108 in Crisis: Complacency and Compromise Undermine Emergency Services' Potential

Subramania Raju Rajasulochana (rajasulochana@tapmi.edu.in) and Daya Shankar Maurya (dmaurya@tapmi.edu.in) are at T A Pai Management Institute.
28 June 2018

The 108 service has been regarded as a successful public private partnership project for handling medical, police, and fire emergencies. However, the service is marred with irregularities and frequent disruptions. This article reflects on the current realities surrounding the service by revisiting key theoretical concepts and principles. Moving forward, the effective organisation and delivery of emergency ambulance services would require inbuilt accountability and transparency mechanisms.

The 108 service started in 2005 as a non-profit joint initiative between the Government of Andhra Pradesh and the GVK-Emergency Management and Research Institute (EMRI). The service model combines public funding with technological support and management capabilities from private entities, to achieve public health goals of safe transportation (Chakraborty et al 2009, Sundararaman et al 2012). Hailed as an example of successful public health innovation at low cost, this emergency medical service (EMS) was built in India at 50 cents per person treated, as compared to $100 in the United States (US) (Prahalad and Mashelkar 2010). 

The unmet need for EMS still remains high in India. Every year, around 33% road accidents and 99% of cardiac arrests victims do not survive in India as compared to 2% and 70% respectively in the US (Kotturu 2018). The differences in survival rate are attributed to access to quality treatment during the “golden hour” (one hour or less, following traumatic injury). Currently, the 108 service operates in a total of 31 states and union territories with 8061 ambulances supported by the National Health Mission (NHM). According to estimates in 2009, India requires 10,000 ambulances to cover its population with an estimated annual cost of around Rs 1700 crores (Chakraborty et al 2009).

Perhaps, the most impressive contribution of the 108 service is that it has led to a conducive legal and policy environment for the growth of EMS in India. The ecosystem for EMS has evolved over the years with the establishment of an integrated network of trauma centres along national highways, National Numbering Plan with three-digit and four-digit short code helplines, National Disaster Management Authority (2005) towards medical preparedness for mass casualty and disaster, National Ambulance Service (NAS) guidelines (2013) to ensure uniform design and nomenclature for road ambulances, and Guidelines to Protect Good Samaritans against harassment by police, hospitals, and other authorities (Das and Desai 2017).

Current Realities

A number of irregularities and issues have surfaced around the organisation and delivery of the 108 service in recent years. 

The first issue is that of sub-optimal response time and calls not being attended. The standard norm for reaching every urban call is within 20 minutes, every rural call within 40 minutes, and to shift the patient to the nearest hospital within 20 minutes after reaching him/her. However, non-adherence to stipulated response time in delivery of the 108 service has been observed across several states. The mean time was between 41 to 47 minutes, as per the Comptroller Auditor General (CAG) report from Madhya Pradesh (GoMP 2017). This response time was based on reported data by the private provider. Further, the CAG report from Odisha observed that “during 2013-14 out of the total call received, ambulances were dispatched in 5.43% of calls.” Further, audit report noted that “no details regarding calls not attended were recorded in the database” (GoO 2015, 165). 

The second issue is that of frequent unrest among contracted employees. The emergency ambulance service comes under the Essential Services Maintenance Act, 1980. Yet, the contracted drivers and paramedical staff of 108 services have resorted to protests and strikes against the private company. Violation of contractual labour norms, denial of benefits and pay as mentioned in the contract have led to conflicts between the employees and the contracting company across various states (Times of India 2012; Kannadiga World 2013; Outlook India 2014; Down to Earth 2014; New Indian Express 2017). It is worth noting that overworked contracted employees without adequate rest may increase the risk of medical errors and consequent loss of clinical quality of EMS.

The third issue relates to the non-fulfilment of conditions of memorandum of understanding (MoU). Conditions like maintenance of equipment and vehicles, geographic information system (GIS) tracking, skill upgradation, networking with government hospitals, and generating awareness among the public about 108 services were not fulfilled as per the timeline prescribed (Yasmeen 2017a). 

A more critical issue related to poor governance is that of insufficient supervision by state governments. Oversight such as lack of due diligence in the tendering process, rising costs and idling of ambulances due to procedural delays in tender procurement, fabrication, delay in payment of operating expenditure (OPEX) to the private provider, inadequate performance monitoring, and forwarding commercial gains at the expense of public interest has been observed in various CAG reports (GoK 2015; GoO 2015; GoMP 2017). The  CAG report 2017 pulled up the Uttarakand state health department for signing an agreement with GVK-EMRI for 108 services in March 2008 “without the proposal being submitted to the expenditure finance committee of the state government as stipulated in the general financial rules.” Further, the audit report noted that the MoU with the operator was signed in a manner which "undermined the ability of the medical, health & family welfare department to enforce the conditions of service and levy penalty or any other punitive measures for deficiencies in the quality of service provided.” The parameters essential for delivery of the requisite quality of service such as staffing norms, performance standards, reporting, monitoring, bank guarantees and penalties were omitted (Times of India 2017).

Clearly, there are signs of complacency and compromise in the delivery of 108 services.  What is more problematic is that state governments find it difficult to replace the incumbent provider despite issues of non-compliance and opportunistic behavior. Recently, the Karnataka State Health Department terminated its nine-year association with the provider of 108 services, GVK-EMRI, citing irregularities and violation of tender conditions (Yasmeen 2017a). However, after a few days, the state health department was compelled to relax tender conditions following poor response to tenders invited to run its 108 Arogya Kavacha services (Yasmeen 2017b). The question then is: what causes these issues in the 108 service and what can be done to address them?

Design and Implementation of 108 Services 

The 108 service is designed and implemented as a public private partnership model. This model is essentially an “operate and maintain” service contract between the respective state governments and the private agencies/consortia. The state governments are purchasers of services. The initial financing of capital expenditure (CAPEX) for buying ambulance vehicles, setting up of call centre, information technology and other physical infrastructure is borne by the central government under the NHM. The OPEX for fuel and maintenance is largely incurred by the respective state governments. The central government support for OPEX gradually diminishes from 60% in the first year to 40% in the second year and 20% thereafter. The geographical coverage (number of districts) and time frame of MoU or contract of the service may vary from 1 to 5 years across various states, according to their specific needs like disease burden, health infrastructure, road connectivity, and delivery settings.

The contractual arrangements and regulation of 108 services, despite their operation for more than a decade, is still far from ideal. In order to shed light on the issues therein, the organisation and delivery of the 108 service is revisited with certain interwoven theoretical concepts and principles as follows.

Absence of Ex Ante Competition in EMS Contracting 

There is not much ex-ante competition in the EMS supplier markets. At present, there are only three players—GVK-EMRI, Ziqitza Healthcare Limited (ZHL) and Bharat Vikas Group India-UK Specialist Ambulance Services (BVG-UKSAS)—actively bidding for the 108 services project tenders and running the service in different states. In 2016, there were only two companies that bid for Rajasthan’s tender contract to run the Integrated Ambulance Service (Times of India 2016). Ex-ante competition is crucial for the success of contracting and bidding out process since it puts pressure on bidders to control costs or be innovative and provide high quality service (Bettignies and Ross 2004). Ex-ante competition can get a provider to make a more compelling value proposition than the competing providers and make commitments to meet requirements and standards on an ongoing basis in order to extend or retain its contract or market rights.

Increasing competition through decentralised mechanisms is problematic. The state could be divided into two to five regions with a separate tender for each circle as done in other public services (Sundararaman et al 2012). However, decentralisation is likely to lead to high costs as each would require its own computer-aided dispatch (CAD) and duplication of all other elements of EMS infrastructure. Besides, there is a possibility of technical issues and poor coordination among district authorities and/or multiple agencies, coupled with lack of centralised monitoring and accountability, which could result ultimately in the failure of the model.

On the other hand, a single provider offers potential cost savings to state government by having to support one infrastructure for the CAD system and by generating the volumes of ambulance dispatches to allow the provider to lower unit cost of this service “per ambulance trip” and “per ambulance per year” to the minimum, through economies of scale.[1]  

Limited Competition Due to EMS Being a ‘Bundled Good’

The EMS is a high end specialised service comprising heterogeneous inputs such as expertise and experience in call centre management, fleet management, global positioning system (GPS) based tracking, ambulances with life supporting medical equipment and trained emergency medical technicians (EMT) and paramedical staff. Due to high complementarity between these inputs, the provider has incentives for cost saving when these EMS inputs are “bundled” (two or more goods or services as a package deal for a discounted price). Further, when all inputs are supplied by the same firm, transaction costs involved in coordination and ensuring compatibility among various inputs get reduced drastically and the provider firm can enjoy economies of scale. From the perspective of the government, the procurement cost associated with purchasing “bundled” EMS is relatively lower than contracting for operation and maintenance of each of these inputs separately.

Economic theory suggests that the “make or buy” decision of inputs should be based on two characteristics of goods—contestability and measurability. Here, contestability refers to barriers to entry and exit of firms in a market while measurability is the precision with which inputs, processes, outputs, and outcomes of a good or service can be measured (Prekar and Harding 2000). Applying this criterion, EMS inputs, if sold separately by individual firms in a market, fall in high contestability and measurability matrix. However, once bundled by a private consortia (a group of suppliers), these EMS inputs fall into the category of low to medium range in the contestability and measurability matrix. In other words, the barriers to entry into the EMS market increase, making the incumbent provider virtually a monopoly. The measurability of service quality becomes difficult, giving ample space to the incumbent provider for complacency and compromise on service quality. 

Ex Post Inefficiencies Due to Bilateral Monopoly 

Ex post inefficiencies arise after the PPP is initiated due to two inter-related factors—relationship-specific investments and contractual incompleteness. Both these factors result in a situation of bilateral monopoly and partners behaving in an opportunistic manner, depending on their ex post bargaining power (Bettignies and Ross 2004).

Once the PPP project starts, both the parties—the state government and the private provider—make relationship-specific investments like purchasing the basic life support (BLS) and advanced life support (ALS) ambulances,[2] and designing and developing EMS infrastructure, trained EMT and paramedical staff, and management capabilities. The consequence of relationship-specific investments is that it makes both parties better off in operating and running the project for a longer period rather than terminating the relationship. Further, long term relationships are often complex and uncertain and not every potential contingency and associated plan can be written into a long run contract. For instance, variances in deployment planning for ambulances may arise due to shortages of trained manpower, creating a zone for ambulance may not be practical at times when the appropriate health facility to handle emergencies is not be available in that particular zone. Thus, relationship-specific investments and contractual incompleteness may give rise to bilateral monopoly and as a result both parties may end up tolerating each other’s inefficiencies (sub-optimal responses to calls by providers, and delays in payments and procedures by state government officials). 

Moral Hazard Issue Due to Gaps in Contract Design 

The moral hazard occurs due to principal-agent problem, where the principal (the state government) finds it difficult to observe, verify, or control the action of the agent (contracted private provider).  It occurs post hoc, where the agent takes undue advantage of the contract clause by taking risks that the principal will pay for, or in situations where service quality is difficult to observe, measure and control.  

Moral hazard situations in the context of 108 services can be observed in many ways. Firstly, the context of delivery settings may lead to moral hazard. For instance, being a cashless service, the ambulance deployment and responses are likely to be configured in favour of urban areas with a higher potential volume of cases and easy access to hospitals with emergency departments and health care resources as compared to their rural counterparts.  But this could be proving detrimental for equitable access to EMS.

Secondly, moral hazard risk may arise in a situation of inappropriate utilisation for patient transport in a non-emergency situation (which can lead to conflicts if the provider refuses) or misuse of free emergency ambulance service by the general public through fake calls. A news report revealed that the integrated emergency response service or “Jeevan Vahini” 108 services in Rajasthan got 65% fake calls every month (Hindustan Times 2017). Such instances have the potential to displace more critical emergency calls from availing the 108 services.

Thirdly, moral hazard risk can be due to the missing link between payment and performance which is further aggravated in case of poor governance, that is, when the penalty clause is overlooked. Currently, most state governments make a fixed payment of close to Rs 1 lakh per ambulance per month and mandate a minimum of five trips per day. For instance, in Orissa and Madhya Pradesh, there were no deductions from OPEX despite non-satisfactory performance parameters in terms of response time and non-performance of mandated five trips per day (GoO 2015; GoMP 2017). 

Lastly, moral hazard risk could also be attributed to bundling tasks that conflict with each other. For instance, the present contract design makes the contracted provider responsible for delivery of EMS services as well as raising public awareness about 108 services to enhance its utilisation. The provider has incentives to reduce trips per day, especially when a fixed payment is made on a monthly basis per ambulance. Thus, raising public awareness and cost control may lead to conflict of interest. Particularly, uses beyond pregnancy are unlikely to be advertised by service providers. For example, around 10 districts did not avail the free emergency ambulance service offered by the Maharashtra emergency medical services due to lack of awareness and a degree of hesitation to call for an ambulance (Times of India 2017). 

Way Forward

The 108 service model is indeed a commendable public health initiative to fill the gap in the hitherto fragmented EMS ecosystem. With the advent of 108 services, the EMS in India has expanded exponentially and geographically, shifting focus from being “transport vehicle concept” to “lifesaving emergency medical transportation”; injury centric to covering all emergencies; and urban-centric to being pan-India (Das and Desai 2017).   

Though the 108 service is well-publicised and cover a large section of the population, there are signs of complacency and compromise in service quality. There are gaps in design and management of contracts for EMS due to the peculiar nature of EMS services, complexity of contracts that thin supplier markets of EMS services, bilateral monopoly, and poor contract design and governance leading to severe principle agent problems. Given these realities, there is a definite need to correct principal-agent problems in the 108 PPP model.  

Competition could be infused through shorter contract periods and by inviting more agencies (including public agencies) to bid for the contract. Contract design could be improved by better aligning payment with performance. This can be done by introducing performance incentives for critical outcomes like quality and utilisation. Tasks that are conflicting in nature could be unbundled to reduce moral hazard. A separate agency could be contracted to create awareness and generate demand for EMS services. Implementation and governance of contracts could be improved by instilling accountability and transparency mechanisms in the organisation and delivery of the service. The service quality needs to be monitored and validated on a regular basis by an independent entity, other than the internal periodic auditing of 108 services. Further, accountability could be ensured with transparency clause on mandatory disclosure of output levels, performance indicators, and payments made by the state governments as mentioned in the contract. This should be done in the public domain and made binding within a reasonable time limit. Such disclosures are neither commercially sensitive so as to potentially damage private partner’s competitive position, nor are they sensitive to the public interest.

Looking forward, the PPP model for 108 services should adopt a systems approach; it should move from the present reductionist goal of safe transportation to the next point of definitive care, towards establishing comprehensive EMS that ensures continuity of care. To this end, three suggestions made in the NHSRC (2009) and Sundararaman et al (2012) require immediate attention. Firstly , adoption of a joint centre-state legal and regulatory framework for achieving universal EMS.  Such a framework, on the lines of the Gujarat EMS Act of 2007, would reduce technical, legal and administrative variations in the organisation and delivery of publicly financed EMS service. Secondly, hospital destination policies should be made explicit, with facilities separately identified for different types of medical emergencies (maternal and neo-natal cases, pediatric emergencies, cardiac emergencies, strokes, road traffic accidents and trauma, burns and injuries, etc) and with clearly defined clinical indicators of “stabilisation”. This would require a matching investment emergency department in public hospitals as well as a tripartite MoU between the state government, empanelled public or private health facilities/hospitals, and ambulance operator. Lastly, at the operational level, the states’ capacity to design and implement suitable contractual agreements for EMS service delivery needs to be enhanced. 

Subramania Raju Rajasulochana (rajasulochana@tapmi.edu.in) and Daya Shankar Maurya (dmaurya@tapmi.edu.in) are at T A Pai Management Institute.
28 June 2018