When someone calls 911 for a medical emergency, they expect an ambulance will be sent as quickly as possible. But an ongoing study by Tippie researchers suggests that if the ambulance service is owned by private equity (PE), they may have to wait awhile longer.

The study finds PE-owned ambulance services are able to avoid emergency calls that lose money and respond more often to calls that are likely to be profitable. Calls that are more likely to lose money are passed along to taxpayer supported services.

Meanwhile, victims wait longer for an emergency response in a time when delays of just a few seconds can be the difference between life and death.

Despite this, study co-author Meghan Esson, assistant professor of finance, says PE is not inherently bad. It can find efficiencies and better ways of doing things that keep struggling businesses afloat and save jobs.

“Private equity is really good at following incentives and keeping businesses competitive,” said Esson. “Consumers can benefit, too, because more competition helps keep prices low.”

But in some industries, PE’s obsession with efficiency may not be good for the community. For instance, Esson said private equity’s move into health care has seen mixed results. Hospitals owned by PE tend to have increased morbidity and higher rates of falls, while nursing homes see poorer outcomes with residents.

Esson sees a similarly problematic trend with ambulance services, with reduced staffing and increased response times leading to more deaths.

Esson and co-author Cameron Ellis, assistant professor of finance, analyzed what happened when the country’s two largest private ambulance services were purchased by private equity in 2010 and 2014.

Both were struggling financially and had they gone out of business, residents would have had fewer emergency service options. Keeping them operating even in a diminished state might have been a benefit to the community, Esson said.

But they found a troubling trend in those areas where the private ambulance service areas overlapped with nonprofit or municipal services.

• First, the PE firm laid off many of the ambulance service’s paramedics and replaced them with lower priced EMTs, with significant savings to payroll.
• Because ambulance services are legally required to send paramedics to what are called Advanced Life Support (ALS) calls, they could no longer respond to as many of those emergencies. Not coincidentally, those calls are the most expensive and typically lose money for the ambulance service.
• The service was able to continue responding to Basic Life Support (BLS) calls,which require only EMTs. Not coincidentally, those calls are also the most profitable.

• Meanwhile, 911 dispatchers referred the money-losing ALS calls to the next closest ambulance service, which was usually operated by a fire department or other municipal agency, so the losses were unloaded on taxpayers.

  

Esson said that this is known as “cream skimming,” when a business keeps the most profitable customers for themselves while taking a pass on less profitable customers. 

In the ambulance industry, though, she found cream skimming can have deadly results. When an Arizona ambulance service was purchased by private equity, Esson and Ellis found fatalities from car crashes increased 7% in the six years after the takeover, or 211 deaths. Since competing ambulance services saw traffic fatalities remain relatively stable, she said the jump is not likely the cause of increased vehicle crashes. Using data from a second ambulance service takeover by private equity, this one with a larger national presence,

Esson and Ellis found a similar trend, as fatalities from vehicle crashes increased 3%, or 9,900 victims, in six years. The researchers are currently gathering more data that will give a broader, nationwide view of private equity’s impact on ambulance services.

Esson cautions they’ve found no evidence PE managers are intentionally putting people at risk or committing fraud. It might simply be the unintended consequence of finding efficiencies. But she said the impact on the health of communities is something private equity managers need to keep in mind when buying an ambulance service.

This article appeared as part of a package in the 2025 issue of Exchange magazine about "hot topics" from the worlds of healthcare, tech, higher ed, real estate, and college sports.

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