The possibility is suggested of adding fixed-route transit service to many of the nation's small cities and towns by using some of the money currently devoted to the provision of client-oriented demand-response transit to fund the new service. This can be done, this study finds, with very little additional expense and no loss of necessary demand-response service. The creation of small fixed routes is feasible, when the demand-response system is organized across a region by a brokerage (i.e., an organization paid on a capitated basis that assigns eligible riders to transportation providers). Research shows that both brokerages and fixed routes tend to lower Medicaid transportation costs. The thesis is that these two efficiency enhancers can be combined effectively in some of the nation's small towns and cities, whenever capitated brokerages can provide the administrative apparatus and much of the funding for the fixed route. This thesis is illustrated with the results of a study conducted in a Kentucky city of 27,000. It found that a substantial number of those currently riding in demand-response vehicles to which they are assigned by a broker could be shifted to a proposed fixed route, The new route would be operated by the broker with funds from the capitation payments. The study's findings suggest that capitated brokerages may create an opportunity for many of the nation's smaller cities to obtain a fixed-route bus service at a modest, or perhaps at even no, additional cost.
