Specialist
Former SVP at Air Methods Corp
Agenda
- Key trends and developments in the US air ambulance industry
- Competitive positioning of major players such as GMR (Global Medical Response), Air Methods, Air Medical Group and PHI Air Medical
- Short- and long-term ramifications of the No Surprises Act, staffing shortages, wage inflation and demand dynamics
- 2023 industry outlook, including consolidation trends and growth strategies amid an uncertain macroeconomic environment
Questions
1.
What key trends and developments have you been following in the air ambulance sector over the last 12 months or so?
2.
You touched upon some of the short-term ramifications of the No Surprises Act on Air Methods. How would you say these companies continue to drive margin expansion via operational efficiencies, due to the big cut in reimbursement?
3.
You mentioned staffing shortages, and we’re seeing a massive burnout of healthcare workers as a result of the pandemic, not just in the air ambulance industry but across healthcare as an industry-wide trend. What would you say is the current state of labour shortages, specifically for the air ambulance industry? Where specifically are we seeing shortages? Is it with EMTs, nurses, pilots, etc?
4.
You mentioned the alternative staffing model with potential to utilise two medics vs one medic and nurse to combat the nursing shortage, but there’s constraint in what you can do depending on the state laws. What players would you say have either made efforts or have had successful efforts at mitigating the wage inflation we’re seeing from the contract labour or the full-time employees?
5.
What’s your current take on the supply chain dynamics in the air ambulance industry? Prices for jet fuel have almost doubled since the beginning of 2022 to about midsummer. How do you assess current supply chain dynamics and how are you expecting the price inflations we’re seeing to fluctuate as we move towards the end of 2022 and into Q1 2023?
6.
Looking at volumes, the pandemic caused a lot of strain on patient transportation and bed management, which caused an increase in flight volumes for patients being moved to appropriate facilities, either due to capacity or, again, medical personnel shortages. How have transportation volumes been trending for the air ambulance industry as we move into this post-pandemic world? Are we beginning to see a normalisation? What’s your prediction for volumes as we move towards the end of 2022 and into 2023?
7.
Could you compare the air ambulance business models of GMR [Global Medical Response] and Air Methods, highlighting any areas of differentiation in terms of operations and revenue streams?
8.
You said some players got contracts in right at the last minute, but when those contracts end, how do you anticipate players such as GMR and PHI Air Medical may make up for the lost revenue that they’re seeing as a result of these subscriptions ending because of the No Surprises Act?
9.
You mentioned players such as GMR can continue to diversify an on-the-ground ambulance, but you said we’re seeing these agreed-upon rates continually going down. How do you anticipating the competitive landscape changing within these players, both air and ground? Do you anticipate a significant shake-up in market share, given all the headwinds that we’re seeing stemming from the No Surprises Act?
10.
How do you think contract dynamics with payers are shifting? What efforts do you think players in the space can implement to potentially increase contact stickiness or maximise any bargaining power they may have left?
11.
Could you outline Air Methods’ typical reimbursement mix when looking across commercial, Medicare and Medicaid? Perhaps there’s a tiny percentage of self-pay, but what split are we seeing and what split are the companies usually striving for?
12.
Could you outline how the relative rates within the Medicare Advantage space are impacted by the No Surprises Act?
13.
Air Methods recently announced a service agreement for Airlift Northwest. Air Methods will provide fixed-wing turboprop services throughout all of Airlift’s Pacific Northwest bases, beginning in 2023. What’s your strategic outlook on this service agreement, and do you think service agreements such as this one may pose a significant opportunity for alternative revenue streams?
14.
Air Methods also delegates resources for community outreach and education. How viable of an opportunity do you see there within education outreach in its communities, not just for Air Methods but for other players in the space?
15.
How are you anticipating the growth strategies of players such as Air Methods or GMR to shift over the next year or so? You mentioned PHI and where it may land. Aside from this, are there other strategic targets a large company such as GMR or Air Methods can chase to fuel inorganic growth?
16.
You mentioned the PE ownership of both GMR and Air Methods. What do you think these companies can do to reduce their high-CAPEX cost structure? Do these companies have any variable cost that they can pull to preserve margins?
17.
This market is highly saturated, and you mentioned the M&A dynamics we’re seeing, but what do you anticipate happening in 2023? If margins continue to shrink and it’s a highly saturated market, how is that going to impact M&A dynamics for the air ambulance industry?
18.
We’ve discussed the headwinds in the air ambulance industry, but what would you say are some tailwinds you’re seeing industry-wide?
19.
Who do you think might be best-positioned across Air Methods, GMR and the other big players to deal with the recessionary headwinds that we may have to face?
20.
What’s your strategic outlook for the air ambulance industry, highlighting a couple of key takeaways to better inform our audience and wrap up our Interview?
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