EMCare SEC Report and Responses

To EM physicians,

The following is compiled from a document submitted in October 2005, to the Securities and Exchange Commission by the parent company of EMCare, Inc., in preparation for an initial public offering (IPO) of stock. You can see that the lay executives in charge of EMCare have received millions of dollars in compensation and stock options derived largely from physician professional fees. It is also clear that they focus their business on lucrative ED contracts. You will note that this company expresses concerns over the risks posed by prohibitions on fee-splitting and the corporate practice of medicine, the core issues AAEM is addressing on your behalf. Please contact us if we can be of assistance.

Emergency Medical Services (EMS), EMCare's parent company

The following information was derived from the October 19, 2005, SEC filing of Emergency Medical Services LP, EMCare's parent company, in order to prepare for an independent public offering (IPO) of 7.8 million shares of common stock on the NYSE (Ticker EMS) for an initial offering price of about $15-17 per share or $125 million in total.

EMCare considers itself to be the largest staffing provider by number of contracts (6 % of total market) and has n on-compete clauses in most contracts. EMCare identified 5 major national groups: EMCare, Team Health, Sterling Healthcare, The Schumacher Group and National Emergency Services Healthcare Group. EMCare has 329 total contracts in 39 states (5.3 million patient visits) and employs 4,500 physicians. This also includes some hospitalist (28 contracts) and radiology services. EMCare believes it has a very good overall payer mix (with only 2% and 4% of revenues Medicaid and self-pay).

The IPO proceeds to go towards repaying $606 million in long-term debt. The CEO, William Sanger, MBA, and President, Don Harvey, of both EMCare and the parent company are not physicians. Dighton Packard, MD, Chair of Dept of EM at Baylor, is the CMO of EMCare and its only physician executive officer. The reported 2004 total compensation (salary and bonus) for CEO William Sanger was $1,070,118, for Don Harvey was $729,167 and for Dighton Packard, MD was $320,571. Also, EMCare paid $4.9 million in the past two years to BIDON, Inc. a consulting firm owned by William Sanger, Don Harvey, and a 3 rd partner. In 2005, William Sanger received stock option grants for about 1.5 million shares estimated to be worth nearly $10 million. And, Don Harvey and Dighton Packard, MD, also received stock option grants estimated to be worth nearly $2.5 million and $325,000, respectively.

EMCare is purchasing 3.5 million shares of stock ($56 million) for its executive stock option program. William Sanger owns 450,000 shares and Don Harvey owns 75,000 shares before the IPO. Finally, William Sanger was recently given a bonus exceeding $12.5 million for assistance with the sale of the company from Laidlaw to Onex and Don Harvey was similarly given a $2.2 million bonus.

The SEC filing requires EMS/EMCare to divulge risks to potential stock purchasers. The following are excerpts:

"There can be no assurance that our non-compete agreements related to affiliated physicians and professional corporations will not be successfully challenged as unenforceable in certain states. In such event, we would be unable to prevent former affiliated physicians and professional corporations from competing with us, potentially resulting in the loss of some of our hospital contracts."

"Laws prohibit the practice of medicine by general business corporations and are intended to prevent unlicensed persons or entities from interfering with or inappropriately influencing the physician's professional judgment. They may also prevent the sharing of professional services income with non-professional or business interests. From time to time, including recently, we have been involved in litigation in which private litigants have raised these issues."

"The Medicare Modernization Act amended the Medicare reassignment statute as of December 8, 2003 and now permits our independent contractor physicians to reassign their Medicare receivables to us under certain circumstances. Because this provision has only recently been implemented, it could be interpreted in a manner adverse to us, which would negatively impact our ability to bill for our physicians' services."

"Under the corporate practice of medicine restrictions of certain states, decisions and activities such as scheduling, contracting, setting rates and the hiring and management of non-clinical personnel may implicate the restrictions on corporate practice of medicine."

"Regulatory authorities or other parties, including our affiliated physicians, may assert that, we are engaged in the corporate practice of medicine or that our contractual arrangements with affiliated physician groups constitute unlawful fee-splitting. In this event, we could be subject to adverse judicial or administrative interpretations, to civil or criminal penalties, our contracts could be found legally invalid and unenforceable or we could be required to restructure our contractual arrangements with our affiliated physician groups."

EMCare Email Responses

XXXXXXXXX@comcast.net

AAEM:

Thank you. This is one of the reasons I am a member.

XXXXX XXXXXX, MD

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XXXXXXXXXXXXXXX@XXXXX.com

How can a physician serve as a Chair of an academic department, Baylor (a full-time job) and simultaneously be the CMO of EMCare? Wouldn't Baylor prohibit that? Does Dr. Packard receive $320K per year for simply providing his MD to the corporation without actually working there?

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XXXXXXXX@aol.com

Hi, I just do not know why Emergency Medicine can not just break away from the claws of these corporate staffing agencies. It is really the demise of medicine. The physician is not different than a ward clerk, or an indentured servant for the administrators of hospitals and groups. Sad. Position security is non existent, but if they are short staffed the Doctor gets to work....sad to see where it has gone as a specialty.

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XXXXXXXXXX@XXXXXXXXXXXX.org

If you ever need a witness against EMCARE, you can call me. Myself and several hundred MD's in XXXXXXXX who worked for EMCARE from 1999-2000 were left without Malpractice Insurance after EMCARE's insurance company went bankrupt. EMCARE did absolutely nothing to help us, except pay its officers big bonuses as you indicate. I have contemplated joining AAEM for quite sometime, and my application will be forthcoming. Please continue to fight corporate EM at every level.

XXXXXX X. XXXXX, MD, FACEP

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XXXXXXXXXXX@earthlink.net

In the for what it is worth category, my best estimate is that what I billed while with EMCare was siphoned off at a rate of approximately 25% for their administration and management. Since leaving EMCare, I have found that that percentage is in reality, only necessarily approximately 8 to 10 % depending on how the group decides to organize itself and what benefits it decides to provide.

When I did work for EMCare, I worked at a facility whose director was a former colleague of Packard's at Baylor. He was an EMCare "company man" who would never seem to say anything adverse about EMCare. Of course when Emcare gave us all a paycut of about $1000 to $1500 a month, without any notice at all, he didn't have much to say then either--though the rest of us were upset at this type of insensitive crass handling of physician employees.

The group I was with subsequently was an independent, single-hospital group. However, I found it to be of only marginal difference versus EMCare, with their principal vice being that the senior partners were prone to opportunistically, and vigorously search for ways to disenfranchise the younger partners of non-monetary benefits. Indeed they did this well. Though I can foresee no circumstance in which I would work with a CMG like EMCare again, sometimes I am not so sure that they are the ultimate evil in this industry. Suffice it to say that I cheer on AAEM in pursuing CMG's like EMCare. Were I not recovering financially from a change of jobs, I would financially 'cheer on' AAEM with support as I am a believer in the good work that AAEM is doing. However, I wonder what means if any AAEM might offer for the 'little guy' who is being extorted by the independent groups out there--because it is happening probably more than we realize.

XXXXXXX XXXXXXXXXXX, M.D.

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XXXXXXXXXXXX@XXXXXXXXXXXX.edu

Questions:

Is EMCare the first EM contract company to go public?

Is it time to initiate a corporate practice of medicine prohibition at the federal level, leveraged by the knowledge that Medicare dollars will now be going out to shareholders in these companies instead of paying for physician services?

XXXXXXXX X XXXXXXX MD FAAEM

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XXXXXX@XXXXX.com

Incredible, the amount this CEO has extracted from the services of physicians, who bear the brunt of responsibility - and liability - for patient care. I hope you can successfully fight against this enterprise.

XXXXXXX XXXXXXXX XXXXXX MD FAAP FACEP

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XXXXXXXXXXXXX@aol.com

BOD:

The below is brilliant intelligence, but what are we going to do about it? We really need to take legal action. It is the only thing these people understand.

Anonymous (I need my job!!)

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XXXXXXXXXX@att.net

Keep up good work. We are glad that AAEM is keeping on eye on non physician thieves, stealing our professional fees Thank you XX