Schaefer Shutters, Says Health Law to Blame

0
Schaefer Shutters, Says Health Law to Blame
Sirens Silenced: Schaefer is locking up for good after 87-year run.

Schaefer Ambulance Service Inc., which two years ago had 375 employees and operated 75 ambulances across five counties in Southern California, is going out of business this month — a fate it attributes to the health care industry’s changing economics under the Affordable Care Act.

The Larchmont-based company, which has been in existence since 1932, declared bankruptcy in February. It has laid off hundreds of its staff since then and is slated to permanently shutter by April 16, according to a state employment report. 

“It was a great run. We did great work. Helped a lot of people,” said Jimmy McNeal, the company’s director of operations and grandson of founder Walter Schaefer.

“It’s all economics”

Ambulance companies like Schaefer were once able to profit from the higher rates paid by private insurers for emergency services. The higher rates offset those paid by Medicare and Medi-Cal, which often don’t cover operators’ costs, a trade group said.

Because the Affordable Care Act drew in more patients who had formerly been uninsured, higher paying commercial payouts have declined as lower paying Medi-Cal and Medicare reimbursements have risen, said Ross Elliott, executive director of the California Ambulance Association, which Schaefer founded.

“Schaefer Ambulance is an icon in the ambulance industry,” Elliott said. “What’s happened to them could happen to many because of the Medi-Cal reimbursements. They’re too low.”

If charged to an insurance company, emergency transports can pay out as much as $2,000 while Medi-Cal reimbursements are a fraction of that, around $118, according to the trade group. Each ambulance ride, meanwhile, costs companies an average $700 per patient, Schaefer and the trade group estimate.

At Schaefer, the number of Medi-Cal transports doubled to 40 percent of the business since the ACA went into effect, McNeal said, while low-paying Medicare transports also grew. Only 7 percent of trips are now paid by private insurance, while the remainder are uninsured, he said. 

A new state law will raise the Medi-Cal reimbursement rate to $340 this month, but it will come too late to save Schaefer. 

“It’s all economics,” McNeal said inside the company’s lobby, unchanged since the 1930s with black-and-white photographs of Schaefer company banquets, company fishing trips and a steel safe that drivers once stuffed with transport cash. “If we were compensated fairly, we wouldn’t be in this position.”

Deep roots

Walter Schaefer, a German immigrant who worked as an undertaker, launched Hollywood Ambulance at a local mortuary in 1932 with one, 6-year-old vehicle.

He soon moved his growing fleet to its current site at Beverly Boulevard and Western Avenue, on the border of what is now Koreatown.

Over the years, he pioneered critical care ambulance services, launched state and national trade associations, and flew a federally certified air ambulance. He died in 1986.

At its peak, Schaefer Ambulance had 100 ambulances. The family firm is now run by Schaefer’s daughter, Louella McNeal, who serves as chief executive; his granddaughter Leslie McNeal, who serves as vice president and treasurer; and Jimmy McNeal.

The company has a dozen remaining ambulance drivers to shuttle kids being transported to Children’s Hospital Los Angeles in East Hollywood. It will shut its doors when the hospital finds an ambulance service to replace it, McNeal said.

“It’s heartbreaking,” said Josie Aguirre, who has worked for Schaefer for 20 years, of its demise. “For those who have been here a long time, it’s family, it’s co-workers. 

“It won’t hit me until the very last day,” she added.

No posts to display