Rising gas prices and lagging reimbursements have forced providers to re-examine their operations’ transportation plans.
It should have been the best of times. But in hindsight, nobody could blame James Martin if he now feels like he had been handed a Washington Generals basketball uniform.
The Generals, after all, are the team that has been the patsy to the Harlem Globetrotters for decades, set up to fail at every turn.
In April 2004, Martin was happily named director of transportation at the Jewish Home and Hospital Lifecare System in New York City. The cost of gas was about $1.75 per gallon.
Fast forward to today. Gas prices in New York City hover around $3.20 per gallon. Diesel? Even higher at $3.42 per gallon.
“There have been no (reimbursement) rate increases on the government side,” Martin explains. “We’re losing money.”
If there’s one bright spot, it’s that Martin’s 56 minivans, ambulettes and buses don’t have to drive long distances. Gas prices that more than doubled over the last four years (see figure) have taken their heaviest toll on rural healthcare providers.
“It’s got to be killing them,” Martin says sympathetically.
He estimates his system is now paying about $24,000 per month in fuel bills, double that of a year ago. The worst part, he said, may be not being able to anticipate what prices will be throughout a year.
In New York, lobbying for greater funding has yielded nothing so far, he said. The state is attempting to bring in a management company to work within the Medicaid program. But that could simply drive smaller transportation companies out of business when they lose contracts to bigger firms, Martin notes.
“I know taxi and limousine drivers allow a surcharge, but (officials) don’t allow it for medical appointments and ambulette companies. Ask me if it makes sense,” he says, exasperated.
The best budget boost Martin and his colleagues can hope for, he said, is a strong flow of admissions: “Everything’s affected by census.”
But not many providers have the robust operation Martin oversees. Providers now have to wring every efficiency out of their already challenged transportation operations to keep them afloat.
Wide-ranging effects
Everyone from truck drivers to Sunday drivers is being strained by rising fuel prices. Those with fixed budgets, such as long-term care providers – heavily dependent on government reimbursements – are some of the hardest hit.
“This is a tough one because conversion vans and mini-buses historically are not fuel efficient,” acknowledges Ed Sawicki, sales manager for Matthews Buses Inc. in New York. Vehicles’ raised roofs and wide bodies eat up fuel and can sink mileage to 6 to 8 miles per gallon.
One key to efficiency is reducing idling time, Sawicki said — no easy task when transporting wheelchair users.
“It doesn’t matter what part of the country you’re from,” he observes. “In cold weather, you have to deal with heating up the inside of a large area to a safe level. In a hot climate, the opposite is true. In either case, you open the lift and entry door and the inside temperature quickly matches the outside temperature.”
Some basic, but often overlooked, steps can be taken to cut warm-up or cool-down time, he notes:
• Make sure heating and air-conditioning systems are sufficient for your area when buying a new vehicle. Check BTU capabilities with the dealer.
• Have heating and cooling systems checked regularly, and learn something about them yourself. For example, on almost all mini-buses there is a ball valve underneath the driver’s seat to shut off hot water that goes to the heater. “If hot water is going to the rear heater in the summer, it is working against your AC system. If you forget to open this valve in the fall, your rear heater won’t work properly,” Sawicki explained.
One way to cut back on idling time, Sawicki adds, is to make sure wheelchair users’ belt straps are secure and simple for staff to use.
“When operating the lift, keep the entry door and windows closed to minimize heat or cooling loss when the lift door is open,” he advises. “Reducing idle time will help your fuel consumption, particularly with gas engines.”
Getting up to speed
Taking an active part in your vehicle’s purchase is a responsibility that can’t be shirked, experts agree. First of all, if you don’t know what you need, you can’t deal judiciously with vehicle vendors.
“Because many facilities do not have a staff person who really understands the specifications of buses and vans, they are often misguided by dealers looking for a quick sale,” says Rob Maloney, sales manager of Empire Bus Sales, Elmira, NY. “Find a reputable dealer that has references you can verify and be sure to talk to these references. Don’t jump at the lowest price until you are sure the bus and dealer will do the job you expect. Make sure the bus or van you put in service will do the job now, and four years from now.”
He stressed getting the proper heating or cooling units.
“An incorrectly sized air conditioner will cost you a lot of money for repairs and increase down time,” Maloney explained. “Electrical output is also important for battery life and vehicle dependability. A fast idle system will also help increase alternator and battery life.”
Along with starting with proper vehicle specifications, proper maintenance is “the best way to control your costs down the road,” he added. If your facility does not have a dedicated transportation professional, this can be accomplished by purchasing a service maintenance contract from a dealer or other mechanical shop suited to take care of buses or vans. But do it with one no more than 30 miles from your location, Maloney advises. Such contracts can take care of everything, from minor preventive maintenance to major repairs to regularly scheduled vehicle washes.
How to compensate
It’s a tough time for petroleum prices to be testing providers’ budgets. Most are resigned to the fact they will simply have to absorb the added costs of driving. Some operators make it even more challenging: They are enhancing their transportation offerings in an attempt to gain a marketing edge.
Some think spreading a little added discipline, however, may not prove too damaging.
“Maybe they’ll cut back a bit. It’s like when it snows a lot — they just don’t go out as much. Look at unnecessary trips,” offers Bill Flynn, co-owner of Atlantic Turtle Top, South Grafton, MA. “Some CCRCs may run a bus route service to the grocery store or wherever. It’s a planned route that may go every hour, or half hour or continuously. Maybe they can cut that back. That’s one good thing: Seniors don’t necessarily have to go shopping on, say, Monday at 3 p.m.”
Flynn also suggested using multiple minivans instead of a big bus with too much capacity to cut down on driving costs. Too many providers are using a big bus to drive just a few residents to doctor appointments, he said.
Another area to consider is leasing, various vendors say.
“It offers a lower payment and it’s a way to update your vehicles more often. Newer vehicles are going to get better gas mileage, meet EPA standards and things like that,” says Tom Gigot, sales manager at Green Bay, WI-based Transportation Vehicles. “Years ago, leasing was popular and then it faded out. It’s becoming popular again. Interest rates are going up so it’s tougher to buy.”
The full effects of higher interest rates haven’t taken hold yet, some observers believe.
“We’re seeing some folks rethink their position on purchasing a new vehicle with interest rates up,” acknowledges Terry Butler, vice president of operations for Carpenter Bus Sales Inc., Franklin, TN.
“We haven’t seen much of the effects, but people are talking about it. Increased lending costs, along with higher fuel costs — you have some issues there,” he said.
Stuck in gear
“Most of the care facilities I work with are really starting to get concerned about transportation,” says Royce Harper, regional sales director for Mid-American Coach, Kansas City, MO.
“I have found they’re leaning toward the full-sized, raised roof vans to specifically utilize them for the quick day trip or doctor trip so they don’t have to fire up the larger scaled shuttles.”
Butler joins several others in cautioning operators to examine diesel-powered vehicles carefully. About 20% of his sales comprise diesel.
“I can’t endorse the diesel, I truly can’t,” he said. “Diesel technology is somewhat stagnant.”
There is consensus diesel engines are more durable and efficient, but they cost more up front and are noisier than gas engines, a turn-off for many long-term care facilities.
“You’ll get maybe 1 to 2 miles per gallon better with diesel, but we’ve found you’re going to have to drive a couple hundred thousand miles to break even with the cost of diesel going in,” adds Carpenter’s Butler.
While new technology has brought gas and diesel options closer together, it’s also made great strides in areas other than engine mechanics.
“With the new technology in flooring systems, and lighter weight components, the weight savings alone is phenomenal, Butler noted.”
Pumped up
National average prices for self-serve regular unleaded gasoline and diesel in mid-June for each of the last six years.
Year Gas Diesel
2006 $2.899 2.979
2005 $2.13 2.332
2004 $1.98 1.793
2003 $1.514 1.523
2002 $1.386 1.363
2001 $1.661 1.578
Source: AAA Motor Club, Oil Price Information Service, 2006
Basic ‘secrets’ for efficiency
Some of the most effective ways to make a vehicle operate more efficiently are the simplest — and yet often least used — notes Sheldon Walle, senior vice president/general manager of ElDorado National Co., Salina, KS.
The transportation veteran offers tips that even beginners can practice:
Tire inflation — Improperly inflated tires can reduce fuel economy as much as 15%. Under-inflated tires create increased drag or friction resulting in more resistance for the powertrain to overcome and greater fuel consumption. Over-inflated tires can result in less contact surface which leads to slippage, particularly in wet conditions, also resulting in greater fuel consumption.
In addition, improperly inflated tires accelerates tire and brake wear. At a minimum, tire inflation should be checked twice a week.
Fluids and filters — Dirty fluids, lubricants and filters can reduce fuel economy as much as 25%. If applicable, consider service intervals based on hours of operation versus mileage.
Engine drive belts — Frayed and worn engine and component drive belts also can waste fuel. Whether due to slippage or putting undue drag on engine components, this also can make the engine work harder than necessary. These should be inspected once a week.
Battery/charging system — Batteries should be checked at least once a month for voltage output. As batteries wear down, they place greater demands on the charging system. The more the alternator is engaged, the more drag on the engine. And the more fuel is consumed.
Rear A/C system — Extra emphasis should be put on cleaning and/or replacing the rear air-conditioning evaporator on applicable vehicles. Like the alternator, the belt driven A/C compressor will be engaged more often if the evaporator filter is unable to maintain good airflow. “These are all things that do not require great mechanical skills, can be performed with minimal tools and equipment and can greatly increase the fuel economy of any vehicle,” Walle noted.
