Doubts expressed about Riggs’ finances, as contract heads to supervisors

08/01/2014 7:31 PM

08/01/2014 11:38 PM

Merced County’s proposed contract with Riggs Ambulance Service has been completed and will be presented to the Board of Supervisors this month, but a team of evaluators expressed concerns about the provider’s financial stability because of a planned buyout by its nonprofit partner.

Sierra Medical Services Alliance, or SEMSA, a Nevada nonprofit emergency medical group, has managed Riggs for nearly nine years. SEMSA planned to acquire Riggs if the 66-year-old Merced County company won the bidding for the multimillion-dollar ambulance contract.

But the planned acquisition raised concerns about whether the nonprofit organization would be able to acquire Riggs and still fund Merced County’s ambulance operations. A May 16 letter from Merced County’s purchasing department outlined its intent to award the contract to Riggs, but also questioned the company’s financial stability.

“Please be aware that during the evaluation process, the evaluation team recommended that the county evaluate the financial information of SEMSA to satisfy itself that the acquisition of Riggs would not financially impair SEMSA’s ability to fund Merced County operations,” the letter stated.

The team of evaluators mentioned in the letter were selected to score the proposals of Riggs and its competitor, American Medical Response. The identities of the members of the evaluation team are kept confidential.

Deputy County Counsel Tom Ebersole explained the letter by saying the county wanted to ensure SEMSA was “not over-leveraged” and that it has enough capital to function.

SEMSA Vice President and Chief Operating Officer Mike Williams said the organization has no doubts about its financial resources or ability to pay for Merced County’s ambulance operations. Williams wouldn’t disclose how much the nonprofit will pay to acquire Riggs, saying it’s “privileged and proprietary” because the deal is still in progress.

SEMSA officials were “not concerned” by the language in the letter, Williams said, because the organization knew what it could afford to do. Williams said he met with Merced County officials to address concerns about the organization’s financial viability.

“When we sat down with all the county officials and consultants, it was a 10-minute discussion,” Williams said. “We opened the books and all the bank statements. They took one look and they said, ‘We get it. We understand this will work.’

“I knew when we laid everything out, they would be happy with it,” he added. “I think the public can be very confident that we are more than capable of doing the job.”

According to SEMSA’s IRS Form 990, the nonprofit reported $3.6 million in revenue for the fiscal year ending June 2012. Expenses were reported as $2.9 million, leaving a surplus of $635,503.

However, Williams said SEMSA has other operations, including Lassen County. SEMSA won’t raise transport rates in Merced County when it takes over Riggs, at least for the first year of the contract.

“We’re committed to keeping those rates for this year,” Williams said, “but depending on what goes on with reimbursements, we may have to revisit that.”

SEMSA plans to invest financially in Riggs by adding new dispatch equipment and ambulances to the fleet. The nonprofit has replaced 10 vehicles and ordered 14 more to be rolled out between now and next summer.

Williams said there will be no noticeable changes to Riggs after SEMSA takes over. Owner Kraig Riggs felt this is “the right time to exit the ambulance business,” Williams said, but will stay involved with the company’s governmental affairs. He’ll now be an employee of SEMSA.

Riggs was challenged by AMR for the ambulance contract for the second year in a row. A heated dispute brewed in 2012 after Riggs lost the contract to AMR and appealed the decision, claiming the bidding process was unfair.

A controversial decision by the Board of Supervisors in January 2013 canceled the award to AMR and restarted the bidding.

AMR officials said Friday they look forward to seeing Riggs’ proposal and the scores received by both companies. Those documents will become public after the contract is put on a Board of Supervisors agenda.

“We don’t even know if they (Riggs) were the highest-scoring proposal,” said AMR spokesman Jason Sorrick. “That’s why we are waiting to see when the contract is solidified so we can access those documents and see how their bid compared to ours.”

Once the proposal documents are released this month, it will trigger a 14-day protest period for AMR.

 

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