Chris Stanton wrote an article for Intelligencer titled The Air-Ambulance Vultures— A search for why my flight cost $86,184 led to a hidden culprit: private equity (April 20, 2022).
« With the nearest hospital ill equipped to handle the required surgery, she was loaded onto a small plane and flown 300 miles south over the Sierra Nevada mountain range to Loma Linda, where she underwent 12 hours of surgery to replace the vertebra with a metal implant. »
« The phone call, which the Hoechlins received less than a day after the surgery, was from the air-ambulance provider, Guardian Flight, informing them that the plane ride had cost $97,269… The couple tried not to panic, holding out hope that their insurance policy would cover the cost. But when the explanation of benefits finally arrived, it showed that Guardian Flight was out of network and that their policy would cover only $17,569, leaving the Hoechlins responsible for the remaining $79,700… From then on, Matt dealt with the incessant phone calls himself and managed to negotiate the remaining balance down to $20,000 after telling Guardian Flight that he and Kathleen would have to file for bankruptcy if it were any higher. »
« I first came across Kathleen’s story after being transported by an air ambulance myself last April, albeit under less severe circumstances… The air-ambulance provider, REACH Air Medical Services, sent me a letter two months later saying the flight had cost me $86,184. »
« Why is this happening, and how could something as essential as an air ambulance possibly be so expensive, especially when an estimated 550,000 patients in the U.S. require one each year? That line of questioning led to at least one culprit: private equity. »
« When major private-equity firms started buying up air-ambulance companies, it set off a flurry of acquisitions. In 2010, Bain Capital bought Air Medical Group Holdings for $1 billion, only to sell it five years later for double that amount to KKR, which, in turn, merged the company with yet another air-ambulance provider, American Medical Response, under the name Global Medical Response. (Tracking this shell game can be dizzying. In the three years between Hoechlin’s air-ambulance flight and mine, Guardian Flight merged with REACH Air Medical Services; both are owned by Global Medical Response.) In 2017, American Securities drastically accelerated private equity’s takeover of the air-ambulance industry with its $2.5 billion purchase of Air Methods, the largest domestic provider of air ambulances. (In 2016, during its final year as a publicly traded company, Air Methods posted a $97.9 million profit on $1.17 billion in revenue, and the year before had paid its CEO $2.5 million in direct compensation, including stock options.) That purchase established the industry’s current landscape, in which two private-equity firms, American Securities and KKR, control almost two-thirds of the national market for air ambulances, according to Medicare data. »
« As private equity tightened its stranglehold on the industry, it jacked up the already-high prices. Between 2008 and 2017, the median price charged by providers for helicopter air ambulances nearly tripled, jumping from $12,500 to $35,900 per flight, according to a study by the Health Care Cost Institute. »
« Private-equity firms have applied their balance-billing approach to other corners of the health-care sector they have encroached upon, including emergency-physician staffing, anesthesia, and ground ambulances — all services for which patients don’t typically choose their providers. »
« Across the country, states attempted to rein in the industry, but air-ambulance providers shot down each attempt in court with an unlikely silver bullet: a 1978 federal law called the Airline Deregulation Act… Time and again, air-ambulance providers invoked the law in court, successfully arguing that states did not have jurisdiction over the federally regulated industry.»
« Congress passed the No Surprises Act in December 2020 as part of the second COVID stimulus package. The law went into effect this year and bans most surprise medical bills — with the notable exception of bills from ground ambulances. It also removes patients from the negotiation process between their insurance company and out-of-network providers, meaning patients shouldn’t receive constant phone calls as the Hoechlins and I did. Instead, patients will have to pay only the in-network rate dictated by their insurance policies, while providers and insurers negotiate the remainder of the cost between themselves. If they can’t agree on an amount, they enter an arbitration process overseen by the federal government, which has to be resolved within 30 days. »
« While surprise medical billing will remain illegal no matter what, if the lawsuits succeed, providers might be able to once again charge insurance companies enormous fees for out-of-network services — a cost that could then be passed on to patients through increased insurance premiums. »
Related topic:
Paul Roberts wrote an article for Mother Jones titled Two Behemoths Dominate the Motorized Wheelchair Industry (May-June 2022 issue).
« Over the past four decades, private equity has become a powerful, and malignant, force in our daily lives. »
« The mom-and-pop shops of the past are gone. In their place? Skeleton crews, long waits, and endless bureaucracy. »
« Paralyzed from the waist down after being struck by a truck in 2012, Douglas Howey is one of hundreds of thousands of Americans who rely on what is known as “complex rehabilitation technology.” In Howey’s case: a Permobil F5 Corpus motorized wheelchair outfitted with an elevator lift motor, two batteries, headlights, and a joystick. Brand-new, it retails for almost $35,000. »
« Numotion, based in Brentwood, Tennessee, was one of the winners to emerge from the new system. Formed by the union of two PE-backed companies, Numotion spent the last decade buying up dozens of smaller suppliers from coast to coast, now employing about 3,000 people in 47 states. National Seating and Mobility, based outside Nashville and owned by the PE firm Cinven, is Numotion’s biggest competitor; it has acquired more than 50 suppliers in the United States and Canada since 2014 and now has 2,600 employees in 174 locations. Brendan Schroeder, a senior analyst at the health care advisory firm Provident, estimated that Numotion and NSM together control more than half the CRT industry. “They’re the two behemoths,” he said. (Neither company was willing to disclose revenue figures or other financial information when asked.) »
« Numotion has been the subject of at least 30 personal injury lawsuits across 18 states since 2015. Many cite bodily harm stemming from faulty or delayed repairs… Right-to-repair laws would help, Robin Bolduc told me. “Why can’t the local bicycle shop change the flat tire on our wheelchair?” she asks. Titone hopes her fellow legislators agree. “We represent them. We care about them and their mobility,” she said. “This is important.” »
Articles of Interest 