MTPR

Montana Legislature Investigates 'Air-Ambulance Wars'

Dec 2, 2015

Things have really changed when it comes to flying medical services in Montana in the last few years.

Jeff Fee is the CEO of Providence St. Patrick Hospital in Missoula. He was used to seeing what he called the John Deere colors of his hospital's medical helicopter flying in and out of Missoula, and then, a couple of years ago, things changed.

"I remember sitting in my office one day and I saw two helicopters that I had never seen before land on my roof. And it was literally like somebody flipped a switch and the air-ambulance wars were on."

Montana went from having about half-a-dozen air ambulance services, mostly affiliated with hospitals, to having at least 13 operating in the state now. But, unlike most markets, more competition didn't drive prices down.

Fee says, for St Pat's, it only made financial sense to operate its helicopter and two fixed-wing air ambulances if they were using them a lot.

"If you've got a patient that is crashing in Dillon, Montana, the doc wants to get that patient out of their ED as quickly as possible. And the business model of some of these for-profits and some of the competitors — pretty smart — is they actually place helicopters closer to where the transports are. So if you've got a doc that's sitting in Dillon, and they can get a helicopter that's based in Butte to their facility 15 minutes faster than they can get mine, they're gonna call the one that can get there quicker."

Fee told a legislative committee Wednesday that in 2013 St. Patrick hospital lost $1.6 million on its air ambulances, and decided to quit operating them.

At least three other hospital systems in Montana still operate air ambulances. Kalispell Regional Medical Center does, even though Tony Patterson, one of its executives told the committee it lost $2.5 million providing the service last year. But Patterson said it's a vital service people in northwest Montana worked hard to create, and that they rely on it to save lives.

The legislature's economic affairs interim committee wanted to know if running an air ambulance service in Montana is always a money loser. So they surveyed all the companies asking how much they charge, and whether they're turning a profit. Jesse Laslovich with the state auditor's office looked at the answers and said he was disappointed that several of the companies didn't answer that question – although some did.

"You had Montana Medical Transport — you heard from Mr. Maxness, totally transparent. He has some of the lowest fees, and his profit margin is 16 - 25 percent. You heard from Mr. Holom — Northeast Montana STAT Air, transparent. Lower fees. Their profit margin: 8.77 percent. And then Sanford Air Med, again, low fees. Profit margin 0 - 7 percent."

The reasons air ambulance services can or can't make money in a given part of Montana are complicated. But the survey showed that some companies charge almost twice as much as others — and, again, not all companies answered the survey.

Air ambulances are regulated as airlines, not ambulances or medical providers, and there is no state regulation over how they operate. Laslovich says that's a problem. He also told the story of a Montana mom who did her homework when one of her kids needed an air ambulance. She wanted to make sure it would be with a service that was in her insurance company's network.

"And she called her insurance company and said 'can I get this pre-approved'. The insurance company said yes. So she said 'great, I"m protected'. The hospital used an out-of-network provider."

That meant the woman got hit with a big bill. The reasons things like that happen are complicated, too. Sometimes they sound justifiable, like the in-network aircraft is busy on another call, other times, decisions on what company to use are based on who a particular health care provider knows personally.

The only thing clear at the end of Wednesday's committee hearing is that lawmakers who want to reform how air ambulance services in Montana are paid for have their work cut out for them. They've now heard from some, but not all, of the ambulance companies and hospitals that use them, but insurance companies haven't come before the committee yet. That's supposed to happen in February.