Mel Evan/AP Photo
A MidAtlantic MedEvac helicopter lifts off from Cooper University Hospital in Camden, New Jersey.
On July 2, 2018, a Boston woman fell into the gap between a subway car and the platform. Passengers rocked the train back and forth, eventually extricating her. Her leg was cut down to the bone. Still, she begged her rescuers not to call an ambulance. “Do you know how much an ambulance costs?” she sobbed. Because there was no choice but to call an ambulance, though, one eventually arrived.*
Ambulance services used to be covered by local taxpayers, volunteers, or nonprofit hospitals, part of a suite of services akin to firefighting, which many people took for granted. This remained the status quo for emergency medical services for decades. Then, following the 2008 recession, private equity firms began to buy up ambulance companies. Quality has declined, and prices have shot up. Within ten years, from the recession to the Boston woman falling on the platform, the transformation of ambulance services from community service to luxury good was complete. Under the new paradigm of private equity, poorly maintained ambulance services siphon profit from vulnerable patients.
During the early 19th century, emergency triage occurred only on the battlefield. In the Napoleonic era, when standard war strategy involved lining masses of troops up against one another directly, retaining a critical number of men on the field was of the highest importance. Soldiers who were the least injured received priority under the contemporary triage system, as they could be bandaged quickly and sent back onto the field. Mortally wounded troops were left to die where they fell. Napoleon’s surgeon, Baron Dominique-Jean Larrey, is speculated to have been the first to reverse this order of triage. Under his system, the heavily injured were extracted first to undergo then-new amputation operations that would save their lives.
The Civil War saw the first iteration of the Napoleonic triage system on American soil, as the first battlefield ambulance wagons prioritized the severely wounded. Civil War servicemen were subjected to approximately 60,000 amputations, an estimated 75 percent of all surgeries performed during the war. Immediately following the war, the first civilian ambulance corps were formed. Medical treatment still being somewhat primitive, one service carried a quart of brandy for each patient it picked up.
Although civilian ambulance services grew over the next 100 years, a survey of 900 cities in 1965 found that fewer than a quarter had a regulated emergency transport system. The Highway Safety Act of 1966, passed as part of an attempt to stem growing traffic deaths, required states to form emergency medical services and standardize equipment and training. The newly formed Department of Transportation offered matching grants and demonstration projects. Yet despite the new law, ambulance services continued to languish behind what could be achieved in emergency care.
In the early 1970s, a cadre of senators began pushing for improvements. Recent shootings of prominent individuals (Martin Luther King Jr., Robert Kennedy, Governor Wallace of Alabama, and Senator Stennis of Mississippi) were fresh on the minds of those testifying, as was the “substandard” ambulance care that had been provided to those shot. The resulting EMS Services Development Act of 1973 provided more grants and highlighted the need for helicopter transportation to cover large swaths of the country.
Over the subsequent decades, states and local regions took increasing control of their ambulance services, with municipalities and nonprofit hospitals providing the services. But the Great Recession created an opportunity to financialize the practice of lifesaving emergency transport.
After 2008, a number of private equity firms moved to take over ambulance and air ambulance providers. Of the three air medical transport companies that have since captured 67 percent of the U.S. market, two are private equity–owned. American Medical Response, the largest provider of ground ambulance services in the U.S., was purchased by Kohlberg Kravis Roberts & Co. Known as KKR, this firm also owns one of the largest air transport companies, Air Medical Group Holdings. Priority Ambulance, LLC, which operates 400 medical transport vehicles, is a portfolio company of Enhanced Equity Funds.
Because private equity firms seek to recoup their investment rapidly rather than putting capital back into the businesses, PE-owned infrastructure has a reputation for being shoddy. Indeed, there have been numerous reports of ambulances in disrepair, slow response times, failing equipment, and low-paid, overwhelmed staff. In a 2016 investigation, The New York Times uncovered at least two lawsuits alleging that the poor quality of service led to patient deaths. One study found that nearly 85 percent of air ambulance crashes between 1998 and 2012 were operated by for-profit companies.
Not only that, but private equity firms show no responsibility to the well-being of the company that they purchase, even when the company provides a service as important as emergency medical transportation. The 2016 New York Times investigation found that a quarter of 12 ambulance companies recently owned by private equity filed for bankruptcy, in some cases without warning, leaving communities without ambulance services almost overnight.
Rural Metro Fire provides a useful case study. The company, also known as Rural/Metro Corporation, was bought by Warburg Pincus in 2011. Rural/Metro then filed for bankruptcy two years later. Oaktree Capital Management, a stakeholder, invested additional money, eliminating Warburg Pincus’s stake. Rural/Metro was then bought by Envision and Global Medical Response, both of which are portfolio companies of KKR. During this time, according to the New York Times, there were formal complaints about a lack of ambulances, county-imposed penalties for late responses, and at least one canceled contract due to a late response that may have contributed to a death.
Private equity–owned ambulance companies are also driving the cost curve. A 2017 GAO report noted that between 2010 and 2014, the median price for air ambulance services doubled, from $15,000 to $30,000. That number continued to rise; by 2017, the median price was over $36,000. And unlike many medical services, the patient is often exposed to the entire cost.
Air ambulance providers often fail to contract with insurers, leaving more than two-thirds of patients out-of-network. This number has increased in recent years, likely indicating that the air ambulance providers are purposely refusing to negotiate with insurers, preferring to instead bill patients exorbitantly. In such cases, the ambulance provider will bill the insurer for whatever out-of-network coverage it provides, and then send the remaining cost along to the patient, a tactic known as balance, or surprise, billing. A 2019 GAO report of air ambulances noted that when it reviewed over 60 consumer complaints from two different states, 59 were for a bill over $10,000.
Ambulance providers also engage in quid pro quo tactics that read as uncomfortably reminiscent of the pharmaceutical salesman/doctor relationships in the nascent stages of the opioid epidemic. Because each company relies on someone, either a 911 operator or in-hospital medical personnel, to notify it that a patient needs transportation, ambulance providers actively cultivate relationships with emergency room staff. In surgeon Marty Makary’s 2019 book The Price We Pay, he recounts an anecdote of one air ambulance going so far as to helicopter in fresh pizza for overworked ER personnel. He also writes of air ambulance providers installing hospital helipads and rapid-response buttons to summon them without being routed through 911. In some instances, air ambulance companies pay medical professionals to promote their services to other medical personnel.
And there are even more revenue streams available for companies looking to diversify their profits. Multiple ambulance providers in Colorado, for example, offer subscription services for those worried about out-of-network fees. One, Med Evac CO (owned by AirMedCare Network, an affiliation of four seemingly independent companies, all of which are owned by Global Medical Response, a portfolio company of KKR) offers a 10-year subscription for $575, and a 25-year membership for $1,125. The subscription promises that the patient will not be billed out-of-network for any flight in the AirMedCare Network. Of course, as the fine print of the subscription pamphlet notes, the patient has no control whatsoever over which company arrives first to transport them.
A patient gives up control over their body and the associated costs for transporting, handling, and curing them. As soon as a patient is determined to need medical transportation, the system takes over. As Makary notes, even the determination of whether a patient needs transportation is a function prone to excess; nearly 80 percent of emergency medical transportation is non-emergency (although that does not stop companies from billing all trips as a matter of life or death). But regardless of whether it is a legitimate emergency, the patient has no say in whether the first ambulance to arrive is in-network or out-of-network, or if the ambulance takes them to an in-network or out-of-network facility. And that’s all before they actually see a doctor.
Arguably, we must pay high prices if we want world-class care. But the actual cost of providing emergency services is kept opaque, and there is strong evidence that we are paying far, far too much. In his book, Makary profiles one company, Sentinel Air Medical Alliance, that both reviews air ambulance bills and creates a platform for different air ambulance companies to bid on patient transport. The prices quoted by air ambulance companies under competition during this process are significantly lower than the monopoly rents they are typically able to demand.
Some patients are reacting to the new profit-gouging ambulance model by using ridesharing services like Uber and Lyft, and some react like the Boston woman, irrationally begging that an ambulance not be called. But more realistic and long-term solutions exist. Companies could be forced to negotiate with all insurers, ensuring that no patient is left out-of-network. Similarly, surprise billing could be banned, requiring companies to either present fees up front or accept the patient’s insurance payment as a full reimbursement. Another potential solution would be to regulate these companies like community firefighters, ensuring that local or state tax dollars subsidize medical transport as a public utility. Another solution, requiring no legislative or legal action, would be to introduce competition into the system, as with Sentinel Air Medical Alliance. Forcing companies to bid on patient transportation significantly reduces fees.
Each solution arguably has its merits, but what is inarguable is that the current emergency medical transportation system represents a market failure. What was once a community service, provided at little or no charge to the patient, has become a financialized moneymaker for the wealthy. Patients in their most vulnerable state should not be forced to pay monopoly rents to private equity firms. Policymakers, entrepreneurs, and citizens should be outraged at the abusive prices being charged and take action to rectify the problem.
*Ultimately, a non-profit ambulance picked up the woman.
