Why The Cost Of Air Ambulances Is Rising
Two thousand and two the. US Government introduced a new policy that allow private players to enter the air ambulance industry. This decision brought more competition into the market yet. The cost of an air ambulance trip sword. So why do the normal rules of supply and demand not apply. Here's Cardiff Garcia and Rachel Cohn from our daily Economics podcast the indicator from planet. Money to understand how air ambulance services became so expensive. You actually have to go back to a time when they they were cheaper a time when hospitals were the largest provider of the service ambulances really grew out of emergency rooms that decided. Hey we won't have a way to get people here faster. They were owned by hospitals. They were part of the hospital system. They were on the master hospital bill and often covered by insurance because it was a hospital service. So that is Dr Marty mccarey. He's a surgeon and professor of Health Policy and management at Johns Hopkins University. He says that for a long time hospitals were not making money from their air ambulances. They provided that service is because they could start charging patients. Once they got to the hospitals there were virtually actually no for profit providers companies that were trying to make a profit but in two thousand and two this began to change. The government rolled out a new policy. That change just the amount of money that area meals providers could make from transporting Medicare and Medicaid patients. But basically what you need to know. Is that the new policy made it more lucrative for independent independent ambulance providers that groups other than hospitals to offer the service and what this did was to incentivize outside group's thinking of investing in air ambulances. Silence is because now they were assured more money for transporting Medicare and Medicaid patients but also they could provide these services for this whole other group of patients. People not not covered by Medicare and Medicaid in other words people who had private insurance the result is that the number of air ambulances in the US nearly doubled in the vast majority today are owned by for profit providers and so here is where the normal dynamics of supply and demand start to go skew. They start to get a little weird see in a normal. Oh market that big increase in supply. The supply of air ambulance providers would usually mean a good thing for consumers because consumers now have more choice means more competition competition between those providers in usually means cheaper prices for consumers but in the area relents market. That's not what happens. That's because customers in in this market can't shop around and compare prices and services in an emergency situation. The customer doesn't choose which air ambulance provider to call the ritual. You spoke to a a couple who experienced this firsthand so the story takes place back in two thousand eight back then. This man named David Jones Scott into a terrible accident on a New Jersey highway. He was driving with his girlfriend at the time now. His wife Juliet when their car flipped over and tumbled at sixty five miles an hour onto the highway shoulder. First responders honors arrived at the scene and called an ambulance. David was flown out. I so I remember that hearing the ambulance land I was completely out of the car. Getting entreated to Juliette was actually still trapped in the car so emergency services had to cut her out which took awhile and so they ended up calling second air ambulance a few hours later eventually vincent. They made a full recovery but a nasty surprise awaited them exactly so they were actually going over their bills for their treatment together when they realized that they were charged. Different announce for their area blitz transports had a note written contemporaneous. Like it's funny just looking at the the no it says You know seventeen hundred for me and thirteen thousand for Juliette. Seventeen hundred for David in thirteen thousand dollars for Juliette even even though they were transported the exact same distance from the same accident site to the same hospital. I mean there was one difference aside from the price and that's who flew them so David was flown by a public provider but Juliet was flown by a for profit company. So this big increase in supply. It doesn't bring down the price for people getting air transported so the medium price for example charged by an air ambulance for a helicopter transport in the United States. That is now more than thirty six thousand dollars if you ask the Association of Air Medical Services About this there the industry group that represents air ambulances. They suggest that ambulances have become more expensive to provide but Dr mccarey he sees things differently so he says that the main reason these companies are charging so much for their services is because they can. There's nothing to stop them and so quickly. This second back industry grew of private equity companies. Buying up these air ambulances from hospitals managing the services services and price gouging patients going around the Master Hospital Bill. This has created a situation where people have gotten into a lot of debt and are straining straining their finances just to be able to pay off their hefty air ambulance Bill Rachel Code Cardiff Garcia N._p._R.. News.