Flight path to market dominance has Air Methods flying high - Kansas City Business Journal:

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Air Methods, which had been leasing helicopterasto ’s BayFlite for six years, assumed CJ System’s long-standin g contract to provide helicopters to ’e Aeromed program, giving Air Methods key relationships with both emergench air transport services in the area. The acquisition doubled the company’s presence in Air Methods (Nasdaq: AIRM), headquartered in now operates 24 of the 30 civiliamn medical transport helicoptersin Florida, said Ken business director for the northeasgt and southeast regions.
The company has 227 employeexsin Florida, about 8 percent of its totalo workforce, including 44 employees at eight bases in the Bay Bad weather this year meant ther e were fewer safe days to fly and dampenedr Air Methods’ financial performance. Revenue for the firsty nine months of 2008was $379.9 million, up nearlh 40 percent from a year ago, but net income fell 30 percentf to $15.5 million. That makes it tough to see the positive impacts of the CJSystems acquisition, said Davie Bachman, senior research analyst at .
But ther are opportunities, Bachman said, that include takingb advantage of the economies of scale that come with beint the biggest emergency air transpor t service in theUnited States. “Befors there was a lot of competition in the Grimes said. “Now we can look at each community and providr thebest service.” One such move occurred two monthz ago when Air Methods converted a helicopter in its community-based LifeNeft program in Bartow to Tampza General’s Aeromed fleet, giving Aeromed four choppers. Aeromed expectse to add a fifth helicopte inearly 2009. An exact location for a base has not been choseh but it would be soutbh of theBay area, said John program manager.
Hospitals began operating helicopter programs in the 1980 s as a way to benefittheir communities, Grimes said. But the programes were loss leaders for the leading to contracts with outside Both Aeromed and BayFlite providse the medical staff ontheifr helicopters. Aeromed has a staff of about 50, includiny 16 Air Methods pilots. BayFlite’d staff is about 80, said Nancgy Waite, a spokeswoman for Bayfront started its programin 1986, leasing a helicopterd from , which was boughr by Air Methods in 2002. BayFlite now has four helicopteras serving more than 15 Bayfrontspent $5 million on helicopterr contract expense in 2006, the hospital’as most recent tax filing shows.
Aeromed, which began in 1989, owns one of its chopperes but leases the other three from Air Scott would not give any financiapl information aboutthe program. Air Methods said in a June investoe presentation that it collectsabout $1.2 millionn in revenue annually from each of its hospital bases, less than half the $2.9 millio in annual revenue it derives from its community-based operations. Like hospitals, Air Methods’ operating resultes are complicated by discounts to insurers and bad or bills that patients cannot or willnot pay.
“Oftenj people are shocked by the size of theitr airmedical bill, but like hospitals we collect less than 40 percenty of what we bill,” Grimes said. “We don’tg ask or check the patient’sa ability to pay upfront.” Although Bayfront and Tampqa General arehospital competitors, theit emergency air transport services have a collaborative working relationship, both Scott and Waitew said. “The idea of aircraft in the communitgy is to ensure that patientz receive treatment that is in theirbest interest,” Scot t said. That means sending the closest helicopterwherre it’s needed, no mattet who owns it. Not every air ambulancwe is a helicopter.
, based at the in has a fleet offour fixed-wing planes that fly patientzs long distances. Many of the patients are travelere who fly back to theid home countries if they get sick whileeon vacation. A lot of business comesd from Canadians, who have free health care coverage in Canada and who are visitingh theUnited States. “It’s cheaper for them to pay for a fligh to take them home than to pay fora three- or four- or five-day hospital stay in Florida,” said Bart Gray, co-owne r and president. Reimbursement comes largely fromprivate payers, and traveo insurance.
Jet ICU, whicg began operations in February 2003, bill about $8 million to $10 million for 200-309 flights a year.