Arizona Department of Health Services (ADHS) awarded ambulance service, called a Certificate of Necessity (CON) to Golden Valley Fire District. This was in spite of the administrative law judge's extremely negative recommendation and a very vocal, small contingent of opponents including two Board members, Rhonda Brooks and Jack Hommel. Director Corey Nelson made his decision based on GVFD's thorough application, the testimony and evidence given by both sides, during the hearing process last fall. In fact, Director Nelson states that he "fully considered" the financial impact to River Medical, Inc. (RMI) in the awarding of the CON to GVFD. After his decision he concludes, "Notwithstanding the financial impact on River Medical, I find that the benefit to Golden Valley residents outweighs the financial impact on River Medical."
So there you have it, his rationale in a nutshell. The citizens of Golden Valley Fire District will benefit from receiving the CON. Isn't that all that really matters?
There were a number of significant factors that went into this decision, but I'll focus on the financial piece since there are reams of misinformation about the financial impact on the District. Detractors' claims GVFD will go bankrupt and can't manage its finances; were as exaggerated as Mark Twain's own demise. Director Nelson saw through those misconceptions. Here are some of the facts he acknowledged.
About 65 percent of 2,000 calls are medical, 77 percent result in ambulance service. The district already responds to every call with trained personnel. When the call does result in a transport, GVFD "hands off" the patient to RMI for transport. In applying for a CON, GVFD was required by statutes to allocate 65 percent of its current operating expenses against ambulance transport revenues in calculating a "net profit or loss."
This "accrual basis" for allocating expenses means the district must show 65 percent of its current expenses, now paid by Golden Valley citizens, as expenses attributable to ambulance service.
Think about that for a moment. Taxpayers already pay for EMS response, up to the point of transport by River Medical who then "swoops in" to take the patient. RMI then bills the patient for transport, while taxpayers paid for up-front EMS costs, often saving the patient's life. In effect, Golden Valley taxpayers subsidize RMI's (privately owned) revenue, being first responders with trained paramedics and EMTs.
By allocating 65 percent of its expenditures against projected revenues from transport ($1.1 to 1.6 million), it's no surprise that the accrual basis shows the District will LOSE $915,000. So why did the state award the CON to the district? The answer is quite simple. ADHS looks at the new or "incremental" costs of the district in operating the ambulance service. That analysis reveals a far different picture.
The additional costs the district will bear fall in three areas: capital, personnel and operating costs. The capital costs, ambulances and storage bays, $300-500K up front, are spread out over 10-40 years. Personnel costs are about $200K, though they can operate adequately with existing staff. The operating costs: fuel, maintenance, supplies, insurance and other minor costs run about $100-150K. Based on conservative estimates, the district's positive cash flow once everything is fully operational is approximately $575,000 "profit" per year. That's a far different picture than the accrual-based analysis states, or the detractors will admit. But the taxpayers will see the impact on their tax bills.
Director Nelson recognized this in Footnote 6 when he wrote, "Testimony and the record establish that using an incremental method of accounting indicates GVFD could generate a profit in its first year."
The director also noted that GVFD has managed declining tax revenues, made significant capital improvements and STILL maintained solid cash reserves, sufficient to begin operating the ambulance service. This is what virtually all of three different boards and the chief understood from the beginning.
So why were there so many complaints from this group and directors? Simply put, there's a long history of in-fighting at GVFD. Sadly, the answer lies in the loathing of Chief O'Donohue and board members who disagree with them. That is at play here.
This small group, using deceit and fraudulent claims, has cost the district valuable time and resources throughout the process. Their voluminous complaints and accusations have been played out before the public over the past two years. The blatantly dishonest words and actions by this group expose their true motives. It's not about what's best for Golden Valley, but about "winning."
Thankfully, the Department of Health Services rejected their claims and decided for the citizens of Golden Valley. They are the real winners here, and that's the bottom line.