Following the Money in Air Ambulance Services

I have more news on the underpinnings of the helicopter ambulance industry. Over the past five years I’ve been focused on the aviation side, the operational stresses that cause emergency medical aviation to be the most dangerous kind of commercial transport in America. You can read more about my work with Patrick Veillette on that subject here.



But as the esteemed investigator John Fawcett always says, you never go wrong when you follow the money and I was lax in not paying more attention to the business side - how the for-profit air ambulance companies like PHI, Air Methods and Air Evac chase the dollars to make it all work.

Sure, I’d been told how some of these companies parked their helicopters in shopping center parking lots, using the considerable sex appeal of a gussied up medivac to convince Walmart shoppers they’d be wise to plunk down $50 a year in exchange for a guarantee they'd never have to fork over a dime if they ever needed to be moved by air. So the pitch is relatively simple, fifty bucks against a $20,000 bill in the event of an emergency.

Wait a minute, did I just write $20,000? Yes, loyal readers,that's what I wrote, and you know I've never pegged the cost that high before. But today I learned that's the figure being tossed around in Alfalfa County, Oklahoma where efforts are underway to sign up county workers for memberships with Air Evac and county commissioners are being urged to help make it happen by auto deducting the Air Evac membership fee from employee paychecks.

Now $20,000 is a scary figure and Phoebe Engle signed right up. She works for Alfalfa County and not only that, both her mother-in-law and father-in-law needed to be moved by air to big city hospitals some distance away from Alfalfa County, population 6,000. Medicare paid in both cases, but still, that $20,000 figure got her worried because her insurance only pays 80% she told me.

I was busy blogging about Life Evac's sale of helicopter ambulance services to the athletes at San Marcos Baptist Academy in Texas, while Air Evac salesman Doug Little was selling this product to Phoebe and others in Oklahoma.

“We need to get some more information on this,” Chad Roach told me by phone this afternoon. He's the chairman of the County Commission and he came right out and said he knows zip about Air Evac and less about helicopter medical services. He's not ready to put the touch on employee paychecks without first finding out more.

"We get so many offers, some are great and some..that’s not the case.”

Roach may want to reach out to nearby Woods County, Oklahoma where I’m told county executives have already approved a program to process the payments for county employees who wish to enroll in the Air Evac membership program. Or he can talk to the executives of Alfalfa Electric, who also opened their doors to the medivac salesman.

But he might also want to find out more about an industry operating in such crisis that the National Transportation Safety Board has held three separate special hearings, the most recent in 2009 after 28 people were killed in a series of helicopter ambulance accidents the year prior. Or he could take a look at the list of 15 Air Evac accidents over the past 12 years that I posted on an earlier blog.

“That’s the first I’ve heard about that," Roach said, sounding genuinely surprised. "Like I said, I haven’t had a chance to do the research."

I am dazzled by the sheer moxie of Air Evac's business plan to involve government executives in processing payments for a profit-making company with a questionable safety record, selling a service of questionable value.

And here's the kicker. According to what the folks in Alfalfa County were told by Little, one million people have already purchased Air Evac memberships, providing the company with a $50 million annual revenue stream. Little claims some 10 to12 percent will actually have need of an air ambulance in the future. I think this  figure is inflated. But if its true and insurance pays at a reimbursement rate conservatively estimated at $5,000, that's another $550 million in revenue. And we haven't even touched on transports of patients not in the program, the $20,000 kind.

John Fawcett is right. To understand what's really going on in this industry, you have to follow the money.