If there is one thing that’s constant about medical flights, it is the fact that the industry is continually reinventing itself. From electric medical flights that are capable of vertical takeoff to dashboards that keep the crew updated with all the information they need during the flight, the sector is full of innovations. However, these innovations bring along something that the industry and its consumers do not desire, and that is the increase in costs. Balancing costs and enhanced efficiency is something that the industry has grappled with for quite some time. The question that arises is whether the innovations are proving too expensive for the industry.
The Rising Cost of Medical Flights has been a Long-Time Concern
The cost of medical flights never fails to make headlines. When middle-class families get slapped with huge air ambulance bills, eyebrows are naturally raised. The insurance coverage is often non-existent or so scant that they fail to cover the costs.
Innovations, in the midst of all this, can prove to be an added cost burden discouraging the industry to go ahead with them. Contributing further to it is the training and adaptation cost that adds fuel to fire. Then, what is the solution?
Rethinking the Least Likely Spaces
Fuel is one area that is a money burner. Aviation fuel does not come cheap. Moreover, the fuel itself is heavy, which translates into a need for more fuel to carry it. What if a predictive technology can be innovated to maintain optimum fuel levels? The other area is the material that goes into building the medical flights. What if the material that is lighter and less friction-causing is innovated? The list goes on. Of course, the focus needs to be trained on affordability.
All the research should ideally be funded by governments, communities, and corporates together with industry leaders. A model like this can truly take the costs in the right direction.
Medical flight membership programs have always been around, although not many have been very popular. Now, with the regulations surrounding surprise medical bills, medical flight service providers are thinking of new ways to stay afloat. Will this mean that membership programs will be redesigned by most of them? It is a question that has remained unanswered, but something that the industry must look at closely.
The disconnect between medical flight service providers has been that they do not honor each other’s memberships. This leaves the members with limited options, wherein they are confined to availing services only from a few medical flight services. In emergencies, they may end up hiring any air ambulance service.
Will the Medical Flight Service Providers Come Together?
This is a big question that has remained unanswered so far. However, the medical flight industry has much to gain if this becomes a reality. Imagine how convenient it would be if one membership would cover all the medical flight services across the country and even across borders. Members simply would not have to worry about the cost. All they would need to do is pay an annual membership fee and the whole family would be covered.
Will Memberships Continue to Remain Popular?
It is likely that medical flight membership programs will gain in popularity. This will be the case even if there is an end to surprise billing. The reason is this: non-emergency medical flight services may still demand out-of-pocket payments. Having a membership can negate this issue. It is for this reason that medical flight memberships will continue to retain their utility. Plus, with the pandemic still not under control, air ambulances can come in handy, especially if it involves flying huge distances for appropriate treatment. The one factor that will continue to retain focus is the acceptability of memberships across service providers.
A recent survey has shown that medical flight services are now more open to insurance network participation. In fact, the numbers have gone up by a healthy 20%. It has also been seen that the medical flight services and insurance companies are holding intense discussions and negotiations surrounding in-network arrangements.
The reason behind this change has been the huge increase in consumer demand and also to steer clear of the negative publicity that both the industries have been subject to in recent times. The efforts by the state governments to regulate air ambulance pricing and also getting insurance companies onboard with their cost-controlling measures have seen a lot of backlash recently.
The Medical Flight Services and their Cost Compulsions
The refusal of the insurance companies to take cognizance of the fact that maintaining medical flight services is an expensive affair – some say – was the cause of all the misunderstanding. Air ambulance companies usually spend a fortune to remain on standby for emergencies. The cost, of course, is then transferred to their services. When insurance companies refuse to foot these costs, the burden unfortunately is transferred to the patients who avail the service. This is a practice that is popular as ‘balance billing’.
How In-Network Coverage Helps
Customers are able to enjoy discounted and ‘fair’ out-of-pocket expenses to cover medical flight services when in-network coverage becomes a reality. In an ideal world, all air ambulance services providers must be in-network. However, the onus of it does not lie only on these emergency service providers. The insurance organizations too must be willing to reimburse a fair amount. Otherwise, it simply does not make business sense for medical flight services to join any network.
The good news, however, seems to be that both these industries are coming around and finding common grounds to work together.
Imagine a situation where a patient is in a life-threatening situation and a medical flight is an absolute necessity. The treating physician recommends an air ambulance. However, when a call is placed for dispatch, the service provider refuses to comply. The reason behind this is bad weather conditions. The hospital then calls several other service providers until they find one that is willing to take the risk. This is called medical flight shopping. While this might seem to be a logical recourse for the patient, it is not always desirable. The risk taken by the patient and the crew is huge in such circumstances. Why do air ambulance service providers agree to such a call?
The Pressures on the Medical Flight Industry
There are over a thousand medical flight service providers in the United States. This means they have to divide the existing customer base within themselves. Plus, most of these businesses are privately funded so profits matter. Rejecting patients for whatever reason does not serve the profit motive of these investors. Hence, the crew is compelled to take the call of answering to the need. However, this eventually places a huge financial burden on the patient. Let’s understand how.
The Out of Network Issue
In a situation where the need for medical flight service is huge and time is short, the patient does not really have the option of choosing a service provider. Most often, the service that he or she ends up with is one that is not covered by the insurance provider. While the insurance might cover a base rate, medical flight companies do not always comply with such rates. As a result, the patient is later compelled to cough up a steep price that the medical flight company charges in the form of balance bills. Medical flight shopping thus is a high-risk and expensive affair – a practice that must be relooked.
Cost saving seems to be the concern of the air ambulance industry in recent times. While there are several resources like the hangar and quality maintenance that cannot be contained, there are certain aspects that technology can help with. Fuel efficiency and route mapping are among those. In fact, the two are closely connected to each other, especially when it comes to long-distance air ambulance evacuation. Let’s dive into the factors that affect the two and how technology can help the air ambulance industry in this regard.
Air Ambulance Industry and Fuel Efficiency
Contingency fuel itself can be a source of fuel wastage for the air ambulance industry. Wondering how? It’s a no brainer – lesser weight translates to lesser fuel. Contingency fuel is usually carried to meet any unforeseen circumstance that can compel medical flight to be on air for a longer period of time.
If there was a mechanism where any adverse conditions can be predicted beforehand, the need for contingency fuel can be negated completely or at least reduced to a huge extent. The approach would help greatly.
Another aspect is flight route. Often, air ambulances are compelled to change their flight path or flight at varying altitudes due to changing weather conditions. Actions like these accelerate the fuel burn pace. If this uncertainty can be taken away, route planning becomes more efficient where the medical flight need not be on air for longer times than necessary. Needless to say, this increases the fuel efficiency and as a consequence, cuts associated costs.
How Technology Helps
Satellite connectivity in real time can help to a huge extent to plan the routes, but this is nothing new to the air ambulance industry but connect analytical algorithms to weather data and you have something new. The combination brings to the table the ability to predict weather and plan routes even better.
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.
Well this might not come to you as a surprise because you might have witnessed this yourself. According to one survey conducted by Kaiser Family Foundation, about 40% of US citizens have revealed that their families have received a medical bill despite being covered by medical insurance. This is a growing problem for the country as insurance companies are seen restricting the number of providers in their networks. Of course, out of network providers are not covered by insurance companies. In this context, the question arises, is it the same logic behind huge medical flight bills that people across the country are witnessing?
Medical Flight Bills and Insurance Network
A majority of industry experts believe medical flight service providers willingly stay out of insurance networks. The reason is simple, they lose the freedom to charge what they feel is fair for their services. It is also felt that there is a huge disparity between what the medical flight industry believes is a fair payout and what the insurance industry pays. The middle ground, it seems, is something that has not been achieved so far. The issue has not gone unnoticed by the lawmakers. However, the opinion is divided as to who is responsible for the huge bills.
Efforts by Lawmakers to Bring Down the Bills
Several attempts have been made to limit the amount that can be charged for medical flight services. From trying to ban balance billing to compelling air ambulance companies to come under insurance networks, several innovative efforts have failed. The reason behind this is the Airline Deregulation Act of 1978. Designed to create a competitive environment to keep the price of this essential service down, it precludes the state governments from intervening in the matters of air ambulances. Only the Federal Government is authorized to make changes.
Air ambulance services play a critical part in providing medical care on time for stroke victims. The Centers for Disease Control estimates that about 795 thousand people suffer strokes every year in the United States of America. Up to 140 thousand of these people die of stroke. Approximately 610 thousand people have never experienced stroke before. To put these numbers into perspective, one person has a stroke every 40 seconds on average in the country. All these people need air ambulance services to receive care on time. If not, they are at risk of suffering disability for the rest of their life.
Air Ambulance Services are Time Critical in Stroke
It is said that the chances of survival and complete recovery improve drastically if the patient receives care within the first three hours of the stroke. Air ambulance services play a major role in ensuring that this. The fact that rural doctors are moving towards urban areas and the reality that rural hospitals are closing at a rapid rate makes air ambulance services for such regions critical and life-saving. These patients are in need of high-level care facilities equipped to handle this medical condition.
The Economics of Stroke
In the US, cost of stroke treatment is approximately USD 34 billion annually. This includes the cost of care, medicines and loss of work revenue due to medical absence. Despite this, insurances only cover about 30 to 40% of the cost related to air ambulance services. Why? Because the reimbursement rates have not been revised for over 20 years, which puts a lot of financial strain on air ambulance services. The result – medical flight service providers are closing at a rapid rate, especially in rural America. If something is not done about this by the congress, it could turn out to be a grave situation for the people in the near future.
The medical flight industry is highly competitive with hundreds of organizations offering this emergency service around the world. With insurance companies not always covering the full cost of the medical flights and people being wary of the high price involved, the question that is being contemplated is whether lowering the standards of service within the legal realm a viable option. Among the cost factors are maintenance, fuel, hangars, and staff. While the first three are almost impossible to control, staffing is something that most are looking at. Here are a few things that some medical flight providers around the world are considering according to a recent survey by ITIJ.
Cutting Down Medical Flight Staffing and Training Costs
Of course, the more experienced professionals such as doctors, nurses, paramedics and pilots come at a huge cost. But then, there are low-cost medical flight service providers who lower their standards when it comes to hiring standards. It must be noted in this regard that staffing is among the highest recurring expense for most companies.
Training can be expensive too. In order to maintain accreditations, constant training programs need to be held and medical flight companies must make way for the accreditation agencies to evaluate them. All these activities can push the costs high. Doing away with accreditations can cut the cost to some extent and this is among the reasons why several medical flight service providers veer away from them.
Containing the Cost of Equipment
The medical flight industry is constantly evolving, especially when it comes to technology. Using outdated equipment that is still legally acceptable is a choice that many air ambulance companies are contemplating today.
The question that one must ask in this context is whether this is the right path to take. People are entitled to best care possible at reasonable costs. How this can be achieved is a question that only future will tell.
Imagine heading a business where customers only pay you 30% of the time in full and the remaining 70% only pay you 50% of the cost. How would your business survive? This is precisely the situation of most air ambulance companies in the United States of America say industry experts. What adds insult to the injury is the fact that there is a outcry about the charges both in national media as well as people, not to mention the politicians who are trying to pin all the blame on air ambulance companies. Most players in the industry say that air ambulance business is getting harder by the day to run.
Air Ambulance Companies Asked to Do More
Rural hospitals in the US are closing down at a rapid rate. More and more rural patients are veering towards the services extended by air ambulance companies. However, the fact remains that air ambulance services are expensive and the costs are not being reimbursed by health insurance providers citing several reasons. While the most common is the ‘lack of medical necessity’ others simply have a small ceiling of reimbursements that have not been revised for a very long time.
Most of the Air Ambulance Costs are Fixed
Costs of running a medical base is, on an average, about USD 3 million a year. This amount accounts for about 85% of the costs and are fixed. These include maintenance of the aircraft, hangar, support staff, crew and the like. Then there are write-downs that are either forced upon the air ambulance companies or the ones that they undertake themselves on humanitarian grounds. All this adds up to a huge amount. Plus, there are always the running costs such as fuel which is also quite expensive. Industry experts feel that the demand for the services provided by air ambulance companies is going to increase considering that the population is aging, and that something needs to be done on a war footing to make the reimbursements commiserate with the services provided.