Air Ambulance Services

Air medical transports, such as helicopters and fixed-winged aircraft particularly designed to carry sick or wounded passengers, are included in the Air Ambulance Services business. Industry revenue is expected to expand by an average of 1.6 percent to $4.2 billion in the five years leading up to 2020, with a softer 0.7 percent growth in 2020.

Due to an aging population, hospital, and healthcare provider consolidation, and declining access to appropriate healthcare in rural regions, the sector has witnessed increased demand over this time period.

Despite the fact that the COVID-19 (coronavirus) pandemic is likely to increase demand for inter-facility patient transfers from remote hospitals and those whose capacity has been surpassed, the pandemic’s recessionary circumstances have slowed revenue growth marginally. In 2020, profits are likely to drop as well.

Over the five years leading up to 2020, the number of individuals aged 65 and over is expected to climb at an annualized rate of 3.2 percent. People are more prone to need emergency medical transportation services, such as air ambulance services, as they become older.

As a result, the increase of this age group has contributed to the industry’s demand increase. In addition, the number of specialist care and emergency department facilities has decreased as a result of healthcare provider consolidation and the continuous closure of rural hospitals.

Patients are more likely to be moved between institutions as a consequence of this. Air ambulance firms are supervised by the same federal laws as commercial airlines, allowing them to establish their own costs. However, politicians are becoming more worried about the devastating bills that patients are getting as a result of this.

Due to the country’s aging population, provider consolidation, and closures of rural healthcare institutions, the Air Ambulance Services business is expected to continue to rise in demand over the next five years, up to 2025. The passing of the FAA Reauthorization Act of 2018 might pave the way for a number of industry developments in the future.

The legislation mandates that the federal government create a stakeholder advisory council to look at transparency measures, consumer education regarding air travel insurance alternatives, and safeguards against exorbitant prices. Despite the fact that certain legislation has acquired momentum, no law has been approved. Revenue for the Air Ambulance Services business is expected to grow at an annualized rate of 2.9 percent to $4.9 billion during the five years to 2025.

The Air Ambulance Services company transports patients to and from medical institutions and accident sites by air. Medical equipment and qualified staff are usually available onboard air ambulances. Demand for Air Ambulance Services has increased throughout the five years leading up to 2020, owing to an aging population, a decrease in the number of specialist and emergency care facilities, and a changing rural healthcare environment.

Overall, research expects industry sales to expand at a 1.6 percent annualized pace to $4.2 billion in 2020, with a 0.7 percent gain in 2020. The demand for industrial services is predicted to fall marginally, owing to a drop in transportations linked to vehicle accidents. Profit, defined as profits before interest and taxes, is expected to fall slightly to 8.2 percent of sales in 2020. Cost increases associated with coronavirus equipment, supplies, and operational adjustments are to blame.

According to a 2017 (latest available) study by the Government Accountability Office (GAO), private businesses operate about 75.0 percent of air ambulances in the United States. The number of ambulance helicopters has expanded from less than 100 in the early 1980s to an estimated 1,045 in 2016, according to the research, which illustrates the industry’s expansion over the last few decades.

The federal Airline Deregulation Act (ADA) of 1978 deregulated the airline business in the United States by eliminating federal government authority overpricing, routes, and new airline market entrance. This law applies to air carriers that provide air ambulance services. As a result of the act’s elimination of impediments, the sector was allowed to expand. Furthermore, since air ambulance companies are classified as air carriers under the ADA, they are free to determine their own fees.

FACTORS THAT AFFECT DEMAND

The demand for air ambulance services is price inelastic, which means that variables other than price influence total demand. In most cases, the medical staff makes the choice to airlift a patient. As a result, demand for air ambulance services is often unrelated to health insurance coverage or individual financial capabilities.

An aging population, hospital provider consolidation, and a rising number of hospital closures in rural regions are the key variables impacting demand throughout this time period. Demand is also influenced by the regularity with which people travel and the number of drivers on the road.

Total health spending is expected to rise at an annualized pace of 2.7 percent during the five years to 2020, according to research, owing in part to the country’s aging population. The number of people aged 65 and older is expected to expand at an annualized rate of 3.2 percent throughout this time period, which is substantially higher than the growth of children, adolescents, and younger people.

Because the usage of emergency medical services (EMS) grows with age, a considerable rise in the number of persons aged 65 and older is contributing to demand growth for the Air Ambulance Services market during this time period.

In addition to an aging population, hospital provider consolidation has reduced the number of specialist care facilities and emergency departments, either via closures or reorganizations connected to consolidation. As a consequence, patients are more likely to need to be transported between healthcare institutions in order to get proper treatment. Patients who are vulnerable or must travel over vast distances are often transported by air ambulance.

Furthermore, hospitals in rural regions are shutting at an increasing rate. They often lack the funds and resources to invest in the equipment and technology needed to modernize their facilities. As a result of a shortage of proper healthcare, air ambulance services have become more vital in connecting patients to the treatment they needed.

This tendency has been worsened by the coronavirus epidemic, which has raised the need for patient transportation. Surges in coronavirus infections have swamped hospitals even in metropolitan areas, driving up demand for air ambulance services to carry patients to institutions with more capacity.

Taking these variables into account, demand for air ambulance services has increased throughout this time, causing more operators, especially privately held operators, to join the field. Research expects the number of industrial firms will expand at an annualized rate of 0.1 percent to 689 firms in 2020 during the next five years.

Despite the modest rate of growth in participation, employment in the sector has risen as individual firms have grown. In 2020, the number of workers in the sector is expected to rise by 4.2 percent on an annual basis, to 48,230.

SCRUTINY IN THE LEGISLATIVE PROCESS IMPROVED

Private equity companies have been paying close attention to the Air Ambulance Services market, as they have to other healthcare industries. During this time, the sector has also been exposed to heightened regulatory scrutiny for these and other reasons. Large bills were given to patients, as well as a lack of transparency, has drawn politicians’ attention to the business. Prices have risen considerably in the last decade due to a lack of pricing constraints, large fixed expenses, and a high degree of competition.

Prices vary across providers, according to the GAO research, although big independent providers tend to be more expensive than those linked with hospitals. In 2016, representatives from significant independent transportation companies claimed average charges of more than $40,000 per transfer. Hospital-affiliated providers, on the other hand, reported typical charges ranging from $13,000 to $31,000.

Consumers have been more vulnerable as a result of a shift toward providers who are not linked with hospitals, with many facing enormous balance bills they can no longer pay. Air ambulance services are covered by Medicare, Medicaid, and certain private health insurance plans if they are judged medically essential. Despite this, there are still some coverage gaps.

Balance billing is permitted by certain private health insurance companies, or patients are flown by businesses that do not contract with their health insurance company, resulting in a huge charge. Between 2013 and 2017, 71.0 percent of ambulance journeys (including those by air) resulted in unexpected out-of-network expenses, according to research published in Health Affairs in 2020.

Because air ambulance providers are subject to the same federal regulations as commercial airlines, they are free to determine their own fees. It also means that efforts by state legislatures to put pricing and service controls on air ambulance operators have so far been thwarted by federal courts.

As a result, though no substantial regulatory changes have happened during this time, the sector has been subjected to intense scrutiny. Only the federal government may intervene to effect changes in this business since it is controlled at the federal level. A comprehensive reform package gathered pace in Congress last year, but it failed to pass in the end.

Research predicts that the Air Ambulance Services business will continue to rise in demand and income over the next five years, up to 2025. Increased demand for services is expected to continue to benefit the business as a result of an aging population, hospital provider consolidation, and the degradation of access to healthcare in rural regions. Rate hikes are projected to be used by industry operators to stimulate revenue growth in the future.

Overall, sector revenue is expected to grow at a 2.9 percent annualized pace over the following five years, reaching $4.9 billion in 2025. Demand for industrial services is expected to climb when economic and social activity returns to normal levels after the coronavirus pandemic, as a consequence of increasing vehicular and work-related accidents, which decreased during times of social separation.

THE DEMAND FOR OUR PRODUCTS IS CONTINUING TO INCREASE.

With the aging of the US population, demand for air ambulance services is expected to continue to rise. As the baby boomer generation approaches this age group, the number of persons aged 65 and older is expected to expand at an annualized pace of 3.1 percent during the five years through 2025. People are more prone to require emergency services as they become older, especially air ambulance services, which contributes to the industry’s demand rise.

Over the next five years, the consolidation of hospitals and other healthcare providers is expected to continue. Due to merger and acquisition-related reorganizations and closures, the number of specialist facilities and emergency departments in hospitals and other healthcare providers has decreased. As a result, patients are more likely to have to travel long distances to obtain the treatment they need, increasing the demand for air ambulance services.

Air ambulance transport is often utilized to transfer patients between institutions and to and from accident scenes, especially when land transportation would take too long or would be impractical due to geography. As the access to healthcare in rural regions continues to degrade, demand for air ambulance services will increase as it becomes more probable that patients will need to be transferred to obtain specialized or trauma treatment.

Demand for air ambulance services is expected to rise, resulting in more job opportunities for sector operators. The number of industry personnel is expected to grow at a 2.4 percent yearly pace to 54,395, in the five years leading up to 2025. Total pay spending, one of the industry’s main cost components as a percentage of sales, is predicted to rise as a result of this.

Despite growing labor expenses, the industry’s profit is predicted to rise as a consequence of low federal regulation and strong private equity investment. Of course, any new reform legislation might alter this trend, but estimates are based on current operating conditions. Profit is expected to climb to 9.1% of sales in 2025, after a little dip in 2020.

PRICES ARE DRIVEN UP BY INCREASED COMPETITION

Industry operators have always sought revenue growth via rate hikes, despite high fixed costs, an oversaturated market, and the lack of price restrictions. According to a 2017 analysis by the US GAO, when the bulk of transportations are paid at lower fixed reimbursement levels, price increases do not result in proportionally more income. For example, a 3.0% increase in sales would need a 15.0 percent rise in pricing. According to the GAO analysis, between 2010 and 2014, the median price charged by air ambulance providers climbed by 76.0 percent to 13.0 percent.

High fixed expenses encourage industry operators to spread their expenditures among a larger number of users. However, since the number of industrial operators has increased rapidly over the last decade, the number of patients per helicopter has decreased. Industry operators have boosted their per-ride fees to boost revenue growth, despite the fact that they are still trying to distribute fixed expenses among fewer patients per helicopter.

In the five years leading up to 2025, the number of industry operators is expected to rise by 0.3 percent annually to 699. Continued expansion in industry participation in an already crowded market is expected to promote price hikes among industry operators looking to reduce fixed costs per trip while also increasing revenue.

REAUTHORIZATION BY THE FEDERAL AVIATION ADMINISTRATIVE AU

The FAA Reauthorization Act of 2018 was signed into law in October 2018, and it addresses a number of important concerns for the aviation sector. Because the Federal Aviation Administration (FAA) regulates the Air Ambulance Services business, various parts of the act might have an impact on the business in the future.

The most important one requires the US Department of Transportation and the US Department of Health and Human Services (HHS) to form an advisory committee of stakeholders to look into transparency measures, consumer education about air travel insurance options, and protection from excessive charges.

Additionally, on all invoices, air ambulance firms must provide the Transportation Department’s complaint hotline and website URL. Measures in the law that would have allowed states to address consumer pricing safeguards were eventually removed. As a result, any substantial further regulatory adjustments over the next five years will have to originate from the federal level.

The industry of air ambulance services has reached the end of its life cycle. Industry value added (IVA), which gauges the industry’s contribution to the US economy, is expected to grow at a 4.0 percent annualized pace during the next ten years, up to 2025.

During the same time period, the US economy is predicted to expand at a pace of 1.9 percent on an annualized basis. A growing industry is defined by IVA growth that is faster than GDP growth. Other criteria, on the other hand, suggest that this industry is more likely to be in its mature life cycle phase.

The relatively moderate expansion in the number of industrial firms, as well as considerable merger and acquisition activity, demonstrate the saturation and maturity of this sector. The number of industrial businesses is only expected to expand by 0.2 percent a year during the next ten years, through 2025.

The industry’s maturity is reflected in this degree of growth. Operators have often merged and acquired one another. In 2016, Air Methods completed a big purchase, and in 2018, Air Medical Group Holdings (AMGH) and American Medical Response merged to establish Global Medical Response (AMR). As a result of this activity, the industry has matured, and the number of industrial firms has grown at a slower rate over time.