Economic regulation of ambulance services in California

This study was intended to identify economic regulatory programs used by California counties (including ambulance franchising and rate setting), to inventory their foci and application, and to identify differences around the state. By studying the variety of programs used in one state, this study establishes a framework for evaluation of state and local regulatory programs elsewhere.

This study surveyed all California local EMS agencies (LEMSAs); these are California's equivalent of regional EMS organizations. The survey achieved a 100% response rate, and all data involve population parameters obviating the need for inferential statistics.

Seventy-three percent of California counties use economic regulations. Large-population counties and those that operate their own LEMSAs are more likely to use economic regulations than are small counties and those that participate in multicounty EMS agencies. Despite a preference for competition in the authorizing statute, most franchises were granted without competition to existing providers. The majority of franchises in the state were granted to public services. Most ambulance rate setting occurs outside of a competitive process.

Economic regulations that were intended to provide a structured marketplace are often being used to protect existing providers, particularly public services, from competition. The growing interest by fire departments in entering the market for emergency ambulance service, along with the existing bias toward them in granting of franchises, does not bode well for use of the competitive process. The growth of managed care may change or eliminate the need for economic regulations but, if they are to continue, more state oversight should be considered.