⚠ PRELIMINARY: NOT FOR PUBLIC USE: These models are unfinished and calculations have not been verified or finalized. They are intended solely for internal discussion purposes. Data and outputs may be inaccurate or incomplete. These models do not represent a policy position, recommendation, or official stance of NCRETAC, its board members, volunteers, or staff.
EMS Sustainability Task Force — Phase IV | Funding Workgroup
Ambulance Cost Structure & Economies of Scale
Five-tier cost model. Baseline: 774.3M system cost · 666.8M APCD billing + $12M HUTF = 678.8M revenue · 95.5M gap.
statewide cost/call
$834
208 agencies (GAL May 2025)
cost/transport
$1,303
vs $609 revenue
revenue deficit
$307M
at 70% collection rate
payroll share
65–80%
of total expenses
scale benefit
93%
cost/call reduction
Payroll
Variable costs
Fixed costs
How to read this chart
What you seeEach bar represents one of five agency size tiers, from Very Small (fewer than 500 calls/year) to Very Large (15,000+ calls/year). The bar is divided into three cost layers: payroll (largest), variable costs like fuel and supplies, and fixed overhead.
What it meansThe bars grow taller as agencies get larger — but not proportionally. A Very Large agency costs about twelve times more than a Very Small one, yet it handles roughly 400 times the call volume. That difference is economies of scale at work.
What this means for policy: Small agencies are not more expensive because they are managed poorly. They are more expensive because fixed costs — the crew that has to be there at 3am whether anyone calls or not — are spread across very few calls. Consolidation can help, but it does not eliminate that fixed floor.
Fixed costs (rent, depreciation, G&A) remain relatively stable while payroll and variable costs scale with call volume. Very Small agencies carry the same ~$57,600 rent burden as Very Large ones.
Total cost/call
Payroll/call
Fixed/call
Variable/call
How to read this chart
What you seeEach point on the line represents the average cost per individual ambulance call at that tier. The left end is Very Small agencies; the right end is Very Large. The line falls sharply from left to right.
What it meansThe curve shows economies of scale in action. Very Small agencies spend over $6,000 per call — not because they waste money, but because their fixed costs are divided by very few calls. Very Large agencies bring that figure down to roughly $500.
What this means for policy: This curve is the central economic argument for state involvement. A county cannot simply "run more efficiently" to escape a $6,000 cost per call when it only generates 60 calls per year. The math is geography, not management.
Fixed cost/call drops 94% from $1,245 (Very Small) to $71 (Very Large). Payroll/call falls from $5,574 to $321. Variable cost/call barely changes — fuel, supplies, and dispatch are largely proportional to transport volume.
Total revenue
Total expenses
How to read this chart
What you seeBars show the gap between what each tier costs to operate and what billing revenue actually covers. Taller bars mean a larger deficit per agency.
What it meansEven the largest agencies do not fully cover their costs from billing. The gap is largest in absolute dollars for big urban systems, but largest as a percentage of cost for small rural and frontier agencies.
What this means for policy: No tier operates without a funding gap. The question is not whether to subsidize EMS — it is who pays and how.
Every agency tier operates at a structural deficit. Very Small agencies collect ~6¢ for every $1 spent. Even Very Large agencies recover less than 72% of costs from billing — driven by Medicare/Medicaid payer mix and contractual adjustments.
Payroll
Variable
Fixed
How to read this chart
What you seeEach bar shows the total annual cost for that tier split into three components: payroll (blue), variable costs (orange), and fixed overhead (green). The bars are different heights — the height shows absolute cost, not a percentage.
What it meansPayroll dominates at every tier and grows in absolute dollars as agencies scale. Fixed overhead stays relatively stable. Variable costs grow with call volume. The most important takeaway is the sheer scale difference: a Very Large agency's annual cost dwarfs a Very Small one.
What this means for policy: Cost structure is largely payroll — trained people who must be present and ready. That is not reducible through administrative efficiency. It is the cost of the service itself.
The scale difference is the point: a Very Large agency spends $12.4M per year against a Very Small agency's $1M. Payroll dominates at every tier and cannot be reduced by running fewer calls — it is a fixed readiness cost, not an operational one.
Note on Agency Count
The 208-agency figure used in this model is drawn from the GAL registry (May 2025) and reflects ground transport providers active at that time — the appropriate basis for the tier cost analysis shown here. The current CDPHE licensed count is 242 (March 2025). That higher figure includes agencies that hold a license but do not perform transports — for example, specialty response units, industrial and event services, and some mutual aid resources. Non-transporting agencies do not generate transport billing revenue but do contribute to the administrative and regulatory cost of the overall system. This distinction has not been quantified in the current model versions; ePCR call volume data is filtered to transported patients at the record level (scene disposition = transported). Revenue estimates apply to transporting agencies only.
Model Assumptions
- Agency tier distribution (n=46/46/46/35/12) is based on the 208-agency GAL registry, May 2025
- Cost structure derived from the $25M underfunded state/regional mandates allocated per-capita ($4.20/resident). Colorado Ambulance Financial Model (July 2023), with components reviewed against HCPF FY2024 cost-per-trip data
- Five tiers defined by annual call volume: Very Small (<150), Small (150–599), Medium (600–2,499), Large (2,500–14,999), Very Large (15,000+)
- Revenue rates: Medicare AFS 2025–26 conversion factors; Medicaid at 80% of Medicare (HCPF FFS standard); commercial at APCD-calibrated rates
- Payroll costs assume fully paid staffing; volunteer labor is not monetized in base figures
- Fixed costs (rent, depreciation, G&A) held constant across tiers at ~$57,600/year for rent floor
Limitations
- Revenue estimates apply to transporting agencies only. ePCR call volume data is filtered to transported patients; the 9 non-transporting 911 ground agencies in Colorado do not affect call volume counts
- Tier cost curves are interpolated from the financial model, not derived from individual agency audited financials
- Geographic variation within tiers is not captured: a Rural 600-call agency has structurally different costs than an Urban 600-call agency at the same volume
- Fire-based agencies may undercount EMS-specific costs if shared infrastructure is not properly allocated
- Does not reflect 2024–2025 wage inflation; labor market conditions since July 2023 will have shifted absolute cost levels
- Volunteer labor subsidy is not reflected; agencies transitioning from volunteer to paid staffing face costs not visible in this model