Air Ambulance Industry and Private Equity

The United States is a country that takes pride in its capitalistic foundations and private equity is a big part of it. Making America great are the enterprising individuals who have found new business avenues and turned their fortunes. In this context, one questions whether the same outlook must be adopted towards the air ambulance industry. Today, the industry is mostly run by firms that leverage private equity to keep floating. However, that comes as no surprise. The medical flight industry is one that sees high demand. It is natural that businessmen want to invest in it.

Air Ambulance Industry and Rising Costs

While the country has not seen high inflation, air ambulance industry has witnessed a steep rise in its costs – thanks to the ever-evolving safety measures and cost a good deal. In addition, there is the need to keep the staff well trained to tackle new equipments. On top of all that, maintaining high standards is not enough, accreditations that stand as evidence to the quality is essential, which again is a cost. Factors such as these are pushing the prices of medical flight services quite high today, to the extent that – without insurance coverage – they are almost impossible to afford.

Prevalence of Too Many Players in the Air Ambulance Industry

The air ambulance industry today witnesses several new entrants. The existing ones too are expanding at a tremendous pace. All this could be leading to an oversupply. However, oversupply is a two-edged sword. It increases the cost that ‘idle time’ attracts. In turn, this pushes the cost of each unit (read cost of each flight) higher as each unit now has to cover higher costs. This could be compelling the air ambulance industry to charge its customers high prices, something that the insurance industry has not been willing to foot lately.

The expectation is that the oversupply balances itself out eventually as the unprofitable ventures close down, and ultimately, a perfect market condition prevails.

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