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RUNNING HEAD: ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
Analyzing the Costs and Benefits for the
Implementation of a Third Fire-based Ambulance
Michael J. Allora
Clifton Fire Department, Clifton, NJ
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
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Certification statement I hereby certify that this paper constitutes my own product, that where the language of
others is set forth, quotation marks so indicate, and that the appropriate credit is given
where I have used language, ideas, expressions, or writings of another.
Signed:___________________________________
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
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Abstract
The Clifton Fire Department (CFD) NJ provides fire-based emergency
medical services at the basic life support (BLS) level. A study of the Fire Department
recommended that the CFD begin planning for the future implementation of a full time
third ambulance
The problem is the CFD has not conducted an analysis of the costs and benefits of
the implementation of a third fire-based ambulance.
The purpose of the research is to identify the issues in developing a plan for
conducting an analysis of the costs and benefits of the implementation of a third fire-
based ambulance.
The descriptive research method was used to answer the following research
questions. 1. What type of cost and benefit analyses should be considered? 2. With a
third fire-based ambulance implementation, what is the associated cost? 3. What are the
benefits associated with the implementation of a third fire-based ambulance?
The author conducted research of published material related to the costs and
benefits of the addition of a third fire-based ambulance, as well as the types of cost
analysis to be considered by the CFD. Additional information was obtained from fire
department personnel, city employees, equipment vendors, and training personnel.
The author discovered that the elements of conducting a cost analysis are very
complex. There are several types of cost analysis to consider, yet all require an
understanding of complex economic procedures at some level.
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The costs associated with implementing a third fire-based ambulance are high.
The benefits associated with the implementation are not easy to quantify and are not
thoroughly supported by the medical community.
The cost of providing services is high. The CFD must continue to explore
alterative funding sources to maintain and/or expand current programs. The CFD must
also consider all service delivery alternatives, and utilize relevant and accurate
information in policy decision making.
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Table of contents
Certification Statement…………………………………………………………….…2
Abstract…………………………………………………………………………….…3
Table of Contents………………………………………………………………….….5
Introduction……………………………………………………………………….…..6
Background and Significance…………………………………………………..…......7
Literature Review………………………………………………………………..……10
Procedures…………………..………………………………………………….……..22
Limitations………………………………………………………………………….....25
Results……………….………………………………………………………….……..28
Discussion………………………………………………………………….…….……32
Recommendations…………….…………………………………………….…………37
References…………….…………………………………………………….…………38
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
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Introduction
The Clifton Fire Department (CFD) NJ provides fire-based emergency medical
services at the basic life support (BLS) level. All uniformed personnel on the department
are trained to the emergency medical technician – basic (EMT-B) level. The department
has two ambulances in service on a daily basis.
Although there have been several attempts made to implement a third fire-based
ambulance, both on a full time or part time basis, there are still only two full time fire-
based ambulances. The staffing of the third ambulance is based on the daily staffing
levels. When the staffing levels are at the minimum, the third ambulance is not in service.
In 2003, the City of Clifton hired Carroll Buracker and Associates, Inc. to conduct
a study of the management and operations of the fire department. This was a
comprehensive study, which examined all areas of the fire department administration and
operations, including the emergency medical services. One of the recommendations of
the study was to begin planning for the future implementation of a full time third
ambulance (Adams, Davis, Foster, Buracker, 2004).
The problem is the CFD has not conducted an analysis of the costs and benefits of
the implementation of a third fire-based ambulance. The purpose of the research is to
identify the issues in developing a plan for conducting an analysis of the costs and
benefits of the implementation of a third fire-based ambulance.
The descriptive research method was used to answer the following research
questions. 1. What type of cost and benefit analyses should be considered? 2. With a third
fire-based ambulance implementation, what is the associated cost? 3. What are the
benefits associated with the implementation of a third fire-based ambulance?
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
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Background and Significance
The CFD provides fire-based EMS operating two full time ambulances. The
ambulances are staffed by firefighters cross trained as EMTs. The primary duty of the
ambulances is to respond to requests for emergency medical services. The ambulances
also respond to other calls including fire incidents, vehicle extrications, and hazardous
materials incidents.
When the author read through the Management and Operations Study of the Fire
Department, a portion of the EMS section was the genesis for the EFO paper. The study
states:
As call load volume increases without an increase in transport service, then
transport response time will most likely be increased. Therefore, an important
aspect of EMS delivery is to examine the need for additional transport units so
that response times can be kept within established guidelines and units do not
become overworked, which can lead to fatigue, poor quality of patient care, and
EMS employee burnout.
The Clifton Fire Department incident workload has been increasing for
both fire and EMS-related incidents over the seven-year period of 1997-2003,
Fire/rescue and related incidents have increased 54.3 percent over this period – a
significant increase in call workload for the CFD.
Approximately 60 percent of all Fire Department calls are EMS related;
consistent with the U.S. trend for fire departments providing EMS services
(Adams et al., 2004).
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In the executive summary of the study, one of the recommendations was to
initiate in the future an assessment of the need for full-time staffing of a third ambulance
in the next three to five years. The executive summary was written over seven years ago
(Adams et al., 2004)
Over the years, several attempts have been made to implement a third fire-based
ambulance. Grants were written in order to get the additional staffing. The Staffing for
the Adequate Fire and Emergency Response (SAFER) program is a federal grant program
for the hiring and recruitment of personnel (FEMA.gov, 2012). One SAFER grant request
was unsuccessful. Another grant was successful, but turned down by the Clifton elected
officials.
Several options have been attempted without success. One option was to staff the
third ambulance with one additional firefighter and have a fire company respond along
with it. Personnel from these two companies would transport the patient, leaving the fire
company understaffed and out of service. This option was not well received by the
department and was eliminated. The idea of having a front line fire apparatus left with
only two firefighters for the duration of the EMS call was unsatisfactory.
The most current staffing model being used to place the third ambulance in
service is based on a staffing level of 29 for the shift. This is three over the minimum
staffing level of 26. When there are 27 firefighters on duty, the additional firefighter is
assigned as the Accountability Technician. The Accountability Technician was a single
person company that responded to incidents for accountability, but was also an assistant
to the tour commander and training officer, serving numerous administrative functions.
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Where there are 28 firefighters on duty, the additional firefighter is assigned as a fourth
firefighter on any of the front line apparatus. When there are 29 on duty, each fire
apparatus is staffed with three firefighters, the Accountability Technician is in service,
and the ambulance is placed in service with two firefighters. There were five days when
the third ambulance was in service in 2011.
One of the issues the CFD is facing is the reduction in the table of organization
since the management and operations study was conducted. In 2004, there were 139 paid
uniformed positions in the department (Adams et al., 2004). Currently, the table of
organization has been reduced to 129 paid uniformed positions, with no reduction in
service levels, the number of companies in service daily, or the minimum staffing levels
per company. The only reduction in staffing levels was the daily minimum staffing level
from 27 to 26. This reduction was the elimination of the Accountability Technician
position. Due to the reduction in the table of organization, and the decrease in the
minimum daily staffing level, there were few times where there was adequate staffing for
the third ambulance to be placed in service.
Currently, there is no plan for the implementation of a third fire-based ambulance.
With a continued increase in call volume and decrease in staffing, the CFD will be unable
to meet the service demands of its customers in the future.
This research is relevant to the Executive Fire Officer Program’s Executive
Development Course. Through this research, the author was attempting to be an agent of
cultural change, while exercising organizational creativity and innovation. Through the
research process, the author utilized effective management, leadership, and change
management strategies.
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The research relates to and supports several of the United States Fire
Administration (USFA) operational goals. Specifically, the research improves local
planning and preparedness by evaluating current service levels and proposing increased
staffing levels based on the results of the research. The research improves the fire and
emergency services’ capability for response to and recovery from all hazards by
increasing staffing levels with firefighters crossed trained in all-hazard response. The
research improves the fire and emergency services’ professional status by analyzing the
costs and benefits of a proposed staffing increase through descriptive research (U.S.F.A.,
2011),
Literature review
What type of cost and benefit analyses should be considered?
“The state of the literature on economic evaluation of EMS is poor” (Lerner,
Nichol, Spaite, Garrison, Maio, 2006). The literature that exists is poor, limited in scope,
and does not reflect the wide array of care provided with EMS systems. A system for
evaluating costs and consequences of care delivered is needed (Lerner, et al, 2006).
Partial evaluations do have some value. But the best use of an economic evaluation is to
assist in making choices about the use of community resources. “Therefore, accurate
assessment of the economics of EMS requires full economic evaluations” (Lerner et al,
2006). For the information to be meaningful in determining how limited resources should
best be used, the scope of economic analyses in out-of-hospital emergency care needs to
be expanded and the quality improved (Lerner et al, 2006).
How much a community is willing to pay for EMS varies and depends on the total
amount of money available. Different communities may to be willing to pay for out-of-
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hospital care according to their available resources and competing alternatives. This
makes it difficult to create a universal definition of what costs should be considered in
decision-making criterion for different EMS systems. It also means some communities
may have a higher cost of readiness than others because of their system demands (Lerner
et al, 2006).
There are numerous references that address cost-benefit analysis (CBA). Some of
this information is directed specifically toward public policy decision-making while
others are directed toward the private sector. Still others address variations of what is
termed “cost-analysis”, by defining and explaining options such as cost-effectiveness
(CE) analysis, cost-utility (CU) analysis, and cost-feasibility (CF) analysis (Levin &
McEwan, 2001).
Before beginning a cost analysis, the framework for conducting the analysis must
be established. This consists of identifying the nature of the problem, clarifying the
alternatives that will be considered, identifying the audience for the analysis, and
selecting which cost analysis to use (Levin & McEwan, 2001).
Public sector policy decisions must demonstrate a consideration of both the costs
and effects of such decisions (Levin & McEwan, 2001). “At the broadest and the vaguest
level, cost-benefit analysis may be regarded simply as systematic thinking about
decision-making” (Kelman, 1981).
CBA is a decision-making tool. It is designed to provide information to assist the
decision maker when choosing between alternatives. CBA does not remove the political
aspect of public policy decision making. It is one input in the decision-making process.
The decision still needs to be made based upon the information (Fuguitt & Wilcox,
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1999). “The applications of benefit-cost analysis to topics in public safety are many and
varied. “The different contexts lead to different literatures, communities of practice, and
outlets for publication” (Farrow, 2009).
“What constitutes a proper cost-benefit analysis? Although a standard decision-
making tool for policy makers, the technique is not fully understood, especially its
procedural details. Even the question of what is a benefit elicits sometimes-conflicting
responses” (Fuguitt & Wilcox, 1999). Cost-benefit analysis can be defined as follows:
Cost-benefit analysis (CBA) is a useful approach to assess whether decisions or
choices that affect the use of scarce resources promote efficiency. Considering a
specific policy and relevant alternatives, the analysis involves systematic
identification of policy consequences, followed by a valuation of social benefits
and costs and then application of the appropriate decision criterion (Fuguitt &
Wilcox, 1999).
“CBA assesses the “social” value of the effects of a public or private decision. It
attempts to allow for all gains and losses as viewed from the standpoint of all individuals
within society” (Fuguitt & Wilcox, 1999).
When analyzing a specific policy, several components must be considered. First,
the policy’s positive and negative social consequences must be identified. Second is the
monetary valuation of as many of the consequences as social benefits and costs as
possible. Third is the application of the appropriate decision criterion to weigh the social
benefits and costs and assess the policy’s efficiency (Fuguitt & Wilcox, 1999).
All potential pros and cons are identified and then converted into monetary
figures. “They are compared to determine if the proposal is desirable from society’s
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standpoint” (Nas, 1996). CBA is an evaluation of alternatives according to their costs and
benefits when they are expressed in monetary terms (Levin & McEwan, 2001). In order
for cost-benefit calculations to be performed correctly, all costs and benefits must be
expressed in a common measure, usually dollars (Kelman, 1981).
In CBA, in order for the alternative to be selected, the benefits must outweigh the
costs. When several alternatives are under consideration, the decision would be based
upon which had the highest cost-benefit ratio (Levin & McEwan, 2001).
“In areas of environmental, safety, and health regulation, there may be instances
where a certain decision might be right even though its benefits do not outweigh its costs.
There are good reasons to oppose efforts to put dollar values on non-marketed benefits
and costs” (Kelman, 1981).
An advantage of CBA is that it can be useful to gauge the overall worth of a
program or policy. The program or policy should not be implemented unless the benefits
are greater than the costs. One disadvantage of CBA is that all benefits and costs must be
converted to monetary units (Levin & McEwan, 2001).
CBA proceeds in four essential steps: 1. identification of relevant costs and
benefits, 2. measurement of costs and benefits, 3. comparison of costs and benefits
accruing during the lifetime of the project, 4. project selection (Nas, 1996).
In instances where benefits are not easily converted, another method for
assessment must be used. CE analysis and CU analysis do not depend on the ability to
represent benefits in monetary terms. An attractive feature of CBA is that a comparison
of programs with different objectives can be conducted. In CE analysis, the alternatives
are limited to a common objective (Levin & McEwan, 2001).
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Placing a value on human life is one of the most difficult and controversial issues
to deal with when conducting analysis.
One approach to value a life is to measure an individual’s lifetime gross
earnings. Sometimes the measurement is based on net earnings, making an
allowance for the individual’s lifetime consumption.
A common way to place a value on human life is to determine the dollar
amount that a person would be willing to pay to reduce the probability of his or
her death (Nas, 1996).
CE analysis is an evaluation of alternatives according to their costs and their
effects relating to producing an outcome (Levin & McEwan, 2001). CE analysis has
advantages and disadvantages. An advantage is that it merely requires combining cost
data with the effectiveness data. A disadvantage is that one can only compare the CE
ratios of alternatives with goals that are similar. Alternatives with different goals cannot
be compared (Levin & McEwan, 2001).
CU analysis is an evaluation of alternatives according to a comparison of the costs
and their utility or value. CU analysis uses information on the preferences of individuals
to express their overall agreement with measures of effectiveness (Levin & McEwan,
2001). CU analysis combines multiple measures of effectiveness into a single estimate of
utility (Levin & McEwan, 2001). The advantages of CU analysis are that it attempts to
consider individual preferences and that a large number of outcomes considered. “A CU
analysis often contributes to a process of consensus building and participatory decision-
making” (Levin & McEwan, 2001). Perhaps the biggest disadvantage is that the results
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are difficult to reproduce among different evaluators due to the sometimes-conflicting
methods used to estimate the importance weights (Levin & McEwan, 2001).
CF analysis estimates only the costs of an alternative to determine whether or not
it should be considered. “If the costs of any alternatives exceed the budget, there is no
point in doing any further analysis” (Levin & McEwan, 2001). This method represents a
limited form of analysis used to determine whether or not alternatives should be included
for consideration (Levin & McEwan, 2001). “When considering the alternatives, it is a
matter of professional integrity to provide information on all pertinent alternatives, while
letting the decision-making and the political processes determine the choice among them”
(Levin & McEwan, 2001).
Costs associated with implementation
There is a limited amount of literature that addresses the cost and economic value
of out-of-hospital care. The literature that exists has limited scope, poor quality, and
evaluates small subsets of out-of-hospital emergency care costs. Good cost-effectiveness
has not been established for most areas of out-of-hospital emergency care (Lerner et al.,
2006)
When estimating costs, the ingredients method represents a straightforward
approach. First, identify the ingredients to be used. By dividing ingredients into four or
five main categories, this facilitates the identification and specification of ingredients.
“These are personnel, facilities, equipment and materials, other program inputs and
required client inputs” (Levin & McEwan, 2001).
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When determining personnel costs, salary and fringe benefit costs must be
considered. Fringe benefit costs include the employer’s contributions to social security
and pension plans, and health and life insurance (Levin & McEwan, 2001).
The components of an EMS cost framework should include: administrative
overhead, bystander response, communications, equipment, human resources,
information systems, medical oversight, physical plant, training and vehicles. Each of
these components can be broken down into smaller components that must be considered.
“Standardizing the calculation of EMS cost will allow for comparisons of costs between
studies, communities, and interventions” (Lerner, Nichol, Spaite, Garrison, Maio, 2007)
When describing the methods of measuring EMS costs, included are the costs of
readiness and actual service delivery. Readiness includes on-call staffing and service
delivery includes staffing, durable and consumable materials used at an incident,
provision of care, and transportation to a receiving facility. The costs of training,
retraining, quality control, medical direction, equipment, administration, and other
expenses should all be considered (Lerner et al., 2007).
Human resource costs include all personnel involved in the EMS system, whether
they are delivering patient care or not. Human resource costs include salary, benefits,
overtime pay, and training. Physical plant costs include any buildings that are required to
train, provide, maintain or administer the EMS system. Vehicle costs consist of acquiring,
operating, maintaining and replacing vehicles. Equipment costs can be divided into two
areas: consumable and durable. Consumable are those that are used and then discarded
(e.g. oxygen masks, defibrillator pads). Durable are used over again multiple times (e.g.
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defibrillators). Costs for durable items require consideration of the cost of buying,
operating, maintaining and replacing this equipment (Lerner et al., 2007).
When considering communication costs, the cost of the facility and associated
equipment for a public safety answering point must be considered. This should also
include all related hardware and software. The communication infrastructure must also be
considered. This includes items such as common telephone lines and cell phone towers.
Medical oversight costs include personnel costs incurred through contracts in addition to
the cost of salaried or hourly personnel (Lerner et al., 2007).
“Those who attempt to use the existing literature related to the economics of
EMS will find few studies. Furthermore, methodologies used to conduct the studies are
inconsistent and, in some cases, inappropriate” (Lerner et al., 2007).
Some agencies that provide out-of-hospital EMS have other responsibilities. For
example, a fire department may respond to both fire and medical requests for aid.
“Allocation of the cost of being available to provide either of these responses is necessary
to estimate the cost of the system. How to allocate such joint costs (products) is an area of
considerable debate that cannot be resolved in this article” (Lerner et al., 2007).
The National Association of State EMS Officials (NASEMSO) developed a cost
analysis workbook guide as part of an EMS Cost Analysis Project. “The objective of the
EMS Cost Analysis Project is to create a comprehensive framework that would allow
users to determine the cost of providing pre-hospital emergency care from a societal
prospective” (NASEMSO.org).
In the guide, there are twelve steps to be taken. They are: 1. Define the
community for which costs are being calculated. 2. Determine all of the agencies that are
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part of an EMS system. 3. Estimate the percent of time that each agency is involved in
EMS. 4. Select a year. 5. Calculate human resource costs. 6. Calculate physical plant
costs. 7. Calculate vehicle costs. 8. Calculate equipment costs. 9. Calculate other
administrative costs. 10. Calculate EMS-related training costs. 11. Calculate bystander
training costs. 12. Exclude any costs associated with revenue generation (Lerner, Nichol,
Spaite, Garrison, Maio, 2011).
Benefits associated with the implementation
“The American Heart Association described the “chain of survival” concept in
which survival depends on several factors including public awareness of symptoms, early
basic life support by bystanders, rapid access to emergency medical services, and prompt
defibrillation” (Pell, Sirel, Marsden, Ford, Cobbe, 2001). In order to provide prompt
defibrillation, the EMS personnel would need to arrive on scene quickly. A reduction in
response time would lead to prompt defibrillation.
In order to reduce response times, additional resources would be required.
However, a cost effectiveness study from Ontario suggested that the additional cost
would be less if the reduced times were achieved by equipping first responders (such as
firefighters and police) with defibrillators (Pell et al., 2001).
The study suggests that “decreasing the target for response to 90% of calls from
14 minutes to 8 minutes would increase survival from 6% to 8%. A response time of 5
minutes would increase survival to 10-11%” (Pell et al., 2001).
“Shorter ambulance response times are associated with an increased probability of
receiving early defibrillation and subsequent survival, although this relationship has not
always been found” (O’Keefe, Nichol, Turner, Goodacre, 2010). Reducing response
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times by 1 minute to calls where the patient was in ventricular fibrillation was estimated
to increase survivability by 24% (O’Keefe et al., 2010).
A study from 1998 suggested that a reduction in average ambulance response
times of 1 minute would mean an annual cost of 1.68 million pounds to that service
alone. At the time of the study, that would have represented a cost of 54 million pounds
in England and Wales. The study suggested that reducing ambulance response times
across the board might not be cost-effective unless the additional benefits were
substantial (O’Keefe et al., 2010). The cost conversion for 1.68 million British pounds to
U.S. dollars is $2,638,895.85. The conversion for 54 million British pounds to U.S.
dollars is $84,821,652.63 (unitconversion.org, 2012)
Except for cardiac arrest, there is little to no scientific evidence suggesting a
casual relationship between response interval and improved patient outcomes.
There is little evidence linking improved response intervals to improved survival
in critical trauma, and there is no literature suggesting rapid response intervals
improve outcome for noncritical patients.
However, there is a public expectation that when EMS is requested, an
ambulance will appear within a reasonable time no matter what the complaint.
The definition of “reasonable time” can vary considerably between communities
of varying population density (Bailey & Sweeney, 2003).
The response time should take into consideration the patient’s perspective. The
time begins when the caller notifies the dispatch center and ends when the unit arrives at
the scene (Bailey & Sweeney, 2003).
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Every community should assess its EMS first-response system and make
improvements that can be realistically sustained. The assessment of response intervals
should be continuous. The changes that are considered should be based on data obtained
from the system. Improved patient care and customer satisfaction should be the top
priorities (Bailey & Sweeney, 2003).
Reducing response times comes with certain costs. “Beyond monetary costs are
safety costs as well. Shorter response intervals carry established, significant risks for
EMS providers and the public alike. Simply going faster is not the solution” (Bailey &
Sweeney, 2003).
A study conducted in Sheffield, UK, found no overall benefits of faster response,
except in patients in out-of-hospital cardiac arrest (Turner, O’Keefe, Dixon, Warren,
Nicholl, Colwell, 2006). One of the study’s main limitations is that it only considered the
benefits of survival.
Although there is no evidence about benefits in terms of reduced disability or
other morbidity, there are other types of benefits for patients, carers, callers, and
bystanders. There may be a reduction in anxiety, distress, pain and discomfort and
further research to measure if these potential benefits are real and valuable to
patient would be worthwhile (Turner et al., 2006).
Another possible benefit might be that if the patient can be admitted to the
hospital while still alive, the families may be able to see them before their death. (Turner
et al., 2006)
Response time goals for first-due units and for the entire assignment of
emergency response vehicles drive fire department objectives like staffing levels.
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The service level objectives established drive response time performance by all
responding resources and the assembly of effective firefighting (or EMS)
response force on scene. The operational performance of the emergency service
organization is a function of three considerations; resource availability/reliability,
department capability, and overall operational effectiveness.
As the fire department responds to an increasing number of requests for
service, the probability that a needed piece of apparatus will be busy when a call
is received also increases (“Assessing Community Vulnerability”, 2011).
Today, fire departments that are responding to EMS calls are seeing an impact on
the availability of their resources. This needs to be considered when evaluating a
department’s reliability (“Assessing Community Vulnerability”, 2011).
The Insurance Services Office, Inc. (ISO) collects and evaluates information from
communities in the United States on their fire suppression capabilities. Each community
is evaluated on data that is used to develop a Public Protection Classification (PPC)
number for that community. ISO uses a uniform set of criteria incorporating nationally
recognized standards. One of the major categories that are evaluated is the Fire
Department. Included under this category are equipment, training, geographic distribution
of fire companies and staffing (ISO, 2011).
Item #571 of the survey is Credit for Company Personnel. This is a review of the
average number of existing firefighters and company officers available to respond to
reported fire alarm structure fires in the city. The maximum number of points for this
category is 15 (ISO, 2011).
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Firefighters staffing ambulances or other units serving the general public are
credited if they participate in fire-fighting operations, the number depending upon
the extent to which they are available and are used for response to fire alarms of
fire (ISO, 2011).
Fire service EMS is the most efficient and effective model for the rapid
delivery of all emergency medical services. When time is critical and effective
pre-hospital care is required, the fire service is well positioned strategically,
geographically, administratively, financially, and operationally (IAFC, 2009)
Procedures
The author began researching while attending the National Fire Academy (NFA)
in July 2011. A search of articles and publications was conducted at the Learning
Resource Center (LRC). The search began with magazine articles and Executive Fire
Officer (EFO) papers related to EMS and the associated costs and benefits. The research
continued with an Internet search for articles and publications related to the costs and
benefits of EMS.
To obtain more technical information related to cost analysis, the author visited
the library at William Paterson University in Wayne, NJ. The university has a large
catalog of reference texts related to cost analysis. In order to check out reference texts,
the author had to go through Passaic County Community College (PCCC). The author
filled out a form using the Virtual Academic Library Environment (VALE) program.
VALE allows full time faculty members, graduate, and undergraduate students
from participating institutions to borrow materials. A valid college or university
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
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photo ID card and a signed VALE Reciprocal Borrowing Application Form are
required to borrow. VALE patrons may borrow up to 3 items (VALE website).
To obtain information related to the costs and benefits of the implementation of a
third fire-based ambulance, the author conducted Internet searches for publications,
studies, and articles.
A list of the major categories of costs associated with the third-ambulance
implementation in the CFD was developed from information gathered during the
literature review. All of the categories were considered. A final group of costs was
compiled based upon the needs of the CFD. They were costs for personnel, pension,
benefits, hiring, training, and outfitting new firefighters, fuel, and EMS equipment.
To determine figures for personnel and benefit costs, the author used the addition
of two firefighters per shift over four shifts, for a total of eight firefighters. This would be
the minimum number of firefighters that would need to be added to each shift to staff the
third ambulance.
In order to determine EMS equipment costs, the author used EMS equipment
figures from the previous year and added 50%. This would estimate the equipment costs
for three ambulances versus two.
In order to determine fuel costs, the author used an average of the gallons of fuel
consumed by the two full-time ambulances for the previous three years. This average was
multiplied by 50% to indicate the addition of a third full-time ambulance. A cost of $3.48
per gallon was used to convert gallons to dollars.
A list of the major categories of benefits associated with a third-ambulance
implementation in the CFD was developed from information gathered during the
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
24
literature review. A final list was developed based upon the CFD and what benefits could
be calculated in the allotted time frame for project completion. The categories considered
were an increase in the Insurance Services Office (ISO) rating, capture of billable
income, and a reduction in fatigue, or burnout, in the personnel assigned to the
ambulances.
The author conducted interviews of the CFD Fire Chief, EMS Chief, Fireman’s
Mutual Benevolent Association (FMBA) president, City of Clifton Department of Public
Works (DPW) Supervisor, a representative from the Insurance Services Office, Inc.,
Passaic County Public Safety Training Academy (PCPSTA) EMS Department Head, the
AAA Emergency Supply representative, and a Turnout Uniform representative.
Fire Chief Vincent Colavitti was asked to provide information related to the costs
of hiring and training new firefighters. The information requested was the cost for pre-
employment physical and psychological testing, and for training new firefighters to the
Firefighter 1 and Firefighter 2 levels.
EMS Chief Daryl D’Amore was asked to provide information related to the costs
and benefits associated with the EMS program, and statistical information related to the
program. The information requested was the total number of EMS transports, total
number of mutual aid EMS transports, dollar amount billed by the CFD per transport, and
the cost of EMS equipment and supplies for 2011.
FMBA president Robert Deluca was asked to provide information about
personnel costs. The costs included salary, pension, and benefits for the first five years
for a newly appointed firefighter.
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
25
DPW supervisor Jim Delillo was asked to provide the amount of fuel consumed
by the ambulances for the last three years.
The ISO representative, Portia Stewart, was asked to determine how many points, if any,
the CFD would receive toward their rating with an increase of eight firefighters.
PCPSTA EMS Department Head Walter Pearn was asked to provide the cost of
training new firefighters to the EMT – Basic level.
The AAA Emergency Supply representative, Ken Kiel, was asked to provide
information about outfitting new firefighters with personal protective equipment (PPE).
The Turnout Uniforms representative, Nidalys Rodriguez, was asked to provide
information about outfitting new firefighters with station wear uniforms.
Limitations
When considering what type of cost and benefit analyses should be considered,
much of the information found in the literature review that focused on a review of costs
and benefits used the term cost-benefit analysis. Although this appeared logical, there
were many distinct differences between the types of analyses, the steps required to
complete the analyses, the difficulty, applicability, and the information required for the
analyses.
Another limitation was the technical nature of the material being considered. In
order to conduct many of these types of analyses, or to conduct them according to the
reference texts, a good understanding of economic principles was required. Some of the
analyses used complex mathematical formulas that required the assistance of someone
well versed in this work.
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
26
When researching the costs associated with implementing a third fire-based
ambulance, the reference material was not specific to implementing a third ambulance.
Much of the reference material focused on the cost of building a new program from the
ground up, or on the costs associated with reducing response times.
The information gathered from the personnel from the City of Clifton was also
not easily calculable. The cost information received from the EMS Chief about the EMS
program was based on the entire EMS program. Costs were not itemized by ambulance.
There were times throughout the year when a third ambulance was in service, although
not often. There were also times when an ambulance was used for special events, such as
football games or fairs. The costs associated with these special events were included in
the overall costs of the program and could not be separated from the full time ambulance
costs. Also, the CFD had already incurred many of the costs associated with the
implementation of a third ambulance, including the vehicle, durable equipment, etc.
Therefore, the list of costs considered was focused mainly on personnel, benefits, and
daily operating costs.
The personnel costs were based on hiring a number of personnel in order to staff
the third ambulance. Although there were a variety of staffing models available, the focus
of the research was on the cost of hiring new members.
Also, only direct costs that could be calculated were considered. Price data was
not available for some of the costs. “There are some publicly provided goods for which
price information may exist, but for most public goods and services, such information is
limited. This problem makes the monetization of costs rather difficult” (Nas, 1996).
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
27
Many of the personnel costs were based on the previous year’s calculations,
because NJ recently enacted legislation requiring employees to pay for part of their health
care benefit. The calculations and percentages are still in dispute and not fully understood
by those interviewed. Most of the numbers and percentages are as close as possible in
order to be considered in a cost analysis. Conclusions must be drawn from the
information provided.
The fuel costs were determined using an average of the fuel consumption for one
ambulance for three years. The second ambulance’s fuel consumption information was
inaccurate due to the fact it was out of service for a prolonged period of time for
mechanical problems.
When researching the benefits associated with implementing a third fire-based
ambulance much of the information from outside the fire service did not specifically
address fire-based EMS. Information from the medical community was focused on
medical outcomes, and other information was based on reducing response times
explicitly. The information from the fire service was directed at the benefits of fire-based
EMS versus other types of EMS service delivery models.
The author used the reference materials in the literature review to determine a list
of the major categories of benefits that were applicable to the research project. The author
recognizes that some of the benefits, such as reduced response times, would have to be
measured after the ambulance was placed in service.
There are benefits that are specific to the CFD that will be addressed in the
discussion section. There was also insufficient information available for these specific
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
28
benefits found during the literature review, therefore, they were excluded from the
research.
Results
What type of cost and benefit analyses should be considered?
The types of cost and benefit analyses that should be considered by the CFD are
cost-benefit analysis (CBA), cost-effectiveness (CE) analysis, cost-feasibility (CF)
analysis, and the cost-utility (CU) analysis. Each of these types of cost analysis has its
applications and limitations.
With a third fire-based ambulance implementation, what is the associated cost?
The costs associated with a third fire-based ambulance in the CFD that were
considered were for personnel, benefits, hiring and processing, training, fuel, and
equipment.
The following charts illustrate the associated costs for hiring and employing eight
new firefighters. The pension rate of 16% is the City’s financial obligation. The family
medical cost is based on an estimated 10% annual increase. The family dental cost is
based on an estimated 5% annual increase (R. Deluca, personal communication, January
3, 2012).
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
29
Base pay Pension cost Medical cost Dental cost Cost for 8
Step one
$32,452.58
$5,192.41
$14,993.75
$398.41
$424,297.20
Step two $47,288.98 $7,566.24 $16,493.13 $418.33 $574,133.44
Step three $60,648.97 $9,703.84 $18,142.43 $439.24 $711,475.84
Step four $70,040.05 $11,206.41 $19,956.68 $461.20 $813,314.72
Step five $80,335.39 $12,853.66 $21,952.35 $484.26 $925,005.28
Step six $91,334.79 $14,613.57 $24,147.58 $508.48 $1,044,835.30
The chart representing the cost of EMS equipment demonstrates a 50% increase.
This figure was determined based upon an increase from two to three ambulances (D.
D’Amore, personal communication, January 9, 2012).
2011 50% increase Total
EMS Equipment
cost
$24,185.65
$12,092.83
$36,278.48
The fuel cost chart represents a 50% increase. The figure was also determined
based upon an increase from two to three ambulances. (J. Delillo, personal
communication, December 27, 2011).
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
30
# gallons Dollar amount
@ $3.48
50% increase Total fuel cost
Fuel costs 4672 $16,258.56 $8,129.28 $24,387.84
What are the benefits associated with the implementation of a third fire-based
ambulance?
The benefits associated with the implementation of a third fire-based ambulance
that were considered were an increase in the ISO rating, increase in the amount of billable
income by EMS, reduction in fatigue, or burnout associated with those assigned to the
ambulance.
Using the call volume information for 2011, which was gathered by the CFD
EMS Chief, there were 491 total requests for EMS mutual aid into Clifton that resulted in
a billable transport to an area hospital (D. D’Amore, personal communication, January 9,
2012). The following chart illustrates the total in potential revenue lost in 2011. The
dollar amount per billable run does not reflect the mileage cost that would be incurred.
The mileage cost billed is $10.00 per mile (D. D’Amore, personal communication,
January 9, 2012). This amount represents the maximum amount that could be collected if
all of the mutual aid calls were answered by the CFD fire-based EMS ambulances.
# mutual aid runs Billable $ per run Total $
491 $850.00 $417,350.00
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
31
The number of EMS transports for the CFD for 2011 was 5493. The number of
mutual aid EMS transports from Clifton was 491. This is a total of 5984 EMS calls
resulting in transportation to the hospital. It does not account for the number of calls
where a transport to the hospital was refused by the patient (D. D’Amore, personal
communication, January 9, 2012).
The costs for hiring, outfitting, and training 8 firefighters are represented in the
table below. Fire Chief Colavitti provided the costs for the pre-employment physical and
psychological examinations, as well as the cost for training to Firefighter 1 and
Firefighter 2 (personal communication, January 27, 2012). Ken Kiel provided the
information for the cost of PPE (personal communication, January 27, 2012). Nidalys
Rodriguez provided the information for the cost of station wear (personal
communication, January 27, 2012). Walter Pearn provided the information for cost of
training to EMT – B (personal communication, January 27, 2012).
Hiring FF 1 & 2 EMT - B PPE Station wear Total for 8
$775 $900 $1200 $3450 $845 $57,360
According to the ISO, the CFD’s overall score would increase from 86.28 to
88.63 with the addition of 8 personnel (P. Stewart, personal communication, January 5,
2012). Adding two firefighters per shift would equate to a staffing minimum of 28,
allowing the full time staffing of the third ambulance.
One of the unintended results of the research was the realization of the amount of
money lost by the CFD to the ambulance billing company. Currently the CFD contracts
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
32
with a third party billing company. The billing company receives 10% of the revenue
collected. Through November 30, 2011, the billing company had received $168,732.63
(D. D’Amore, personal communication, January 9, 2012)
Discussion
How did the results compare to the findings of others discussed in the literature
review? (Provide actual citations of selected resources)
There are several types of cost analyses that can be used. The analyses listed in
the results were chosen directly from the literature that was reviewed. Each has its
applications and some are more easily conducted than others. Each has its benefits and,
depending on the goal of the analysis, a modified cost analysis can be conducted using
any of those listed in order to reach the goal. It is important to understand what is trying
to be measured, and then choose which of the cost analyses is most appropriate. “There
are numerous references that address cost-benefit analysis (CBA). Some of this
information is directed specifically toward public policy decision-making while others
are directed toward the private sector” (Levin & McEwan, 2001).
Much of the literature reviewed focused on improved response times and patient
outcomes. Some of the studies supported the idea that improvements in response times
were beneficial to patient outcomes, while others conducted studies that indicated little if
any improvement in patient outcomes, except in specific cardiac cases. “There is little to
no scientific evidence suggesting a casual relationship between response interval and
improved patient outcomes. However, there is a public expectation that when EMS is
requested, an ambulance will respond within a reasonable time no matter what the
complaint” (Bailey & Sweeney, 2003).
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
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As the author expected, much of the fire service literature was focused on the
benefits of fire-based EMS versus other service delivery models. “Fire service EMS is the
most efficient and effective model for the rapid delivery of all EMS” (IAFC, 2009)
Although the purpose of the paper was not to determine whether or not fire-based EMS
was the most efficient service delivery model for the City of Clifton, the benefits of
utilizing firefighters to provide EMS delivery as well as being available for other
emergencies is noted.
The expansion of the current fire-based EMS system in the CFD, by
implementing a third ambulance, is supported by the Metropolitan Fire Chiefs. “As the
number of emergency calls per day increases, the probability that a needed piece of
apparatus will be busy when a call is received also increases” (“Fire Service
Deployment”).
With the projected increase in ISO score, the CFD would need 1.37 additional
points in order to obtain a Class 1 rating. Currently, only one fire department in the State
of NJ has achieved this exclusive rating.
Insurance companies use the ISO rating for marketing, underwriting, and to help
establish fair premiums for homeowners and commercial fire insurance. In
general, the price of fire insurance in a community with a good rating is
substantially lower than in a community with a poor rating. (ISO, 2011)
The CFD is at the point where the number of EMS transports calls for the addition
of a third ambulance. The collection of data on call volume for 2011 supports the need
for the conducting an analysis for the implementation of a third ambulance.
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
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An important aspect of EMS delivery is to examine the need for additional
transport units so that units do not become overworked, which can lead to fatigue,
poor quality of patient care, and EMS employee burnout. Using the nationally
accepted formula “call volume – unit hour utilization ratio (U:UH)”, it is
recommended that when the CFD EMS transports reach 6000 per year, the CFD
begin to take action to implement a third transport ambulance on a 24 hour basis.
(Adams et al., 2004)
The costs associated with an EMS program were detailed in the EMS Cost
Analysis Workbook Guide. “All relevant costs for delivering EMS services within the
boundary must be included, no matter who pays that cost” (Lerner et al., 2011). The
author used this document as a guide to determine the costs that should be considered for
increasing the fire-based EMS capability. An attempt to determine all of the costs
associated with the EMS program is not useful for this research paper. Many of the costs
associated with implementing a new EMS program have already been incurred.
When considering costs and benefits, much of the literature was directed toward
an analysis of cost versus benefit regarding response times. “Concentrating resources on
reducing response times across the board to improve survival for those patients already in
arrest is unlikely to be a cost-effective option” (O’Keefe et al., 2010). The author’s cost
data was not directed at improving response time directly.
What is the author’s own interpretation/evaluation of the results?
The author’s evaluation of the results is that the type of cost analysis must be
determined by the stakeholders in the City of Clifton. Before one of the types of cost
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
35
analysis is conducted, the goal of the research should be determined. Each of the cost
analyses has a different application.
The costs of providing fire-based EMS are high. Personnel and benefit costs are
increasing and has been a hot button issue in the State of NJ as well as across the country.
If decisions are going to be made that are going to affect the CFD’s ability to provide
services, an accurate analysis of all of the benefits and all of the costs associated with the
decision need to be considered.
This research paper began looking at the issues in developing a plan for
conducting an analysis. One of the issues is that there were benefits that were unique to
the CFD that were omitted from the research because of the difficulty in determining
their value, or assigning a monetary cost to them. Some of those benefits are a decrease in
EMS response time, less wear and tear on fire apparatus, increased staffing levels, better
customer satisfaction, and higher morale.
Another benefit is the ability to staff the Accountability Technician position using
the additional personnel assigned to the ambulances by increasing our minimum staffing
level to 28 instead of 29. All of these benefits are important to the organization. More
importantly, if considered as benefits in an in depth cost analysis, they will contribute to
more informed decision making during budget hearing and upon requests for increases in
staffing.
Other issues are insufficient money and time. The CFD does not currently have
the resources or expertise to conduct a detailed analysis. It must be a citywide effort and
must be guided by the elected officials and their representation of the public at large. The
results simply tell the author that providing fire-based EMS is expensive, but has worth.
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
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Whether it is the most cost-effective or cost-efficient way of doing business is another
issue. Every decision has its consequences.
What the author discovered through the research was that one of the only benefits
of increased response times to EMS incidents is in the perception by those receiving the
care. There were several documented studies that indicated a decrease in response time
was not worth the cost that would be incurred. Much of the fire service literature focuses
on improved response times, yet this was not supported by the literature from the medical
field. Improving response times does have its benefits, but they are difficult to quantify
without extensive data, which is not available and beyond the scope of this research.
What are the implications of the results for the organization?
The implications are that the CFD will probably not see any increase in staffing
regardless of how beneficial it may be to the organization at this time, because of the
personnel costs involved. The run data supports the need for the addition of a third
ambulance. The increase in billable income and increase in staffing overall are beneficial.
But without the CFD obtaining grant funds for additional personnel, the reality is we will
probably have to make do with what we currently have.
The author’s hope is that the results show that we can no longer stand to lose any
additional personnel. Although this was not the intention of the research, it may be its
most beneficial and unintended consequence.
Another implication of the results is the realization that obtaining accurate data to
make informed decisions will be required in the future. The CFD and the City of Clifton
cannot afford to make major policy decisions with incomplete or inaccurate information.
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
37
The stakeholders must be involved in decision making. The public perception of the EMS
service should be taken into account.
Recommendations
After completing this research project, there are several recommendations by the
author. The CFD needs to identify which of the cost analyses will best meet the needs of
the department, and determine how complex the analyses needs to be. The CFD should
consider seeking expert assistance in conducting an in-depth analysis.
The CFD should explore alternative funding options to offset the costs involved.
The CFD should continue to apply for grant funding. The grant committee should
identify items that were successful and/or unsuccessful in previous grant applications,
and use this information when writing the next grant application.
The CFD should look at ways of reducing costs without sacrificing service levels.
After looking at the results, one idea was to eliminate the outside EMS billing company
and hire a person, either on a part-time or a full-time basis, to conduct billing in-house.
The thought was that there may be an immediate cost savings without losing any revenue.
The CFD has recently switched to a computer generated run sheet which is supposed to
make billing easier. The system has not been in service long enough to make this
determination. This information needs to be evaluated. An analysis of the costs and
benefits associated with this idea will need to be conducted as well.
The CFD must do a better job of compiling useful data to assist in policy
decisions. The CFD should continue to develop policies and procedures to reduce costs
while at the same time improving service levels. These will be some of the challenges for
the twenty first century Fire Chief.
ANALYZING THE COSTS AND BENEFITS FOR THE IMPLEMENTATION OF A THIRD FIRE-BASED AMBULANCE
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