The "Walmart Effect" refers to the increased wages being offered to those working in Walmart, Amazon, and similar growing distribution centers that, as a result, and to the detriment of other industries, is enticing employees away from their previous service-based jobs. More specifically, with industries offering $15 per hour for unskilled labor, how do small business owners compete to retain a reliable labor force?
Although the enclosed article does not specifically reference the medical transportation industry, the labor related dynamics associated with the "Walmart Effect" are very applicable to the NEMT industry. Even more, with so many of our members owning both a home care agency and medical transportation business, the scenarios outlined in this article are very pertinent.
Employees leaving in pursuit of higher paying jobs is understandable and should be expected. For business owners, labor retention can be a common and consistent challenge. Therefore, especially in competitive service-based business, size of operation and even sales volume should not be key indicators of success. Rather, operational efficiency and overall profitability should be prime valuation factors.
As you read this article, consider how such dynamics can impact your medical transportation business and ability to retain valuable employees. Even more, if you are heavily invested in broker reimbursements versus private pay and contracted work, consider how slimmer margins will hamper your ability to further scale your business.
Nine months as an Uber driverless car struck and killed a pedestrian in Tempe, Arizona, leading them to suspend all driverless car research and development, they are again resuming operations.
We have been sounding the alarm on how driverless technology is, obviously, designed to replace ridesharing drivers to increase profitability. Even more, we have been sharing how driverless cars and ridesharing technologies are adversely affecting non-emergency transportation, emergency transportation, and insurance companies.
Following Uber's fatal accident in Tempe, Arizona, we received a great deal of correspondence suggesting the incident was going to slow the impact of ridesharing technology on the medical transportation industry. Our position was, and remains, that you cannot slow the progress of technology and if you are not properly building your medical transportation business to cater to wheelchair and stretcher patients you will continue to lose considerable market share to ridesharing and driverless car technology. Our position is further strengthened by it ONLY taking nine months for the Department of Transportation to grant Uber authorization to resume development and operations in Pittsburgh and other projected cities.
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As we all know, the elderly population is going to double by the year 2030, further creating demand and opportunity for transportation and support services catering to our seasoned seniors. But driverless cars and ridesharing technology will be readily available 2020-2021 to assist with ambulatory transportation, paratransit transportation, and even emergency transportation.
To our surprise, ridesharing services continue to directly impact EMS providers as well. With such a vast volume of ridesharing drivers readily available, people with non-life threatening emergencies find a quicker response time and more cost effective solution to booking a ridesharing transport versus calling an ambulance.
Because there will always be the need for providers to go into hospitals, nursing home, rehab facilities, and the like to prepare and transfer patients onto wheelchairs and stretchers, there will always be the need for non-emergency transportation. But as we've noted before, paratransit providers, especially those operating on fixed routes, are on barrowed time. Urban planners have long since been planning for the day when autonomous passenger systems will replace and reduce labor costs, operate without downtime, and increase accuracy and precision.
Click here to read how industry leader Waymo, with authorization from state regulators, is already operating driverless cars on public streets and working with law enforcement and motor vehicle officials to develop enhanced policies.
Bottom line, as a motivated entrepreneur eager to be successful in a growing industry, it's important you build and diversify your business model, embracing and including technology in your vision and planning as technology is only going to continue to evolve and enhance.
The amount of lawsuits for independent contractors, using their own insurance to serve as rideshare drivers for Logisticare, MTM, and the many other brokers, continue to mount across the country.
Allstate Insurance has denied coverage to three people injured when an independent contractor working for a medical transportation company suffered a stroke and hit an oncoming truck, arguing its policy with the driver excluded damages if the car was serving as a “vehicle for hire.”
The insurer’s complaint said the driver was using his own vehicle to shuttle riders for Atlanta-based Logisticare, which operates in 41 states and bills itself as the “the nation’s largest provider of non-emergency medical transportation for state governments and managed care organizations” when the accident occurred in March.
According to Allstate’s complaint, LogistiCare “employs contractors to provide transportation for patients to and from medical appointments” and “does not provide vehicles for its drivers and does not provide insurance for the vehicles used for transport.”
In a statement to the Daily Report, LogistiCare said that, “while we cannot comment on pending litigation, we can confirm that LogistiCare is a broker of non-emergency medical transportation. LogistiCare does not own the transportation providers or vehicles, nor employ the drivers.”
Logisticare and the countless other Medicaid brokers incorporate independently and sign Agreements in each state. Such Agreements insist the broker ensures drivers and passengers are properly insured, yet, Logisticare consistently violates such terms in an effort to cut cost by outsourcing to independent providers who are not properly trained or insured.
Again, this is one of many countless lawsuits pending across the country leaving independent operators completely exposed to immeasurable liability. In addition to the passengers, the independent operator, working to make a living, is also a victim of this unfortunate accident because he/she will be at the center of all lawsuits and financial liability.
Protect yourself and insulate your business from financial liability by structuring your business properly. Click here to learn more.
All too often we are contacted by new providers experiencing setbacks in the early stages of launching their medical transportation business. They're discouraged because the reality of their situation is not in alignment with their expectations when they first started. Typically, their frustration grows from low sales volume, high expenses, wasted time and effort, despite the growing opportunities in our industry.
The reality is the high motivation and dreams of riches do not translate into growth and profitability when it is founded on poor or faulty information and instruction. So many of our client-providers come to us when they finally realize they fell victim to all the false hope and misinformation that's readily available online. Unfortunately, the internet is flooded with websites, bloggers, and affiliate marketers seeking to cash in on support services catering the booming elderly population.
It's so easy for someone sitting at a keyboard to claim they are an "expert" or "experienced" in any industry despite having no firsthand knowledge or experience. Therefore, the burden is on you, the well intentioned aspiring entrepreneur, to perform your due diligence and invest in thorough research and credentialing before you invest money and start your business.
The elderly population will have doubled by the year 2030. The medical industry is continuing to grow and transform. All such critical factors, and many more, are clear indication of the growing demand for non-emergency medical transportation. However, it is critical that you practice discernment on who and what you listen to. Far too many online "experts," essentially, claim all you need to do is get a vehicle and insurance and start distributing business cards and your NEMT business will thrive. Needless say, this could not be further from the truth!
If the source you are listening to does not discuss how changes in the Medicaid transportation system and various brokers are impacting the industry, how ride-sharing services are affecting your business, how to market and position your service to pursue contracts and service agreements, how to properly solicit and introduce your business to various facilities, how to effectively create infrastructure so you can grow and scale your business, and much, much more, then you need to run as fast and far away from the source of information as possible! Not only will such poor guidance and misguided leadership cost you time, money, and effort, but you will remain an independent operator versus a thriving business owner - a big difference! Your goal should be to become a thriving business owner versus an independent operator, essentially, owing your own job.
Again, the opportunity for the growing NEMT industry is obvious. The many variables associated with the growth of the medical industry and booming elderly population make starting a medical transportation business an advantageous opportunity. However, like any business, a strong foundation is critical to your successes and ensuring you are able to build a profitable asset that you can either pass onto your heirs or sell for future profit.
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Sadly, there is so much inaccurate and conflicting sources of information online that it is difficult for aspiring NEMT providers to determine which information is correct.
One of the most common questions we receive is regarding possible Medicare reimbursement for non-emergency medical transportation. Because we want to ensure you are no longer confused by the various sources of online disinformation, we would like to make the issue of Medicare reimbursement abundantly clear.
As of this posting, Medicare will not reimburse for non-emergency transportation unless it is provided by an Advanced Life Support (ALS) ambulance or a Basic Life Support (BLS) ambulance. Obviously, this stipulation leaves out the vast majority of traditional NEMT providers (ambulettes) focused solely on providing non-emergency medical transportation.
So the questions begs, how is this possible? How it is that Medicare is willing to pay 5-10 times as much for an ALS or BLS vehicle with multiple EMTs to render non-emergency transportation versus a traditional ambulette service? Obviously, common sense suggests it is far more economical to use a traditional ambulette service versus and ambulance service. After all, it is non-emergency transportation.
It would be easy for us to attempt to explain Medicare's justification for this shameful and wasteful spending being due to the potential risk of providers needing to offer the patient more advanced services. However, again, because this is for non-emergency transportation services, the likelihood of such circumstances developing is exponentially miniscule and cannot be justified.
Therefore, truth be told, the foundational reason why Medicare will reimburse ALS/BLS services for non-emergency medical transportation but not reimburse ambulette services and save untold volumes of money is, quite simply, because the ambulance lobbying machine is simply too strong and too entrenched.
When we share such information it never fails to be enlightening and poignant. Very few people and providers realize just how vast, powerful and entrenched the ambulance lobbying mechanism is and their ability to influence private and government forms of subsidized insurance and reimbursements. By gaining a monopoly on Medicare's reimbursement for non-emergency medical transportation and barring traditional ambulette providers from gaining access to such reimbursement, the ambulance industry is able to maintain a very strong and lucrative negotiating position with hospitals and medical centers in addition to lining the pockets of politicians.
If you're considering starting an NEMT business and are researching information online, you need to avoid and reject any resource(s) that suggests Medicare funding is growing for NEMT providers. It is not. Such reimbursement is only growing for ambulance providers offering NEMT services in addition to their standard emergency services. Anyone making such claims is simply an online salesman and not an industry experienced provider.