front the anticipated costs for their clients, and for tax dollars to be paid annually up front to cover the uninsured, costs for nonreimbursed activities such as disaster response, and to provide funds to be devoted to system development. That would translate roughly to CMS paying each ambulance agency $40 per capita per year and for health insurance companies and government to pay about $60 per capita per year to create and maintain a high-performance EMS system. Alternative two would also eliminate all the administrative costs associated with per-patient billing.

Part three of this series will publish on August 8 and will cover the conclusions of the study.

Acknowledgements

The authors extend our appreciation to James T. Kerr (KERR Associates, Inc) for his valuable insights and suggestions.

Disclaimers

There was no funding for this project. The authors have no conflicts of interest.

References

1. National Association of State EMS Officials. National Emergency Medical Services (EMS) Assessment.  2020.  Available at: https://nasemso.org/wp-content/uploads/2020-National-EMS-Assessment_Reduced-File-Size.pdf. Accessed: July 6, 2020.

2. Norman CP, Lloyd;Williams, David. Quality as an Organizational Strategy. Austin, TX: Provident Heierman Press; 2024.

3. The National Association of State EMS Officials (NASEMSO), and the Office of EMS, National Highway Traffic Safety Administration (NHTSA), U.S. Department of Transportation. National Emergency Medical Services (EMS) Assessment. 2020. Available at: https://nasemso.org/wp-content/uploads/2020-National-EMS-Assessment_Reduced-File-Size.pdf. Accessed: February 26, 2023.

4. Krumperman K, Murphy S, Overton J, Smith P, Staffan B. EMS structured for quality: Best practices in designing, managing and contracting for emergency ambulance service. American Ambulance Association: McLean, Va. 2008.  Available at: https://ambulance.org/wp-content/uploads/2020/11/EMS-Structured-for-Quality_0308_FINAL.pdf. Accessed: April 22, 2025.

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8. Heyman F. Sirens are a warning sound: A glimpse at ambulance service in America by comparing nine city’s prehospital ambulance care systems. 1985. Prepared for Three Rivers Ambulance Authority, Ft. Wayne, Ind.

9. The Dartmouth Atlas of Health Care.  2024.  Available at: https://www.dartmouthatlas.org/. Accessed: March 15, 2025.

10. U.S. Census Bureau. New 2024 Population Estimates Show Nation’s Population Grew by About 1% to 340.1 Million Since 2023. 2024. Available at: https://www.census.gov/library/stories/2024/12/population-estimates.html#:~:text=New%202024%20Population%20Estimates%20Show,to%20340.1%20Million%20Since%202023. Accessed: March 15, 2025.

11. U.S. National Highway Traffic Safety Administration. National EMS Assessment (Final Draft). 2011. Available at: http://ems.gov/pdf/2011/National_EMS_Assessment_Final_Draft_12202011.pdf. Accessed: 29 August 2013.

12. Caplan Z. U.S. Older Population Grew From 2010 to 2020 at Fastest Rate Since 1880 to 1890. 2023. U.S. Census Bureau Available at: https://www.census.gov/library/stories/2023/05/2020-census-united-states-older-population-grew.html. Accessed: April 22, 2025.

13. Lowthian JA, Jolley DJ, Curtis AJ, et al. The challenges of population ageing: accelerating demand for emergency ambulance services by older patients, 1995–2015. Med J Aust. 2011; 194(11):574-578.

14. Hanchate AD, Paasche-Orlow MK, Dyer KS, Baker WE, Feng C, Feldman J. Geographic variation in use of ambulance transport to the emergency department. Ann Emerg Med. 2017; 70(4):533-543. e537.

15. Stout J. System Status Management:  The Strategy of Ambulance Placement. Journal of Emergency Medical Services. 1983; 8(5):21-32.

16. Overton J, Stout J. System Design. In: Kuehl A, ed. Prehospital Systems Medical Oversight. 3rd ed. St. Louis: Mosby;  2002:114-131. Affairs Forefront. 2025