Business for Sale Industry Economics
2005 - 2021
2021 - 2027
The Ambulance Services sector has grown over the next five years, owing largely to demographic changes. According to the most recent figures available from the Centers for Disease Control and Prevention (CDC), an ambulance is used in 14.5 percent of overall emergency room (ED) visits, with people aged 65 and over-responsible for 32.6 percent of ED visits requiring an ambulance.
State budgetary concerns, especially in rural areas where tax revenue may be insufficient to support unified ambulance services, have prompted industry providers to shift to a corporate, for-profit business model.
Both Envision Healthcare Corporation and Air Methods Corporation recently completed divestitures of their medical transportation operations to private equity firms, indicating a market transition.
Furthermore, the industry has seen increased demand as a result of the COVID-19 (coronavirus) pandemic, which has resulted in a high number of hospitalizations.
Over the five years to 2020, the Ambulance Services sector has benefited from the high demand for emergency and non-emergency ambulance services among the growing elderly population. Nonetheless, systemic shifts have occurred in the sector over the last five years.
State budget constraints, especially in rural communities that do not have enough tax revenue to support emergency services, have prompted a move toward private, for-profit ambulance providers. As a result of their improved capacity to streamline costs associated with operating emergency fleets and providing dispatch systems, payment processing, and billing processes, these private providers have thrived.
Furthermore, the industry has seen increased demand as a result of the COVID-19 (coronavirus) pandemic, which has resulted in an increase in hospitalizations. However, recent outbreaks have been intermittent as shelter-in-place regulations curtail the transmission of the virus, though students returning to school have sparked a new outbreak of infections.
Since reimbursement rates have stayed poor and personal security equipment usage raises prices, the temporary surge in demand does not translate into higher sales.
Moving ahead, income for the Ambulance Services sector is expected to rise at a 1.0 percent annualized pace to $18.4 billion over the next five years. The outlook duration is supposed to be defined by continued private equity (PE) activity in the ambulatory care arena.
According to Modern Healthcare, KKR & Co. Inc.’s purchase of Envision Healthcare Corporation’s ambulatory transportation division is only one of many cases of expanding private equity forays into healthcare. This pattern is expected to encourage area emergency services to consolidate, lowering operating costs and increasing market sales.
Profit, identified as profits before interest and taxes, is projected to stay steady in 2025, accounting for 9.3 percent of sales. However, recovery from the COVID-19 (coronavirus) pandemic, which causes significant financial hardship in many cities and towns and theoretically lowers budgets, is a factor in the outlook results.
Additionally, the transportation business comprises privately owned ground and air-based operations that provide patient transportation, as well as medical services. These services are typically offered in the midst of a medical emergency, although they aren’t always supplied during such events. Industry trucks include life-saving equipment that is operated by a team of medically qualified workers. In the expansionary stage of its lifecycle, the Ambulance Services sector is seeing strong development.
Industry value added (IVA), which represents the industry’s contribution to the entire economy, is predicted to expand at an annualized rate of 2.3% per year over the next decade, and 2.3% compounded every year until 2026. Conversely, US GDP is expected to increase at an annualized rate of 1.9 percent over the same time period, implying the IVA growth rate of the Ambulance Service business is quicker than that of the US GDP.
Further, as the population ages, there will be an increased need for ambulance services due to the fact that the older population uses emergency healthcare services more than other age groups. This has been shown as a concerning detail in the research involving the coronavirus, since it is proving to be a very lethal to older people.
Though government funding for Medicare and Medicaid is projected to increase, it is possible that the healthcare business will have to struggle with government reimbursement rates that are less than the real cost of delivering services. Additional, advances in technology are rising at a quick rate in healthcare facilities, which are boosting patient demand for speedier transit times to healthcare facilities.
Demand for additional ambulance services develops as new time-sensitive treatments are developed for use in emergency rooms that help to keep patients alive in a timely way. In addition to a growing need for non-emergency services, the sector benefits from a rise in the use of outpatient services and home care, which leads in increased need for medical transport between different care sites.