HomeMy WebLinkAboutStaff Report 13618
City of Palo Alto (ID # 13618)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 10/18/2021
City of Palo Alto Page 1
Title: Review and Approve a Fire Department Ambulance Subscription
Program: 1) Adopt Ordinance to Establish Program and Fees, and 2) Approval
of a Budget Amendment in the General Fund
From: City Manager
Lead Department: Fire
Recommendation
To establish a Fire Department Ambulance Subscription Program, the Finance Committee and
staff recommend that the City Council:
1. Approve a new Ambulance Subscription Program and associated fees for Residential and
Business Participants;
2. Adopt the Finance Committee’s recommended fees including the adoption of an
Ordinance amending the Fiscal Year 2022 Municipal Fee Schedule (Attachment A); and,
3. Approve a Budget Amendment Ordinance for Fiscal Year 2022 in the General Fund by:
a. Increasing the Fire Department Operating Budget by $50,000 for marketing
costs, and
b. Increasing the Fire Department Operating Budget by $60,000 for Allocated
Charges for Utility Payment Processing, and
c. Decreasing the General Fund Reserve: Transition Costs* by $110,000.
4. Approve a Budget Amendment Ordinance for Fiscal Year 2022 in the Utilities
Administrative Fund by:
a. Increasing the Utilities Department Charges to Other Funds revenue by $60,000,
and
b. Increasing the Ending Fund Balance by $60,000.
* These funds are included in a reappropriation request to carry them forward from FY 2021 to FY 2022 in a
separate CMR also on this October 18th agenda.
Executive Summary
As part of the Fiscal Year 2021 Adopted Budget, both a new Ambulance Subscription Program
and First Responder Fee were proposed for residents and businesses for Fire Department
services. This report specifically addresses establishing the new ambulance subscription
program. This program will be voluntary and proposes to waive the insurance co-pay that the
City Fire Department would otherwise charge participants for ambulance transport to a
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hospital. It is recommended that the program be established with a flat monthly participation
fee that would be administered by adding it to the household or business utility bill.
Background
The Palo Alto Fire Department (PAFD) has been operating an ambulance service since 1974.
PAFD is the only fire agency in Santa Clara County that provides an ambulance service, which
performs approximately 3,500 transports each year. Emergency medical calls for service make
up approximately two-thirds of all calls for service for the Fire Department annually. For at least
5 consecutive years, PAFD has exceeded the response standard for Emergency Medical Service
(EMS) response for a unit to arrive on-scene in 8 minutes or less 90% of the time, and a
paramedic on-scene in 12 minutes or less 99% percent of the time. The ambulance transport
service has been recognized as one of the City’s highest-rated services, based on customer
satisfaction surveys.
On June 22, 2020, City Council adopted a budget for Fiscal Year 2021 that included revenue of
$1.5 million from creating a new Ambulance Subscription Program. The Ambulance
Subscription Program is an optional fee for residents and businesses to secure co-pay-free
ambulance transport.
The Ambulance Subscription Program proposed by the Fire Department is modeled after similar
programs offered by other fire departments in California that also provide an ambulance
transport service. The voluntary program covers the co-pay for ambulance transports to the
residents or employees of participating businesses. The first known Ambulance Subscription
Program was established in 1985 in Anaheim, California, and most cities that have offered such
a program are in Southern California.
The PAFD identified five other fire departments in California that offer an Ambulance
Subscription Program. All cities offer the program to residents and some offer it to businesses.
Each city has a flat annual fee, ranging from $43-$60 for participation that was determined
when the program started, and they have not been adjusted since the programs started.
All cities reported participation rates of 25-30% of all residents and/or businesses in the initial
year of implementation and slowly declining participation rates over decades as residents and
businesses turn over. Some cities reported running marketing campaigns every 2-3 years to
boost enrollment or even adding an automatic voluntary payment on the utility bill once per
month to encourage enrollment.
Corona, California, a city in Riverside County with a resident population of 152,374 (2010
Census), provided some details on the number of participants and revenue received from the
program. Their program was established in 2004, and charges $60 per household per year to
participate. In Fiscal Year 2018, they had a total of 18,470 subscribers, approximately twelve
percent (12%) of the resident population. The program generated $886,564 of revenue.
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In December 2020, the Department brought forward a report (CMR 11710) and proposed three
fee tier options, asking Finance Committee to decide upon a fee level for the Ambulance
Subscription Program. After discussing the program and fees, the Finance Committee directed
staff to collect more information and opinions from the community on the amount at which to
set the fees. The Department conducted an online survey and virtual focus group in order to
gauge the community’s interest and collect opinions on the rate at which to set the fee. The
results of those studies are presented in this report and the Department is proposing a fee
structure based on the community’s input.
On September 21, 2021 the Finance Committee unanimously approved the proposed Program
and Fees outlined in this report to be brought forward to City Council for adoption.
Discussion
Community Input
The survey included eight questions focused on the value of adding this program to the
community, individual interest in participating in the program, and fee amounts were sent to
the Emergency Service Volunteer Group. We received a total of 35 responses, with the survey
open for one week.
Result Highlights:
• 52% think the program would be extremely or very valuable
• Interest in the program was split (34% very, 31% somewhat, 35% not so or not at all)
• More commercial insurance respondents (57%) reported the program to be extremely
or very valuable than Medicare respondents (43%)
• More commercial insurance respondents (43%) reported they would be extremely or
very interested than Medicare respondents (21%)
• The more interested in the program, the more they are willing to pay. Of those
responding “extremely or very” interested in the program, most would be willing to pay
$100 or more annually.
On May 5, 2021 the Fire Department held a virtual conference focus group with one of the
City’s neighborhood associations. A total of 7 residents participated in the focus group and
provided helpful information and asked questions that helped to shape the proposed program.
Feedback and Suggestion Highlights:
• All thought the program would be beneficial to the community
• It would be best to target towards families
• Make it a monthly program, not annual
• 2 people wanted the City to charge the highest tier fee ($10/month)
• 1 person wanted the City to charge a lowest amount ($6.67/month) believing this would
get more people to sign up
• The group was excited about the program and wanted to help the City promote the
program
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• Create a way to donate if you didn’t want to sign up for the entire fee
• Create a way for someone to pay for someone else’s membership in the program
Key Quotes from Focus Group Participants:
“Well, being that I have five kids and we went through all the teenage years with them.
We've met many opportunities to partake of the lovely ambulance service. So, we would
have paid off in dividends for us.”
“Well, I was saying this to Amber and the Chief, you know, it's just something for them to
keep in mind, but I too, I have four grandchildren, grandchildren now left in the school
system and they all play sports big time and they all two of them have had injuries.”
“Oh, $10, 10, well, whatever it works out $12 to make it $12 a month. And that doesn't
sound painful. So, I just thank you. You're really on the right track with that.”
“So, I think it's a showstopper. If you don't cover the out of County ambulances, if I pay for
this and then you charge me, I'm going to be really pissed off. I, I think that's just a social
cost. Right.”
“I think that I think $120 a year is a lot, honestly, I would go lower just because I think it
would make it. I mean, you guys, in your model, you show the same number of people
adopting it at every level. We all know demand; curves don't work that way. So, you will get
fewer people if you positioned higher.”
“As a member of the [neighborhood] association board, which a number of us are here, I
think we should promote it in the community.”
Costs to Patients and Program Design
The PAFD has established ambulance transport fees, and contracts with a third-party vendor to
collect insurance fees. Often patients are responsible for a co-pay when transported to the
hospital, depending on their insurance coverage. In Fiscal Year 2019, the average
deductible/co-pay required for a single trip to the hospital for patients with commercial
insurance was $650, with most patients paying $385 out-of-pocket for a transport.
For residents or businesses that elect to enroll in the Ambulance Subscription Program, a flat
monthly fee will be assessed, and eligible participants will have the co-pay amount waived
when transported by PAFD to the hospital. This program has the potential to reduce revenue
generated by the City’s paramedic transportation service fees (approximately $3 million
annually); however, with the expected participation levels in the program, staff estimates the
impact to be no greater than $15,000 to $25,000 annually. During the implementation of the
program, staff will track how many co-pay waivers are granted to monitor the impacts on
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paramedic transportation revenue.
Participation in the program will be limited to residents and businesses within the City of Palo
Alto, and applies to EMS responses within the Palo Alto city limits.
- For residential participants, all household members who are permanent residents of the
subscribing household will be covered. The program will include umbrella coverage for
visitors in the subscribing household who need emergency medical transport from a
resident that is a program participant.
- For business participants, the Program will cover all employees at the business address
or those elsewhere in the City of Palo Alto during the course of their duties. A business
subscription will not cover customers or other visitors to the premises of the business.
This program will not be available for Stanford student or residents. The Department will offer
an option to Stanford University if it chooses to cover its residents and day-time population. A
separate agreement with the University would be negotiated if they are interested.
Program Administration and Fee Collection
Participants who elect to enroll in the Program will be able to do so through various methods
including online, email or phone. Current administrative staff within the PAFD will be assigned
to assist residents and businesses with enrolling and answering any questions they may have
about the program, and the Department will use current technology to create a database of
participants. Fees will be collected in partnership with the Utilities Department, and Fire
Administrative staff will collaborate with Utilities Customer Support to coordinate enrollment
and billing.
From a customer perspective, the enrollment will be seamless after submitting their
information, and the pro-rated monthly charge will show up on their next utility bill.
Participants will be able to elect to unenroll at any time for any reason, and their subscription
benefits will be terminated upon request, effective the following month.
All cities interviewed reported the success of enrolling participants in the program resulted
from a strong marketing and outreach campaign over the course of the first year. The PAFD will
launch a community education and outreach campaign to inform the residents and businesses
about the new program benefits and provide clear communication on the eligibility and
enrollment in collaboration with the City Manager’s Office.
Fee Setting and Revenue Estimates
The FY 2022 Adopted Budget assumed a revised revenue estimate of $550,000 generated from
residential and business participants for the second half of the fiscal year, assuming a launch by
January 2022. The Fire Department is seeking to adjust the FY 2022 Municipal Fee Schedule to
add this fee, and approval from the Finance Committee on the amount of monthly Residential
and Business Fees. The cities identified with similar programs in California set fees upon the
program’s onset and have not increased them. With most of those fees set more than thirty
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years ago, the Fire Department is proposing a higher rate than compared to other city programs
based on the current cost of services as well as the financial benefit of the program should the
co-payment paid by the participant be waived.
Residential Participants
Participants in the Online Survey and Focus Group were given 3 tiers of annual fees to consider.
Based on their feedback the Department is proposing a monthly rate, rather than annual. The
Department is also proposing setting that monthly fee in the middle of the options proposed to
the community based on the mixed feedback from the community. The proposed monthly fee
would be set at a rate of $8 per month.
There are approximately 25,000 residential Utility customers in Palo Alto that could elect to
participate in the program. Using other cities as a benchmark who have reported a 25-30%
participation rate in Ambulance Subscription Programs, the Fire Department is estimating 6,250
residential utility customers (25 percent) will enroll in the program. With a $8 per month fee,
this would generate $600,000 in gross programmatic revenue annually.
Business Participants
In March of 2020 the City of Palo Alto considered a Local Tax Measure (CMR 11161) which
provided data on business population from the California Employment Development
Department (EDD). That data showed an estimated 3,141 businesses with employee counts
ranging widely from under 10 to 1,000 or more. It should be noted that these estimates and
data reflect information prior to the current shelter in place environment and the long-term
impacts of business models as a result of the current public health emergency.
A modified program approach similar to that of Corona, CA, that sets the Business rate based
on employee headcount is recommended. The Palo Alto Ambulance Subscription Program
would establish 5 tiers of rates for businesses based on employee headcount.
Tier
Employee
Headcount
Number of
Businesses Monthly Fee
1 0-10 2,300 $20
2 11-50 621 $100
3 51-100 121 $200
4 101-250 62 $500
5 251-1,000 37 $1,000
Expected Participation Rate 25%
Total Estimated Revenue $600,900
Resource Impact
The proposed fees estimate a total annual revenue of up to $1.2 million using an estimated
participation rate of 25% for both residential and commercial utility customers. This voluntary
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fee does not need to be based on costs, in contrast to fees imposed by the City for services. The
Department intends to have the fees and revenue targets remain flat for the first few years of
implementation while staff analyzes trends and viability of the program.
There are costs to implement this program unanticipated at the time of budget development.
In collaboration with the Utilities Department, staff have identified a way to leverage existing
invoice infrastructure, however some marginal additional staff resources will required to
support the billing activities of the Program. Utilities estimates a total of 30 hours each month
will be required for customer support, amounting to an annual charge of $60,000 to support
customer inquiries, payment posting, credit collection, and accounting. The fee for Utilities
support will be evaluated annually and charged in arrears based on the actual level of effort. An
ongoing base budget increase to interdepartmental services costs of $60,000 annually will be
needed in the General Fund. And, if this program is approved service cost would be included in
the FY 2023 base budget for the administration of this program.
The Fire Department will conduct a strong marketing and outreach campaign throughout the
first year in collaboration with the City Manager’s Office. This will include no-cost efforts, such
as press releases, and for-cost efforts including print and digital marketing. Additional one-time
funding of $50,000 will be necessary to cover the campaign’s costs and will be recommended as
a budget amendment in FY 2022 when presented to the City Council. The funding source for
these additional funds would be recommended to be drawn from available reserve funds or the
Budget Stabilization Reserve. In order to maintain enrollment rates, a strong marketing
campaign will be required every 2-3 years, and the budget will be recommended for adjustment
in the future to boost enrollment when needed.
Funding is recommended to come from the General Fund “Reserve: Transition Costs” that was
specifically set aside for unanticipated costs associated with changes to services delivery as
adopted in the budget and transition costs unforeseen as part of the budget process.
Remaining funding in this reserve would be approximately $0.7 million.
Stakeholder Engagement
Residents and businesses have been engaged in the budget adoption process; however,
targeted outreach and information marketing are required to provide clear communication and
information to residents and businesses about the program benefits and enrollment. The
above-recommended approach includes a robust initial outreach campaign.
Environmental Review
Council’s adoption of an Ambulance Subscription Program and related fees is not a project
requiring environmental review for the purpose of the California Environmental Quality Act,
because the Program will not result in a direct or reasonably foreseeable indirect physical
change in the environment (Pub. Res. Code sec. 21065, 14 CCR sec. 15378(b)(4)).
Council’s approval of budget adjustments associated with Program approval does not
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constitute a project requiring environmental review for the purpose of the California
Environmental Quality Act, as the creation of governing funding mechanisms and fiscal
activities that do not involve any commitment to any specific project which may result in a
potentially significant physical impact on the environment (14 Cal. Code Regs. sec. 15378(b)(4)).
Attachments:
• Attachment6.a: Attachment A: Ambulance Fee Ordinance
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13618 AB092921 1
*Yet to be Passed*
Ordinance No. ___
Ordinance of the Council of the City of Palo Alto Amending the
Fiscal Year 2021 Municipal Fee Schedule to Add Fire Department
Ambulance Subscription Program Fees
The Council of the City of Palo Alto ORDAINS as follows:
SECTION 1. Findings and Declarations. The City Council finds and declares as follows:
A. The City of Palo Alto Fire Department has provided an ambulance transport service
since 1974.
B. The City plans to establish a new Ambulance Subscription Program (Program)
allowing eligible participants to pay an annual fee to have the insurance co-pay waived for
ambulance transports occurring within the City.
C. All residences and businesses within the City of Palo Alto are eligible for voluntary
participation in the program.
D. A Residential Program subscription will cover all permanent residents at the
subscribing household address, as further described in the Program terms.
E. A Business Program subscription will cover all employees at the subscribing
business address or those who are elsewhere in the City of Palo Alto during the course of their
duties, as further described in the Program terms.
The City will fund the Program through a flat monthly fee for Residential and Business Program
participants.
SECTION 2. The Council of the City of Palo Alto approves and adopts new fees for an Ambulance
Subscription Program available to residential and business participants and adopts the
amendments to the Fiscal Year 2021 Municipal Fee Schedule as set forth in Exhibit “A” and
incorporated here by reference.
SECTION 3. The fees in this Ordinance are for voluntary enrollment in the Program. Pursuant to
Art. XIII C, Section 1(e) of the California Constitution, such fees are not a tax.
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SECTION 4. The Council finds that adoption of an Ambulance Subscription Program and related
fees is not a project requiring environmental review for the purpose of the California
Environmental Quality Act, because the Program will not result in a direct or reasonably
foreseeable indirect physical change in the environment (Pub. Res. Code sec. 21065, 14 CCR sec.
15378(b)(4)).
SECTION 5. This ordinance shall be effective thirty-one days after the date of its adoption.
INTRODUCED:
PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
____________________________ ____________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
____________________________ ____________________________
Deputy City Attorney City Manager
____________________________
Fire Chief
____________________________
Director of Administrative
Services
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Exhibit A
13618 AB092921 3
Fiscal Year 2021 Municipal Fee Schedule
Chapter VIII - Fire Fees
New Fee: Ambulance Subscription Program
Residential Rate
Monthly Fee per Household $8
Business Rate
Rate Tier Employee Headcount Monthly Fee
1 0-10 $20
2 11-50 $100 3 51-100 $200
4 101-250 $500 5 251-1000 $1,000
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