Published Nov. 24 in the Paintsville Herald

Red lights, red ink
City ambulance service deficit an 'investment' that will be recouped over time, mayor says

By SCOTT PERRY
Paintsville Herald Editor

PAINTSVILLE — Four years after city officials first rejected a plan to initiate a municipal ambulance service in Paintsville on concerns over finances, those concerns continue, but the service that wasn’t to be is marking its fourth year of operation.

In May 1996, Paintsville’s city council rejected formation of the ambulance service on advice from Mayor Robin Cooper and Fire Chief Bob Dixon, who said their review of the proposal indicated it would not generate enough income to pay expenses.

“I don’t think anyone wants to subsidize this ambulance service,” Cooper told council in 1996.

Four months after rejecting the ambulance proposal, council authorized a limited startup of the service, and this month it begins its fifth year of operation.

Over the past four years, the city-owned ambulance service has run up about $125,000 in red ink—an amount Cooper called an “investment,” but a number that actually reflects a deficit in the system’s financial operation.

Cooper said Wednesday that the deficit, accumulated over three years, should not concern city taxpayers, adding that the ambulance system is turning the corner on its past financial problems and preparing for growth. Earlier this month, council gave a tentative go-ahead to the purchase of two new ambulances which, the mayor said, will give the system an opportunity to enhance its revenue stream and cut down on the high maintenance costs it is suffering now.

“I can’t say that our (financial) problems are over,” Cooper said, “but we are close to having a positive cash flow, and we expect and project that we will eventually recoup the money we have invested over the years into the ambulance program.”

If the mayor’s projection this week about the financial future of the ambulance system sounds familiar, it’s because this is not the first time city officials have said that growth and expansion of the program was the key to resolving financial concerns.

When the ambulance system expanded its boundaries from the Paintsville city limits to include all of Johnson County in June 1997, Cooper said the expansion would bring new customers and much-needed new revenue with it. While the service was on fairly solid financial ground at that time, the expansion of the boundaries in 1997 also included an upgrade of the service capabilities, from Basic Life Support (BLS) to Advanced Life Support (ALS), and the costs associated with that enhancement pushed the program $102,000 into the red.

“We knew at the time that upgrading to ALS would increase our costs immediately, but not our revenues,” Cooper said this week. “But we made that move based on need and with expectations that revenues would eventually catch up.”

It has taken nearly most of the past three years for that to happen. Current financial reports indicate that revenues over the past few months are beginning to meet and exceed system expenses, and the mayor said he expects that trend to continue as new equipment comes on line.

Cooper said a simple look at the program’s finances over the past four years don’t provide an accurate picture of the system’s situation, suggesting that those reports don’t reflect income trends, which may overlap from month-to-month or year-to-year.

For instance, at the end of the first year of operation in November 1996, a financial review showed the system with a deficit of about $36,000. Cooper said the actual loss for the fiscal year, which ended five months earlier, was about $2,200.

The mayor said taxpayers have no reason to be concerned over the deficit, adding that collections on unpaid bills are improving and reimbursements from Medicaid and Medicare for past billings are anticipated.

“I believe we are in a very comfortable position,” he said, “and we expect things to improve.”

But, the mayor added that the city won’t rely solely on expectations and projections, and will monitor the ambulance service finances as a matter of routine, as has been done since the service began in 1996.

“Every decision we’ve made about the ambulance program has been calculated,” Cooper said. “And, every decision we make is made in the best interest and for the welfare of the community.”

Cooper also took issue Wednesday with an editorial published in the November 17 issue of The Paintsville Herald which, he said, gave the false impression that the ambulance system was mired in red ink.

“We consider the costs associated with the ambulance system to be an investment that will be recovered,” he said, “and the $125,000 we have invested so far is not much compared to the service we provide and when it is divided over four years.”

The mayor agreed, however, with a point raised in the editorial that suggested the city would have to draw a line at some point if deficit spending for the program continued.

“I don’t think we have reached that point, and I truly believe we won’t come to that,” he said. “But, if we do find that our expenses aren’t manageable, we will have to address that. We’ve gotten through a lot of our problems,” he added, “but we know our problems aren’t over yet.”

By the Numbers...

Since it was founded in 1996, the city-owned ambulance service has struggled financially. Here’s a time-line of significant events associated with operation of the ambulance service:

• May 1996: An ordinance proposing creation of a municipal ambulance service is given first reading by Paintsville City Council.
• July 1996: City council declines to give a second and final reading to the ambulance ordinance after Mayor Robin Cooper and Fire Chief Bob Dixon report that the proposed service would not bring in enough money to meet expenses.
• November 1996: Council reconsiders the ambulance service issue and authorizes a startup of the program on a limited basis, using existing personnel who would be paid $25 per shift and $15 per run. Councilman Paul David Brown adds a stipulation to the motion authorizing the startup, saying it can be discontinued at any time costs become excessive.
• January 1997: Chief Dixon reports to council that $9,500 in ambulance service charges have been turned over to a collection agency.
• March 1997: Chief Dixon reports that the ambulance service is making money.
• May 1997: A financial report to council indicates ambulance service collections are not keeping pace with payroll. Of $52,000 billed, just $13,000 has been collected. Another $11,000 in charges has been disallowed by Medicaid.
• November 1997: After one full year of operation, a financial report shows that the ambulance service has cost the city $84,000, while just $48,000 in charges have been collected. The system ends its first year $36,000 in the red.
Chief Dixon opposes a proposal to upgrade the service from Basic Life Support (BLS) to Advanced Life Support (ALS).
• June 1998: City finance officer Bob Conley reports that the city’s year-end budget carryover of $32,000 is the lowest ever. A rate hike is proposed for 911 surcharges, but no action is taken on the proposal by council.
• May 1999: Finance officer Conley tells council that the 911 program and the ambulance service are two areas of concern for the coming fiscal year. A 77¢ increase in 911 fees is proposed, and council authenticates a move made earlier to upgrade the ambulance service from BLS to ALS, which requires the service of a paramedic.
• June 1999: Council approves a $1 increase in the 911 surcharge and authorizes expansion of the ambulance service boundaries to include all of Johnson County. A financial report indicates that the ambulance service had a deficit of $102,000 in 1999.
• November 2000: On the fourth anniversary of the service’s startup, council okays the purchase of two new ambulances at a cost of $115,000. Service officials say the new vehicles will allow the operation to attract new customers, new revenue, and will cut down on maintenance costs.

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