Seeing Red

After years of taking it on the chin, Bob Goeggel struck back at his competitor. Thanks to his accusations of fraud, the state's largest ambulance company is on the operating table and the feds are doing the cutting.

Under the sponsorship of the two hospitals, which made a 20-year, $6.57 million loan to the company in 1988, Abbott grew steadily. Today, Abbott has 80 ambulances and more than 600 employees, including operations in Madison and St. Clair counties in Illinois. The recent wave of mergers and sales in the local health-care scene has meant change for Abbott's sponsors. Barnes-Jewish, formed by the 1996 merger of Barnes and Jewish hospitals, controls 50 percent of Abbott; SLU, which sold its hospital last year to Tenet Healthcare Corp., controls the other half. Barnes-Jewish and SLU executives serve on Abbott's board.

In the early days, Goeggel and Dougherty seldom competed directly, though there were occasional skirmishes. In the late 1970s or early '80s, Goeggel says, he negotiated a deal with two of his contractors for neonatal transport — St. Louis Children's Hospital and Cardinal Glennon Children's Hospital — making them responsible for the cost of the service. Soon after, Abbott walked away with the business. "Dougherty came in and undercut us — he's really good at doing that," Goeggel says.

As Abbott grew, the two companies increasingly would compete over new business. Sometimes Gateway would win, sometimes Abbott. In recent years, Goeggel says, Abbott has been winning more than losing.

Former Abbott president Terrence Dougherty describes Bob Goeggel as a "bitter competitor."
photo courtesy of the St.Louis Business Journal
Former Abbott president Terrence Dougherty describes Bob Goeggel as a "bitter competitor."
"Owning your own business is like 
having a kid. It's not about money; you want it to do well." 
- Bob Goeggel
Jennifer Silverberg
"Owning your own business is like having a kid. It's not about money; you want it to do well." - Bob Goeggel

In 1990, Gateway won a contract to provide ambulance service to the city of Crestwood; Abbott got the business when it was rebid a couple of years later. It was the same story with the Lambert International Airport contract that year. "When we bid the airport, Abbott's bid was double our bid. When we rebid it three years later, they came in under our bid because by then they had taken a person away from us ... who knew the price that we had bid," Goeggel says. "I'm not going to bid anything to lose money, but they didn't seem to care about that — they came in and bid the thing so that kept us from having that piece of business. Whether they made money on it or not didn't seem to matter to them too much."

In 1990, Goeggel lost the contract to handle service for the Veterans Administration hospitals to Abbott. He won it back in 1993, then lost it again in 1996. That year, Goeggel also lost the exclusive contract to provide backup ambulances to the city of St. Louis' EMS service.

Gateway had held that contract since the 1980s. In 1995, the city decided to open the contract to competitive bids, and Gateway won the bid. After Abbott demanded a piece of the business — Goeggel says Abbott executives lodged a protest with then-Mayor Freeman Bosley Jr. — Gateway's deal was rescinded. A revised request for proposals was issued. "It was very clear what they intended to do — they intended to hand the contract to two providers, and that's what they did," Goeggel says.

Under the old contract, the city used to compensate Gateway for any transports it couldn't collect on. Under the new "zero cost" backup contract, the city doesn't guarantee the ambulance companies payment; they must collect directly from the patient, the patient's insurance company, Medicare or Medicaid. Gary Ludwig, chief paramedic for the city's EMS service, says the competition has been good for the city. Ludwig estimates that Abbott handled about 3,100 backup calls for the city last year, Gateway 800. EMS handled the bulk of the calls, about 71,000-72,000 runs.

Gateway went from handling about 100 city backup transports a month to less than 50 this year; overall, the company has seen the number of transports drop by about a third in the past three years, with much of that business going to Abbott.

Matt McCormick, Abbott's director of corporate development, contends that the company won business fair and square. "If (Goeggel) believes that there was unfair competition in the marketplace, I would point out a number of contracts have no pricing," McCormick says. "Crestwood, for example, doesn't pay for ambulance service. We can't underbid him, because there is no bid. A community makes a decision based on the quality of service they believe they will receive or have received in the past."

As for other contracts in which bidders submit prices, such as the airport, McCormick says the process tends to be "pretty open": "Being government bids, a lot of the information is available to the public — what the pricing was, how much was bid, what the current vendor is charging."

Dougherty declined a request for an interview, but in written responses to our questions, provided by one of his lawyers, Stephen B. Higgins of Thompson Coburn, he describes Goeggel as a "bitter competitor" who is responsible for Gateway's flagging fortunes and calls Goeggel's allegations of improper bidding "blatantly false."

The relationship between the two companies, Dougherty says, "has been intensely competitive. I believe that the reason Abbott grew greatly during the 1970s and 1980s — while Mr. Goeggel's company did not — was because Gateway did not invest in their business, improve service, upgrade or add equipment, provide ongoing training to medical technicians or respond to client needs. Abbott not only spent a lot more in these areas but also had numerous economies of scale."

But, for Goeggel, losing contract after contract seemed to show that Abbott executives would challenge him for every piece of business in the market. Goeggel was convinced Abbott had targeted his company for extinction. "Not only was my company name used in their management meetings, but my name was also personally used, as in "We're going to put him out of business.'" A former Abbott executive was the source, Goeggel says.

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