American Academy of Emergency Medicine

Laidlaw Restructures Its Ambulance Service

On March 1, 1999, Laidlaw Inc. announced a major restructuring of its American Medical Response (AMR) ambulance service segment. A thorough review of the unit's contracts and management structure confirms that a $255 million (after-tax), non-cash charge, to be taken in the company's third quarter, adequately reflects the changed value of assets in the business, principally goodwill. In addition, a charge of $50 million ($30 million after tax) will reflect severance and other costs of reducing AMR's employee base by 2,200 positions or approximately 10%. The majority of staff reductions is occurring in the Northeastern and Southern U.S. operations while Denver head office staff levels also will be decreased and the "group'' management level across the company's field operations is being eliminated.

As a result, underperforming locations are being eliminated, sold or wound up; non-compensatory contracts of all kinds are being renegotiated, re-bid, or exited and a number of wheelchair van operations either transferred to Laidlaw's public transit management unit or disposed of. As of April 8, eleven locations have been closed in Texas and Southeastern states.

The objective is to concentrate on AMR's clinical expertise and strengthen the unit's ambulance business by focussing it: (a) on communities which are seeking true partners in ambulance services, (b) on customers, represented by larger integrated healthcare systems, and (c) on the expansion of its unique patient triage and access management programs.

Management expects the revitalized AMR will have annual revenues of approximately $950 million. Operating margin is expected to remain at current levels for the company's third quarter, to improve to the 8-9% range by fiscal year end and to exceed 10% in the first quarter of fiscal 2000, beginning on September 1.

Editor's Note: Laidlaw's troubles should be carefully followed by EM physicians as EmCare is a Laidlaw subsidiary. Hopefully, Laidlaw's difficulties with AMR will not have an impact on the aprroximately 4,500 physicians who work for EmCare.