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| 10/15/2009 4:07:00 PM | Email this article • Print this article | New Platte Canyon Fire numbers released
Fire chief says collections to go to paying back startup costs, losses, new ambulances
Recently obtained numbers from the Bailey-based Platte Canyon Fire Protection District and an in-depth interview with Fire Chief Jeff Davis provide additional insights into uses for dollars collected for ambulance services and for tax revenue if a property tax increase on the November ballot passes.
Newly released numbers indicate that the district collected $127,580 from the startup of ambulance services in October 2008 through September 2009 on billings of $417,139, a collection rate of 30.5 percent. (See documents at theflume.com, PCFDBillingsCollections, with this story.)
The ballot language asks whether property taxes within the district in northeastern Park County shall "be increased by $386,623 annually" with a mill rate increase of "up to 3.5 mills."
In a presentation to the Platte Canyon Area Chamber of Commerce on Sept. 8, Davis told the chamber that the mill levy would be used to pay for $360,000 a year in advanced-life-support (ALS) ambulance costs to fund the salaries of a paramedic and emergency medical technician, or EMT.
If that's the case, then why would the district need $514,203 ($386,623 in tax money plus $127,580 in annual collections), which is 43 percent higher than the $360,000 in annual costs?
Asked that question on Oct. 13, Davis said that the extra $26,623 ($386,623 minus $360,000) would be used to make all the ALS ambulance personnel full-time and provide benefits. It takes the equivalent of six people to man an ALS ambulance 24 hours a day, seven days a week, and right now there are three EMTs who are full-time and one paramedic who is full-time, but the other two paramedic slots are filled by part-timers.
And the collections, which ran more than $127,000 in the first year? Where would that money go?
Davis said it will first go to pay back the district for $119,000 in startup costs, plus losses to date that the district has incurred because of the new ambulance service. That new service had to be provided on sudden notice last October because of the financial failure and loss of licensure by Bailey-based Platte Canyon Rescue Service Inc., which ran an ambulance service for many years without tax support.
Based on the new numbers, the district's labor costs of $360,000 in that first year were offset partially by the $127,000 in collections, for negative cash flow of $233,000. Add that to the $119,000 in startup costs, and there's $352,000 to pay back. Assuming collections stayed at $127,000 a year, that money would be paid back in 2.8 years.
What happens after that with the $127,000 in yearly collections?
Davis said then they would go to purchasing new ambulances, which cost $150,000 each, plus a new heart monitor that it needs, for $25,000. The district currently has one 1997 two-wheel drive ambulance that was donated, and one used four-wheel-drive ambulance it bought for $55,000 from Elk Creek Fire Protection District with the help of a grant.
The fire district would work for other grants, he said. Whether it might get any for a new ambulance is unclear at this point. Assuming it didn't and used the $127,000 a year in collections for $325,000 in costs for the two new ambulances and heart monitor, it would take 2.6 years to pay for that capital equipment.
So in a little more than five years, the district would have itself paid back and acquired new capital equipment.
What would happen then?
Davis said the district would then take another look at the situation and decide whether it needed to fund a second ambulance with full-time paid staff, and use money for that, or whether it should lower the mill levy.
Right now the plan is to have a second basic-life-support ambulance, manned by volunteers, act as a backup to the ALS ambulance. A basic-life-support (BLS) crew cannot handle certain medical situations, such as strokes or heart attacks, because it is not authorized to provide medications and do certain other tasks.
Davis said the board of directors made a purposeful decision to use collections for payback and capital equipment because the district needed the money.
If the district had decided to use the collections as an offset to the $360,000, with staffing and equipment as it is and no payback, it would need $233,000 a year and the $386,623 proposed by the 3.5 mil increase would be 66 percent higher than it needed to be. A mill increase of 2.11 would fund that $233,000.
Enough historical data?
And that's assuming the collection rate of 30.5 percent, which includes a couple of months with little or no collections because of the lag time in collecting.
Davis acknowledged on Oct. 13 that the district does not have enough of a historical track record to say what the long-term collection rate will be. Indeed, recent data show that substantial collections for charges in October were still coming in during August, 10 months later.
Davis said, however, that the state average is 42 percent and that prior to the downturn in the economy he was hearing from nearby districts that their collections were 60 percent. But that was before the current recession, which forced collection rates down as uninsured cases rose.
Assuming billings stayed the same at about $417,000 a year, if collections were 40 percent the district would be taking in $166,800 a year in cash, and it would take four years to pay off $677,000 in payback and capital costs for new ambulances.
Assuming collections were 60 percent on that amount of revenue, the district would be generating $250,200 in cash from its ambulance services and it would pay off the $677,000 in 2.7 years.
After that, if it decided to use the $250,200 as an offset to $386,000 in costs, it could lower the mill levy by 65 percent.
While a 60 percent collection rate may be overly optimistic, it also might be just about right, or even conservative, according to conversations with Kathy Reasoner, who is president of Platte Canyon Rescue Service, and Fire Chief Bill Dolan of the Elk Creek Fire Protection District.
Reasoner said Platte Canyon Rescue's collection rate was 55 percent to 60 percent, and Dolan said his collection rate was 70 percent.
Dolan noted that the collections of 70 percent are after considering the discounts mandated by Medicare and Medicaid.
If Platte Canyon Fire Protection District realized that collection rate on its one-year revenue of $417,000, its collections would be $291,900 a year, and it would need only $68,100 a year to cover its current costs of $360,000 a year. That would mean the tax revenue of $386,000 that it is requesting would be five times higher than needed on a long-term basis.
At the Fairplay-based South Park Ambulance District, Chief Paul Mattson said that his collection rates were around 50 percent to 55 percent so far this year. Much of the loss is from write-offs and Medicare and Medicaid billings.
According to figures provided by Mattson, South Park Ambulance billed out $297,790 in fees to date in 2009. Adjustments from Medicare, Medicaid and commercial contract allowances such as Tri-Care Military, Medicare HMO, and bad debt that was sent to collections, he wrote off $140,351, meaning the district could collect $157,439 to date. (See theflume.com, SouthParkAmbulanceData)
But so far in 2009 the district has collected $174,777, which includes $17,338 for billings prior to 2009.
Based on those numbers, South Park Ambulance Service is collecting 59 percent of its billables, according to Mattson.
Whether the collection rates are 30 percent or 70 percent, it appears that Platte Canyon Fire Protection District would need some level of taxpayer support to realize its goal of operating one ALS ambulance on a continuous basis. The question appears to be how much it will need, and what level of mill levy increase is appropriate over the short run and long run.
So far, the monthly numbers show considerable variance in billings and amounts collected from month to month (see theflume.com, PCFDBillingsCollections).
For instance, according to the receivables summary by month report provided by the district, in October 2008, the first month the district provided ambulance services, $20,092 was billed out. To date, $7,002.15 has been collected of that month's billings, or about 35 percent.
It shows the first payments for the October services came in January 2009, which is contrary to a graph that was part of the Davis presentation at the Platte Canyon Chamber in September. That graph showed no collections in January. (see theflume.com, PCFDCostsCollectionsGraph)
In November 2008, $32,352 in medical services was billed, of which 26 percent was recovered, or $8,345.39. The most recent payments for that month was August 2009, a payment for $2,634.89.
Limiting the amount the fire district can collect are exceptions from medical insurance companies and Medicare and Medicaid.
Still, in December 2008, Platte Canyon Fire collected close to 50 percent of what it billed. It billed $14,138. It had collected $7,054 of that as of August.
Jumping ahead to July 2009, $65,348 was billed in medical services, and of that, $2,520 was collected, or a little less than 4 percent of the total, as of August. That's because of the lag times in collections. As of Oct. 12, on collections through August, nothing had been collected on the amount billed out in August: $21,883.
Language on the ballot
Davis has said that the $386,623 annually raised through the increased property taxes would only be used for the salaries of the EMTs and paramedics who man the ambulance every hour of every day. However, the language in proposal 5A doesn't specify that the money can only be spent for that purpose.
Platte Canyon firefighter John Gleason, who is chairman of the VoteYesOn5A Committee, said that money could be used for other, ambulance-related items.
"[The money] could be used for additional expenses that are outside, but in addition to, the normal $30,000 budgeted for EMS operations," he said.
Davis said, though, that in crafting the 2010 budget, the amount raised by the 3.5 mill levy increase would probably only cover the cost of the paramedics and EMTs, because of the plan to make the current part-time employees full time.
The ballot question states that the money raised from the 3.5 mill increase will be used for "ambulance services."
The need for the $386,623 was calculated based on the 26 percent collection rate of the ambulance service, Davis said.
However, that was based on numbers through August. At that point the district had collected $99,478.84 on billings of $376,981, or 26.39 percent. It's important to note that $28,101 was collected in September, the highest month for collections so far, and that $21,883 was collected in August, the next highest month for collections so far. The upturn in collections the last two months provide further indication that it's hard to tell what the long-term collection rate will be. If costs were $30,000 in September, which is the average monthly cost, then September collections were actually 93.7 percent of costs, and negative cash flow was only $1,899.
Davis said that although the fire district's collections have been rising somewhat as time has gone on, the increase hasn't been enough to cover it's costs.
"The increase hasn't been enough to really do anything with," Davis said. "It's still staying at that low level."
He was hopeful that the amount the fire district collected on its ambulance service would eventually increase to the state average of 42 percent.
Randy Kuykendall, chief of the emergency medical and trauma section at the Colorado Department of Public Health and Environment, said the 42-percent figure cited by Davis fit with the national averages for EMS providers in the country.
He said collection rates run from 40 percent on the low end to 60 or 70 percent on the high end, with more affluent communities seeing higher collection rates
He said the EMS services in ski areas, like Breckenridge, post some of the highest collection rates because of the type of people who typically visit those areas.
"You don't usually go skiing unless you've got insurance," he said.
But, he said, even in those areas, not everything is collected.
"Certainly, you don't collect everything you bill," he said.
Mill levy increase
A "mill" is $1 of tax per $1,000 in assessed property value. The assessed value is 7.96 percent of actual residential property value and 29 percent of actual commercial property value.
For a home with an actual value of $181,288 (the average price of a home sold in eastern Park County in the second quarter of 2009) the residential property owner would pay an extra $50.50 per year for the added 3.5 mills in property taxes to the Platte Canyon Fire Protection District on top of its current $113.43 yearly tax contribution to the fire district.
If the mill levy increase passes to the new total of 11.36 mills, that property owner would pay $163.93 per year, or $13.66 per month, total to the district.
According to figures obtained from the Park County Assessor's Web site, if the mill levy increase passes, the fire district would have the highest mill levy of the seven districts that make up Park County, but it would be the only one besides Elk Creek Fire Protection District that offers emergency medical services.
Currently, the Platte Canyon Fire Protection District is ranked second in size of mill levy behind the Jefferson-Como Fire Protection District.
Although Jefferson-Como has 10.037 mills assessed to district properties, its expected revenue in 2008 was $578,280, compared with the $852,163 Platte Canyon Fire expected to bring in with its current 7.86 mill levy.
Platte Canyon Fire brings in more money through tax revenue than any other fire district in the county. All the other fire districts in the county (except Elk Creek, which is barely in the county) get their ambulance service through South Park Ambulance, which has its own mill levy of 3.749 mills, which is higher than the 3.5 mills Platte Canyon is requesting.
The closest district in terms of revenue is the Fairplay-based North-West Fire Protection District, which is expected to generate more than $670,000 in 2008 from property tax at a mill rate of 5.8 mills.
The Jefferson County-based Elk Creek Fire Protection District, which covers a portion of Park County near Pine Junction, expects to generate $110,703 in revenue from Park County properties, and $963,899 from Jefferson County properties, totaling $1.07 million in expected revenue per year on 4.924 mills. That revenue is lower than the total $1.22 million per year that Platte Canyon Fire would generate if the proposed tax increase passes.
1995 mill levy increase
The Platte Canyon Fire Protection District proposed extending a 2 mill property tax in 1996 with the money being used for "fire, rescue, emergency medical and ambulance services."
The 2 mill levy was set to expire at the end of 1995, but was extended by voters by a margin of more than three to one, with 999 "yes" votes and 312 "no" votes.
Davis said the mill levy was still on the books, but was used for fire district expenses. At the time, Platte Canyon Fire didn't have an ambulance service.
He said the wording on the ballot was taken from state statute and was used with the advice of a lawyer. It meant that the money could be used for medical services but didn't have to be, he said. He noted that firefighters carry oxygen and are prepared to offer some medical help when they arrive at a scene but they don't provide the transportation services that ambulances do.
Elk Creek Fire
shows support
Elk Creek Fire Chief Bill Dolan said he is supporting Platte Canyon's bid to raise the mills to help cover the cost of the ambulance service, and that he understands the high costs of providing an ambulance service.
The Elk Creek Fire Protection District has been providing an ambulance service without raising taxes for district residents, but that burden has been felt by other areas in the district.
Dolan said the district's 4.924 mills cover much of its budget, including the ambulance service, because of the increase in values in the district's properties, but the district doesn't have a vehicle replacement plan because money that could be used for that has been going to the ambulance service.
Unlike the Platte Canyon Fire Protection District, though, Elk Creek's medical services collection rate has been about 84 or 85 percent in 2009, but that's not including discounts for Medicare and Medicaid and private insurance. Including those discounts, it's about 70 percent, he said. The district collects about 30 percent of what it charges to Medicare and Medicaid, he said.
The Platte Canyon Fire Protection District uses Pridemark Medical Billing Services to collect on its bills.
Davis said Pridemark is paid 7 percent of whatever it collects, which is a better deal than paying someone in-house to do it.
Plan B
Davis said that if the mill levy increase doesn't pass, it would change the outlook of the ambulance service.
"What we have now will look very different if this doesn't pass," Davis said.
He also said that helicopters would probably be called more often, because a helicopter could provide ALS services if a volunteer-staffed BLS ambulance couldn't.
Right now, the paid staff for the ALS ambulance is on call all hours of the day, seven days a week, and thus the response time is very low.
Davis said that of his volunteers, nine have basic life support (BLS) training, and one has advanced life support (ALS) training.
With the volunteers, there are problems not only with response time, but with them being able to transport patients and not having it cut into their work schedules.
He said it's a three-hour round trip to metro Denver with a patient, and he realizes that his volunteers can't take off in the middle of their day to respond to an emergency call and be gone for so long.
That's why the mill levy increase is so important to his district, he said.
"If the district doesn't pass the mill levy, we're going to have to punt," he said of the ambulance service.
Is it possible the district would come back with a request for a lower tax increase? Davis said he doesn't know. If the current proposal doesn't pass, the board would look at several options, he said.
Park County Clerk Debra Green said that there would be time for the Platte Canyon Fire Protection District to place a question on the May special district ballots.
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