LUBEC – McGovern Ambulance Service says it is working to resolve a cash-flow problem that delayed last week’s employee paychecks, but that doesn’t change the fact that the company can no longer afford to serve Lubec, manager Ham Robbins said Monday.

Robbins informed Lubec officials last week that McGovern’s ambulance contract with the town will be terminated as of Feb. 8 because of increasing costs and a substantial drop in the number of emergency ambulance runs.

Lubec selectmen have called a public meeting tonight to discuss alternatives to McGovern, including a town-owned and -operated ambulance service.

Robbins confirmed Monday that McGovern held Friday’s paychecks for all of its employees. The employees were able to cash them Monday, he said.

McGovern’s central office staff became aware of a significant cash-flow problem a few weeks ago and reached an agreement with Machias Savings Bank, he said.

“The bank has been allowing us to go into a negative balance and then recover two or three days later,” Robbins said. “But, we’re expecting to be able to have money to free up to use for a reserve account.”

The reserve account will cover the payroll when cash flow is low, Robbins said. Machias Savings Bank is working with the company, and Robbins said he expects the situation to be resolved within the next few days.

Meanwhile, McGovern employees who cashed their checks at Machias Savings Bank in Calais during the past few weeks haven’t had a problem, but some checks presented to remote branches didn’t clear, he said.

Robbins said the company’s financial problems are the result of several factors, including a lack of adequate monthly budget monitoring and his decision to hire additional staff to provide patient transfer services to hospitals.

Robbins said he hired a number of paramedics on a per diem basis and cut most of them from the payroll last week.

Robbins said the company’s long-term accountant fell ill last year and since that time it has been difficult to “get a grip” on the company’s finances..

Once it became obvious that no one was really monitoring the monthly budget, central office staff took over, he said.

Owner Dana McGovern has been undergoing an audit of his Medicaid and Medicare payment records by the federal government.

Robbins said McGovern has been under tremendous pressure and he stressed that the lack of attention to the budget was not deliberate.

“It was more of a lack of awareness,” Robbins said.

Budget problems surfaced last spring when Robbins, who was working on the Lubec contract, became aware that Lubec’s payment wasn’t coming close to covering the expenses of the operation, he said.

As a result, McGovern raised Lubec’s annual contract fee from $14,760 to $91,000, effective July 1. Lubec voters raised the additional money during the town’s annual business meeting in August, but also approved $1,800 for a consultant to study options to the contract with McGovern.

Robbins said Monday that despite the increased fee, the Lubec division is running a monthly deficit of approximately $5,000.

“Statewide ambulance calls are down 30 percent this year, and the business just isn’t there in Lubec,” Robbins said Monday. “The town shouldn’t be paying for 24-hour, seven-day-a-week service.”

Town administrator Nancy Matthews said some members of the Lubec board are involved with a regional group that has been exploring alternatives to McGovern since May.

Last July, the majority of the 25 people who attended a public hearing on the ambulance situation said they wanted the town to explore having its own ambulance service.

Butch Huntley served on Lubec’s volunteer ambulance service for 27 years and was chief of service when the town disbanded the service to go with McGovern five years ago.

Huntley, who also works for McGovern’s Lubec division, said that division is down by about 70 calls this year. That is the reason the operation is running the deficit despite the increase in fees, he said.

But Huntley said he disagrees with Robbins’ assessment that Lubec doesn’t need round-the-clock ambulance service. The potential for life-threatening accidents is high because of the factories, fishermen, urchin divers and woodworkers, he said.

Huntley said he doesn’t think a town ambulance service will succeed if it is staffed by volunteers. Volunteers tend to start out enthusiastically but drop out over time, he said.

And Lubec is too far away from the hospital and has too many older people to get by with a basic ambulance service, he said. Any town service should have paramedics because they can administer the drugs that make the difference between life and death, particularly when it comes to heart attacks, Huntley said.