Air-ambulance service saves lives. It also costs an arm and a leg.
Terri Ann Chott was out for a walk with her grandchildren near Eastern Washington’s Dragoon Creek Campground on Sept. 30 when she suddenly started to feel poorly. She returned to her son’s house thinking she had a cold and was tired, exacerbated by the end-of-summer rush at the bed and breakfast she and her husband run in Newport, Wash. Once back at her son’s house near Spokane, she lay down to rest while her daughter-in-law dialed 911.
Chott was still alert when the fire department arrived but was surprised when she awoke two days later in Spokane’s Sacred Heart. As it turned out, Chott had walking pneumonia and had suffered a near-fatal heart attack.
Paramedics performed CPR for 40 minutes to keep Chott alive before bundling her in a Life Flight Network helicopter for an eight-minute flight to Sacred Heart. The paramedics weren’t sure she was going to survive.
But she did and has since made a strong recovery. “I can’t say enough good things about them,” Chott says of the rescue and medical personnel who participated in her transport and treatment.
Three months later, she can’t say the same about the financial impact of the treatment.
“Our insurance carrier is finally starting to make sense of our claims,” Chott says. She says she was initially angry at her daughter-in-law for calling for help: “Even in the throes of cardiac arrest, I was concerned about the medical bills.”
But one bill she won’t have to see is the more than $20,000 for the short flight to the hospital. Chott pays $60 per year for a membership with Aurora, Ore.-based Life Flight Network, which guarantees Life Flight will accept what her insurer is willing to pay and not bill her for any outstanding balance.
Chott is one of the lucky ones. Many patients in the Pacific Northwest are discovering after-the-fact that their insurers will only cover part of air medical bills, costs that can climb well above $20,000. And people without coverage must face the bills alone if they can’t prove they’re indigent.
The cost of air-ambulance service is only getting more expensive, thanks to the growth of for-profit air ambulances throughout the U.S. over the past 15 years. And high feees are now sparking a nationwide backlash as insurers balk at paying, leaving patients on the hook for the balance.
Helicopter emergency medical services, or HEMS, as they are known, used to be primarily operated by hospitals with a single helicopter staffed by emergency physicians and nurses. The programs were operated as loss leaders that brought patients suffering from trauma or other grave medical conditions to hospitals quickly for extensive treatment, the bills for which could offset the costly transport.
A sea change came in 2002. That’s when Medicare more than doubled its reimbursement rate for HEMS transports, ostensibly to increase safety.
That move sparked a gold rush that has since attracted heavyweight financial investors, including Boston-based Bain Capital and New York’s KKR. The market is now worth $5 billion annually, according to Los Angeles management consultancy IBISWorld, and is expected to continue growing 2.9% each year through 2021, following 1.9% annual growth since 2011.
Another reason for growth: The American population is aging, and state-of-the-art healthcare is concentrating in cities. If you get sick in a rural area, you want to get to a metropolitan area.
In 2016 there were 1,045 helicopters at 879 bases, a 59% increase in helicopters since 2004, according to the Association of Air Medical Services’ ADAMS database. That doesn’t include the 360 planes at 200 bases, up from 282 at 148 bases since 2007 — the first year the database included planes All told, the HEMS industry has 302 operators nationwide, up from 256 in 2004.
The industry is dominated by just three for-profit companies: Englewood, Colo.-based Air Methods, with 23.4% of the market; West Plains, Mo.-based Air Medical Group Holdings, with 16.3%; and Lafayette, La.’s PHI with 8.5%, according to IBISWorld.
Oregon is home to five: Life Flight, which transported Chott; Hillsboro’s Lifeguard Air Ambulance; Bend’s AirLink Critical Care Transport; Mercy Flights, of Medford; and Reach Air Medical Services, which is based in Santa Rosa, Calif. but operates at bases in Oregon as well as its Cal-Ore Life Flight unit in Brookings.
Reach and Cal-Ore are owned by Air Medical Group Holdings, which in turn is held by New York financial investor KKR. AirLink is owned by Lewisville, Texas-based Med-Trans. Reach and Cal-Ore did not respond to requests for interviews.