Competing air ambulance systems fear duplication of services
The medical arms race now has health care systems vying for air supremacy.
Flight for Life, the nonprofit air ambulance service based in the greater Milwaukee area, will open an air base in Fond du Lac next month that puts it in a position to draw patients from similar services in Neenah and Madison.
The question is whether the base — to be equipped with a twin-engine helicopter that costs about $5 million and staffed with the equivalent of 15 full-time employees — is needed.
“They are going to have to cannibalize the other programs around them,” said Gary Stromberg, supervisor of ThedaStar Air Medical Service in Neenah.
Stromberg contends the new base will duplicate existing services, increasing the cost of all the programs that serve the area.
Flight for Life disputes that, saying it receives many more calls from the area than it can respond to now.
“We clearly saw we were not able to meet all the requests we were getting,” said Claire Rayford, a spokeswoman for Flight for Life operations in Wisconsin.
Still, she acknowledges that other medical helicopters in the area may answer those calls.
Flight for Life’s new base, which would cost more than $2 million a year to operate, is part of a national trend that has led to swarms of air ambulances in some parts of the country.
In five years, the number of helicopters dedicated to medical services nationwide has increased by 50 percent, rising from an estimated 443 in 2003 to 663 in 2007, based on research by Ira Blumen, an emergency physician at the University of Chicago Medical Center.
The number has more than doubled in the past 10 years.
“Some of the expansion in some of the areas was needed,” Blumen said. “But there was no way in my wildest dreams that I thought we’d have this many helicopters.”
The increase is one example of how competition among health care systems — the so-called medical arms race — might lead to duplicative services, particularly for those that are the most profitable. The phenomenon can be seen in the construction of new hospitals, in orthopedic and heart hospitals, in the number of imaging centers — and helicopters.
At least part of the growth in the service is attributed to higher reimbursement rates Medicare put in place in April 2002. The new rates and the increase in the number of medical helicopters have resulted in a sharp rise in Medicare’s total spending for the service.
So far this decade, Medicare payments for air ambulance services provided by helicopters has risen more than sixfold, increasing from $41 million in 2001 to $255.3 million last year, according to the Centers for Medicare & Medicaid Services.
Medicare’s higher rates have probably affected what commercial health plans pay, since their rates are often pegged to Medicare’s rates. The cost varies with mileage and other factors, but being transported by medical helicopter typically ranges from $6,000 to $10,000.
Revenue generator
For certain, Flight for Life’s new base will put a medical helicopter closer to the scene of some accidents and small hospitals. But it also could mean more revenue for Flight for Life, and potentially for its biggest customer, Froedtert Hospital.
Flight for Life is part of Milwaukee Regional Medical Center Inc., a nonprofit entity whose board consists largely of the medical complex’s tenants, including the chief executives of Froedtert Hospital and Children’s Hospital of Wisconsin.
The service, which has helicopters stationed in Wauwatosa and in McHenry, Ill., reported net income of $1.1 million on revenue of $8.6 million last year, according to Marc DeVillers, director of finance and assistant treasurer.
The Wauwatosa helicopter will be moved to Crites Field in Waukesha next month.
The two bases, combined, transport about 1,300 patients a year. Flight for Life’s helicopter in Wauwatosa takes patients primarily to Froedtert Hospital and Children’s Hospital in Wauwatosa and to Aurora St. Luke’s Medical Center in Milwaukee. The McHenry helicopter flies about 25 percent of its patients to Froedtert or Children’s.
The most common transports are trauma patients, such as those in highway crashes, requiring the care available at a Level I or Level II trauma center. But Flight for Life and other air ambulance services also fly patients with aneurysms, burns and high-risk pregnancies, cardiac patients and premature babies.
Most of the patients — an estimated 54 percent — are flown from one hospital to another, according to a 2007 report by the federal Government Accountability Office. On-scene responses account for about 33 percent of the flights nationally.
The Milwaukee base transports about 700 patients a year. Excluding calls missed because of weather or maintenance, Flight for Life cannot respond to about 200 calls a year because its helicopter is in use, Rayford said.
Rayford estimates that two-thirds of those unanswered calls — about 132 a year — were north of the Milwaukee area.
“We looked at our requests and our inability to meet those requests, and for us it showed a need,” she said. “This was just a business decision we made.”
Wisconsin has no centralized dispatch for air ambulances, and no agency tracks the number of times that a helicopter is unavailable. And Rayford said she did not know if other services answered those calls.
Stromberg questions that.
“We know who is getting our backups,” he said. “It’s just good customer service.”
Flight for Life expects its new base to lose money for its first two years. But Rayford said that if Flight for Life didn’t open a base in Fond du Lac, a for-profit air ambulance service would.
That’s a possibility. Much of that growth in the number of helicopters has come from independent, for-profit services.
Still, by its own calculations, Flight for Life’s new base in Fond du Lac will need to transport about 400 patients a year to break even. That’s roughly triple the estimated number of requests it could not answer in the area.
This means that to break even, Flight for Life will need to take market share away from ThedaCare in the Fox Valley or UW Health in Madison.
“That could very well happen,” Rayford said.
UW Health — which transported 1,312 patients last year through UW Med Flight — declined to comment on how Flight for Life’s new base could affect its service.
Emergency medical services, fire departments, law enforcement agencies and hospitals generally call the nearest helicopter. Flight for Life clearly will have that status in the area near Fond du Lac.
At the same time, the air ambulances are supposed to take patients to the nearest appropriate hospital. And here, Flight for Life and ThedaStar read maps differently.
Rayford said that patients to the south of the northern boundary of Fond du Lac County probably would be taken to Froedtert Hospital.
By ThedaStar’s estimate, the midway point between Theda Clark Medical Center, a Level II trauma center in Neenah, and Froedtert Hospital, a Level I center in Wauwatosa, is closer to Fond du Lac County’s southern boundary.
“There’s no gray area as to who is closer,” Stromberg said. “The guy on the ground knows, too.”
Air ambulances typically travel about 180 mph , though their speed can be much slower in a headwind. An additional 15 miles at that speed translates into a five-minute longer flight.
Even if Flight for Life takes patients to Neenah, the new base will mean fewer patients for ThedaStar. Stromberg estimates the service could lose 30 percent of its volume. That would raise its costs significantly because its fixed costs, such as its helicopter and crew, won’t change.
“All it is going to do,” he said, “is make service in the Fox Valley more difficult.”
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