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More money needed to expand Harford's paid EMS system, report says

FinanceAccounting and AuditingEarningsDavid R. Craig

The cost of providing emergency medical services in Harford County far outstrips the money available from insurance reimbursements and other non-government sources to pay for them, a financial review of the local EMS system has concluded.

The review, completed earlier this month by the Harford County Council's auditor, also warns that if additional paid emergency medical technicians are hired this summer, as leaders of the system want, it will immediately create an operating deficit for the county's paid emergency medical service.

Despite the projection that Harford needs an additional $5 million to $6 million annually to expand its EMS system, the report's findings were hailed by the county's emergency services chief.

The report sets the stage for a "countywide EMS system" to be built, Emergency Services Director Russ Strickland said via email Tuesday.

"The audit has provided for us the necessary requirements and considerations to operate an EMS system in this county," he said.

$12.2 million projection

According to the report by county council auditor Chrystal Brooks and auditor Laura Tucholski, the quasi-public Harford County Volunteer Fire and EMS Foundation is requesting the additional staffing for the 2015 fiscal year, but its operations would lose an estimated $1.7 million if the foundation's annual revenues don't increase accordingly.

Brooks' report also estimates the annual cost of providing emergency medical services in the county is $12.2 million, but the potential countywide revenue to pay for it is only between $5.9 million and $6.6 million annually.

"Consequently, the deficit between potential revenue and projected costs for EMS is $5.67 million," Brooks concludes in a cover letter to the two county administration officials responsible for fire and EMS services, Strickland and Director of Administration Mary Chance.

The financial review and analysis points up one of the major difficulties Harford has faced as it has tried to transition in recent years from an almost entirely volunteer emergency medical response system to what has become a hybrid system staffed by volunteers and, increasingly, by paid EMTs and administrators who manage them.

Brooks noted in her letter that she was asked to perform an audit of the fire and ems foundation in light of its request for additional manpower and support services in the 2015 fiscal year, which begins July 1.

"In addition to estimating the foundation costs, we estimated the county-wide EMS costs based on historical data and the projected staffing requirements," she wrote.

The foundation's current revenue would not support its request for immediate extra staffing, as well as an extra 10 percent for chase truck costs – backup vehicles provided by the volunteer fire companies when an ambulance staffed by foundation EMTs goes on a call, the auditor wrote.

The foundation's annual costs, projected to be about $3.3 million for fiscal year 2014, would rise to $5.3 million for fiscal year 2015, with the additional expenses, she wrote. Though the revenue from fire companies would also increase, it would only offset a fraction of the higher operating cost.

Service, cost concerns

The foundation was set up several years ago, under the management of the private volunteer fire and ambulance companies – but with the majority of its funding coming directly from the county - because of the growing volume of emergency medical calls across the county and the inability to meet them with an all-volunteer service.

The foundation received $2.65 million in direct county funding in the 2012 and 2013 fiscal years, according to the audit. Its total revenue in 2013 was $3.4 million, which included $223,000 in reimbursements from volunteer companies for chase car services and $506,000 from the same sources when a foundation EMT was used on one of the volunteer companies' EMS calls.

In April 2012, the foundation asked the county for a "stopgap" appropriation of $400,000 after it lost about $639,000 in assets from fiscal year 2011. That brought the operation's total annual county funding to $2.6 million, according to the audit, where it has remained since.

The audit also questioned the internal control of its finances.

"In our opinion... the Foundation's actual expenses are significantly lower than budgeted because of its approach to recording transactions and its budget preparation methodology," the audit said. "Specifically, the Foundation relies on its external auditor to make adjusting entries in the accounting records and the annual budget is based on the prior year budget, not necessarily prior year costs."

"At the end of [fiscal year 2013], the Foundation had a projected operating surplus that far exceeded its budgeted surplus," the audit also noted.

The foundation had net income of $112,000 in 2013, according to the audit, which also projects $220,610 net income for fiscal year 2014, which ends June 30.

According to the audit, in the 2012 fiscal year, there were 27,800 emergency medical related dispatches in Harford County or nearby counties where Harford provided mutual aid. Of the total, 4,346 dispatches, 15.6 percent, were through the Fire and EMS Foundation, while more than 23,400 were through volunteer fire and EMS companies, some of which pay their trained EMTs.

The total number of dispatches increased to 29,066 in the 2013 fiscal year, with 4,251, or 14.6 percent, going through the foundation.

In looking at an expanded system, Brooks concluded the potential countywide revenue for EMS services, most of it in the form of insurance company reimbursements, could be $5.9 million to $6.6 million annually. This projection is based on ambulance billings collected by Harford volunteer companies of $5.6 million in 2012 and $5.7 million in 2013.

The report also points out that relying on direct or supplemental collections from people who require ambulance service would be an unrealistic assumption based on historical data in other communities that have fully paid emergency medical systems.

The foundation collected just $40,000 in insurance reimbursements in 2012, according to the audit, and nothing in 2013.

'Work collectively'

"Our next challenge is to work collectively and cooperatively to provide a countywide EMS system that provides our citizens with the highest quality possible," Strickland said. "The next step is to identify what our EMS system should [look] like in the future. We have started that process."

Emergency Services spokesman Bob Thomas also called the audit and analysis "very thorough" and "an excellent tool for county government to use moving forward."

Harford County Executive David Craig has pushed for more government oversight of the 11 volunteer-run fire and EMS companies, as well as Havre de Grace Ambulance Corps. All are private organizations but, collectively, they receive about $7 million from the county toward their operations and equipment costs. The county also has provided millions toward construction of firehouses around the county.

In 2012, Craig forced creation of a new fire and EMS commission through a reluctant county council, using an executive order after the idea was tied up by controversy among Harford County Volunteer Fire and EMS Association members, who had the ear of some council members.

The commission has been meeting monthly since August 2012 to analyze the workings of Harford fire and EMS companies.

Craig also created a new Department of Emergency Services in January 2013 in keeping with his plan to have more county oversight for the fire and EMS system.

Copyright © 2014, The Baltimore Sun
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FinanceAccounting and AuditingEarningsDavid R. Craig
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