New York Times, May 3, 2005

As Medical Airlifts Proliferate, the Public Price Tag Is
Rising
By BARRY MEIER 
 
One night last May, after two cars collided along a rural
highway about 40 miles west of Tulsa - killing one driver
and seriously injuring the other - firefighters from the
nearby town of Foyil called for a medical helicopter.

But as the aircraft descended, they saw it was a helicopter
operated by a rival company and not the one their
dispatcher had summoned from Tulsa. 

Randy Atchley, the chief of the Foyil fire department, said
he thought the rival helicopter's crew, listening on an
emergency scanner, had "jumped the call" and raced to the
scene. The firemen waved it off and the Tulsa-based
helicopter soon arrived.

Air ambulances were once a rarity. Not today. Across the
country, competing helicopter services are locked in air
wars over patient-rich areas as medical airlifting grows
more profitable and common. 

As with other health care services that have become routine
- sophisticated diagnostic tests like CAT scans, for
example - the public price tag is soaring and helicopters
are being used when ambulances might do. 

The price of an airlift ranges from $5,000 to $10,000, 5 to
10 times that of a ground ambulance.

"They are buzzing above you like buzzards," said Brad
Lancaster, the director of emergency medical services in
Murray County, south of Oklahoma City.

On a recent windy morning, Cliff Rost, the volunteer fire
chief in Morrison, Mo., found himself walking an older man
bothered by shoulder pain a quarter of a mile down a road
to reach a helicopter run by a company called Air Evac
Lifeteam. The man had bought a company "membership" that
allowed participants to call for an emergency airlift
without any out-of-pocket cost. 

In recent years, Mr. Rost said, Air Evac has made about a
dozen flights into the area, about 75 miles west of St.
Louis. He said he felt that only one had involved a serious
emergency. 

"They had people running around saying, 'You don't need to
call 911, just call Air Evac,' and that's what's been
happening," he said.

Executives of Air Evac and its investors declined to be
interviewed for this article. But in a written statement,
its chief executive, Colin C. Collins, said that Air Evac
made only medically necessary flights and that the company
had saved "countless lives." He also said Air Evac did not
"jump calls." 

An estimated 700 medical helicopters operate nationally,
about twice the number flying a decade ago. And with more
of them scrambling for business, specialists say that
emergency personnel are feeling more pressure to use them.

Last year, the number of flights paid for by Medicare alone
was 58 percent higher than in 2001. Spending by Medicare,
which increased its rate of reimbursement for airlifts in
2002 and set a higher rate for patient pickups in rural
areas, has more than doubled, to $103 million, over the
same period.

In some cases, helicopters can transport seriously ill or
injured patients to a hospital more quickly than by ground.
But the industry's rapid expansion has taken place amid
scant oversight of both flight safety and medical quality.
The medical capabilities of competing helicopter concerns
can vary sharply. 

Meanwhile, deaths in crashes have reached alarming levels
and questions remain about the effectiveness of air
ambulances.

In the past, medical helicopters were largely operated by
hospitals. But increasingly, aviation companies run them
like independent air taxis that respond to emergency calls
or ferry patients between hospitals.

The industry is diverse, made up of large and small
operators and two publicly traded companies, the Air
Methods Corporation and Petroleum Helicopters Inc. But if
one company exemplifies the industry's growth, as well as
its excesses and problems, it may be Air Evac Lifeteam, one
of the nation's biggest operators.

The company was founded in 1985 with one helicopter in West
Plains, Mo., a small town in the Ozark Mountains, to
transport rural patients to hospitals in cities. An annual
membership is $50 a household. In an emergency, a member
can call Air Evac, rather than a 911 operator, and it will
send a helicopter. Under the plan, the company will not
seek money from a member beyond what a private or public
insurer pays.

William R. Chritton, a founder of Air Evac, recently
recalled the company's earliest days. "I was flying around
as a pilot selling memberships," said Mr. Chritton, whose
interest in the company was purchased last year.

Some communities have welcomed Air Evac's arrival, and last
year two private equity firms bought the company at an
undisclosed price. Its formula has proved so successful
that it now operates out of 54 locations in nine Central
and Southeastern states, acquiring 10 bases in Texas last
month.

But along the way, the company's critics - who include some
competitors, doctors and emergency officials - contend that
Air Evac has used a variety of tactics to generate flights
for itself, including unneeded ones. Air Evac has also
fought efforts to tighten oversight of the air medical
industry. "When you talk about Air Evac Lifeteam, they are
probably the No. 1 opponent to regulation in the country,"
said Ron Walter, the president of the National Flight
Paramedics Association, a professional group.

In his statement, Mr. Collins said his company's safety
record was strong. "Our company provides a critically
needed service to medically underserved areas of rural
America," Mr. Collins stated.

These days, Air Evac's membership campaigns seem more like
aggressive marketing drives than community barn raisings.
Two years ago, the company sent a "blitz team" of paid
representatives to Scottsboro, Ala., to sell memberships
door to door, as well as outside stores like Wal-Mart and
to civic groups like the Veterans of Foreign Wars.

A former salesman there, Joseph W. Ashmore, said that a
focus of such drives were people deemed at high risk of
emergencies, like those in dangerous jobs and the elderly.
Among his sales stops were assisted-living facilities.
"It's a very emotional buying decision," said Mr. Ashmore,
who successfully sued Air Evac last year in an Alabama
court over unpaid commissions.

Some people who have bought memberships said they were glad
they did. 

"It's just like other kinds of insurance," said Lucy
Bevill, who lives outside Shelbyville, Mo. "It's there when
you need it."

Air Evac's strategy has been to keep costs low by buying
old single-engine helicopters and retrofitting them as
medical aircraft. The number of flights its helicopters
need each month to break even is about 25, or half that of
most hospital flight services, which often operate larger
aircraft and have full-time crews. 

"We have a Wal-Mart real estate mentality with a Southwest
Airlines business" style, Mr. Collins said in an earlier
interview.

Air Evac said that membership flights represented only a
small fraction of its airlifts. The company also builds
ties with another vital constituency: ambulance, police and
fire personnel, who call for helicopters and often decide
which operator to use.

Consider the case of Jefferson County, Mo. In 2002, when
Air Evac set up a new base there, it sold memberships to
public employees in the town of Hillsboro, the county seat,
for $10 each. The company also hired the relatives of
officials running ground ambulances as its marketing
representatives, said Edward L. Kemp, a county
commissioner.

Mr. Kemp said he believed that Air Evac made those hires so
ambulance crews would call for its helicopter and not a
competitor's. "If your daughter's livelihood is at stake,"
he said, "who are you going to call?"

The company's allies also tried to persuade 911 officials
in the county, which is about 45 miles south of St. Louis,
to call Air Evac first, but that effort was rejected. In
late 2003, Air Evac closed the base, citing a lack of
flight volume.

The company continues to operate two nearby bases. But data
collected by the Missouri health department indicate that
calls for Air Evac services fell sharply after it closed
the Jefferson County base. In the last five months of 2003,
Air Evac made 60 flights from Jefferson County. But in the
last half of 2004, it made only 28. 

Mr. Collins said in the statement that the company did not
single out any age group for marketing purposes. And he
added that any suggestions that Air Evac provided benefits
to emergency personnel or made hiring decisions to win
business "could not be more wrong." 

Under federal law, providing a financial benefit to solicit
health care referrals may qualify as an illegal kickback. 

Mr. Collins added that other air programs offer
memberships. 

But not long ago, when Air Evac tried to join a trade
association of medical helicopter membership programs, the
group rejected its request because it is a for-profit
company, said Vern Bartley, the director of Air Life of
Oregon, which is based in Bend. 

The group's members are all nonprofit. "We don't
door-to-door sell," said Mr. Bartley. As the industry grows
profitable, aerial turf wars are flaring up. For instance,
as Air Evac gained footholds in the Nashville area,
Vanderbilt Medical Center set up four new bases in a
protective ring around the Tennessee city and its suburbs. 

In some places, the arrival of more helicopters has meant
more business for everyone, not less. Elsewhere,
competitors have raised prices, not lowered them, to make
up for lost volume. Meanwhile, areas with high levels of
Medicaid patients or the uninsured are often ignored.

"It is horribly inefficient," Mr. Bartley said.

Government oversight is spotty. While the Federal Aviation
Administration sets some basic flight safety standards,
state regulations concerning patient care, crew training
and flight safety vary. Some states do not regulate medical
helicopters at all.

A few states like Michigan, Rhode Island and Washington
require that air ambulances be certified by a voluntary
industry standard-setting group, the Commission on the
Accreditation of Medical Transport Systems. But when some
operators in Missouri and Oklahoma pressed for such
legislation they ran into a formidable opponent - Air Evac.

"They shot us down," said R. Shawn Rodgers, the emergency
medical services director of the Oklahoma State Department
of Health. To avoid another legislative defeat, Oklahoma
officials recently adopted the group's guidelines as
regulation. 

Mr. Collins stated that Air Evac had opposed legislative
efforts on accreditation because it did not believe there
"should be the single standard for state licensure." He
also said that Air Evac had a strong safety record and that
a consulting group, Aviation Research Group/US, had given
it a "Silver" rating.

Joseph J. Moeggenberg, the company's president, said the
ranking signified that a review of public records indicated
that Air Evac had a reasonably good safety record compared
with operators of similar size. 

The industry's growth is likely to continue. Mr. Chritton,
Air Evac's founder, said Mr. Collins had told him that Air
Evac hoped to open 12 locations a year. And others are
scrambling to keep up. Hearing Air Evac's footsteps, three
helicopter operators have recently contacted him to learn
how memberships work, said Mr. Bartley of Air Life of
Oregon. 

But memberships may have other costs. Craig Yale, an
executive with Air Methods, said that one of its
helicopters was recently at an Illinois hospital to
transfer a cardiac patient. But the man and his family
refused to take it and asked for Air Evac to come because
he was a member.

Air Evac dispatched a helicopter to the facility. But
before it arrived, Mr. Yale said, the patient suffered a
heart attack and died.

Mr. Collins did not respond when asked to comment on the
episode.

--- URG-L
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