A New Hampshire consultant warned Gardiner officials this week that if the city’s emergency medical service becomes unsustainable, it will be the death knell to both the ambulance service and the city’s full-time fire department, which serves communities all over the region.

The city hired Municipal Resources Inc. last month to find out why the city’s ambulance fund had been falling short of projections the last several years by as much as $100,000.

The final report presented at Wednesday’s council meeting said the city’s revenue projections for its ambulance service have been overly optimistic because of poor billing practices and collection practices that aren’t aggressive enough.

The overstated revenue projections, along with new budget requests and previous unpaid bills from individuals served, could more than double the amount the seven communities in the ambulance service will pay next year if the city doesn’t make any changes to how it’s funded.

“That’s obviously not an option,” said City Manager Scott Morelli, who presented the budget picture to councilors Wednesday. “We can’t keep doing the things the way we have been.”

Morelli presented another scenario where $162,000 in additional costs would be shifted to Gardiner taxpayers, raising the tax rate by 3 percent, and the city would keep the base rate for all communities flat. However, he said Thursday morning that the second option would also not be acceptable.

Elected officials and ambulance committee members from all seven communities are scheduled meet at the Gardiner the fire station April 10 to discuss a way to fund the shortfall, Morelli said.

Gardiner Ambulance Service provides emergency medical service to Chelsea, Farmingdale, Gardiner, Litchfield, Pittston, Randolph and West Gardiner. It brings in revenue by billing individuals and their insurance companies for service and through fees charged to all communities.

One of the central issues investigated by the consultant was the overly optimistic projections for revenues as the result of fewer bills being collected than projected.

Cash collections between fiscal years 2010 through 2013 were short $307,183 for the four year period. While expenses exceeded actual cash collections by $257,247, the city listed 300,807 in bills yet to be collected, called receivables.

The consultant said that more than half of the past receivables likely won’t be collected.

The report identified fixes including reducing the delay between when the call occurs and when the invoice is processed, using more aggressive collection practices and increasing the rates charged for several services. The city uses an outside company, Comstar, to handle collections.

The report also noted that the city, up until about two months ago, was billing for a number of itemized services like oxygen and cardiac monitoring that are no longer covered by Medicare or most private insurance carriers. Medicare and most private insurers moved to bundled billing years ago, so the itemized charges decreased the likelihood the bills would be paid, the report said.

The report also recommended engaging with regional communities to develop a sustainable public safety service model and avoid losing anymore communities to private services.

The city and all the towns pay annual fees, but unpaid bills also are distributed to all partner communities, including Gardiner. Those unpaid bills, called uncollectables, have been a point of criticism from partner towns, some of which have considered leaving the service for a cheaper, private ambulance companies.

Morelli said the goals in the short term are to keep the partner communities and try to increase revenues by implementing changes recommended by the consultant. If more of the costs of the fire and rescue services have to be shifted to Gardiner taxpayers, the hope is that the increased revenue could allow the city to eventually move back toward a similar cost distribution.

The city will already likely have to raise taxes next year.

It’s expected to face a budget shortfall of at least $600,000 for the fiscal year that begins in January. Morelli will present a preliminary budget, including changes recommended by the report, at the next City Council meeting April 16.

The ambulance service fund currently pays for about 80 percent of the roughly $1,650,000 fire and rescue department budget, and the rest is funded by the city’s general fund, according to Morelli.

Morelli said the city will attempt to bring the town of Richmond, which left the ambulance service for North East Mobile Health Services in 2008, back into the partnership when its contract with the private ambulance company expires next year. The city is also planning to hold a meeting this month for cities and towns in the region to discuss ways to share services, he said.

The city held a regionalization meeting in January, and Morelli said the upcoming meeting’s focus will be on ways to develop a regional fire service plan.

“It just doesn’t make sense for all of our communities to be operating in these silos when there’s great opportunities for us to combine our resources and offer a regional fire service that can benefit all our communities,” he said.

Paul Koenig — 207-621-5663 pkoenig@centralmaine.com Twitter: @paul_koenig