As I write this, Congress is engaged in its annual exercise of not passing the fiscal year budget and a new, spirited sideshow involving at attempt to defund the Affordable Care Act (ACA) aka “Obamacare.” As someone who worked on Capitol Hill for over a decade, it is fairly easy to see through this political theater for what it is: An attempt by both Republicans and Democrats to show their various constituencies that they are getting value for their campaign contributions. It’s a third-rate drama that will keep re-election coffers full and give cable news networks hours of cheap programming, but ultimately change nothing. The Supreme Court has validated ACA’s legality and Republicans don’t have the votes to defund or overturn it. Tilt: Game over.
Make no mistake, the ACA remains highly controversial and its impact on American society and its economy will be widespread with plenty of unintended consequences along the way and, like Medicare Part D (enhanced prescription drug benefit), it undoubtedly will be wildly more expensive than its supporters originally envisaged, adding an estimated $250 billion to the federal budget every year beginning in 2015. Parts of it may not be workable and need to be changed over time. Deep in the bowels of the Department of Health and Human Services (HHS) headquarters, much of the implementation language and regulation surrounding the ACA continues to be fashioned and exemptions already have been granted to various entities to ease implementation during the confusion. Rep. Nancy Pelosi’s (D.-Calif.) famous remark that, “You need to pass the bill to see what is in it,” seems woefully understated. The bill passed, people read it, and many still can’t fathom all that it implies, especially for the air medical industry. We are flying into entropy.
Here’s what we do know: Policies being offered through state health insurance exchanges, so far, are shackling patients to a shrinking number of providers within specific healthcare networks and reimbursements are being reduced for virtually all providers across-the-board. This already is encouraging some practitioners to leave the profession and contributing to understaffing. The march to health care rationing is not new, but under the ACA it moves at a faster pace. This has two sides for air medical.
More patients may need to be transported greater distances directly to the most appropriate medical facility as marginal clinics, trauma centers, and hospitals are closed or reduce the services they offer, especially in rural areas. This also means that a higher level of care will need to be provided onboard the helicopter or airplane during these transports and an overall growth in the fixed-wing EMS market to enable longer-distance transports at more rational costs. In Texas, paramedics at one hospital already carry blood and plasma onboard the helicopter. In the Midwest, Plains States, and Canada, operators are snapping up used Pilatus PC-12 single-engine turboprops and installing medical interiors. During the second quarter of this year, Air Methods, the nation’s largest air medical provider and the virtual canary in the coal mine for the industry, posted significant drops in community-based and patient transports, but a modest gain in net per patient revenues. Some of this could be ascribed to lousy weather, but not all of it. Expect these practices and results to spread in these markets with more frequent transports in larger and more expensive helicopters, in some instances a switch to fixed-wing aircraft, and higher per-patient revenues and/ or better margins.
Conversely, expect to see a continuing decline in non-exigent clinic-to-hospital or hospital-to-hospital air medical transfers and increased physician participation in these decisions. These intra-facility transfers are currently the industry’s bread and butter. There will be some consolidation and base closings, especially in urban or near-urban markets that already are over-served.
The net-net likely will be a redeployment of resources and perhaps a small reduction in the overall size of the nation’s fleet of 1,000 privately and publicly-owned air medical aircraft. However, over the last 30 years, air medical has more than demonstrated its value in generating improved patient survivability and outcomes. No law is likely to change that.