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January 9, 2020

Private Equity Investment in Ambulance & Medical Transportation, Part 3: How Ride Sharing and Technology Innovation is Impacting Traditional Ambulance Services

MHT Partners  | Business & Information Services Investment Bank

As private equity investment in healthcare services has boomed over the past decade, select funds have turned an eye toward one of the most important and challenging areas of healthcare services: ambulance and medical transportation. In part three of our series on private equity investment in medical transportation, we’ll examine how technology and innovation are altering traditional dynamics in the industry and overhauling existing business models.

Modern ambulances are critical to the U.S. healthcare system and can provide life-saving services in many situations, but for a large and growing population of ambulance riders, high-acuity advanced life support (“ALS”) or basic life support (“BLS”) services exceed patients’ needs. According to recent estimates, non-life-threatening events account for up to 51% of emergency ambulance trips. Utilizing private services such as Uber and Lyft for select non-critical medical transportation is one way that the technology community is working to reduce the cost of care and improve patient outcomes by alleviating a strain on finite ambulance resources.

A one-way ambulance trip can cost a rider thousands of dollars. Insurers often pay a portion of the sum, but in many cases leave a remainder for the patient to pay out-of-pocket. If Medicare determines ambulance transportation to have been medically necessary, Medicare patients are responsible for 20% of the Medicare-approved reimbursement for ambulance transportation, which can vary from $200 to over $450 per trip based on the ambulance type and location. If Medicare determines the ambulance trip not medically necessary, the patient can be stuck with the whole bill. Comparatively, the average cost of an Uber or Lyft is only ~$25. In a true emergency, the financial burden takes a backseat to the patient’s life, but in less critical scenarios, many patients can benefit from evaluating the relative costs of transportation alternatives.

In response, transportation network companies such as Uber and Lyft have introduced non-emergency medical transportation (“NEMT”) services platforms. Both state Medicaid programs and Medicare Advantage (“MA”) plans have begun to arrange NEMT services to transport members to doctors’ offices and hospitals in lieu of traditional ambulance services. The health plans work with NEMT brokers, such as American Logistics Corporation, National MedTrans, and Access2Care, who contract directly with the transportation network companies. In the past, these NEMT brokers have coordinated taxi services or worked with specialized medical transportation providers, but they are increasingly turning toward mainstream ride-sharing platforms.

Uber and Lyft’s NEMT services offerings focus on providing Medicare and Medicaid patients with reliable transportation to doctor appointments. The platforms, marketed as Uber Health and Lyft Concierge, provide a HIPAA-secure environment for healthcare organizations to arrange rides on behalf of patients days in advance of appointments and coordinate with riders via text message or phone call so that riders do not need access to a smartphone. The platforms also provide usage reports and centralized billing functionality for healthcare organizations. Combined, the companies currently have thousands of healthcare partners, including major healthcare organizations such as Allscripts, Ascension, Cleveland Clinic, and Florida Blue.

The introduction of cost-effective, easy-to-use ambulance alternatives has already had a measurable impact: a recent study found that the entry of UberX service into a new market reduced per capita ambulance volume by at least 7%. As adoption of these tech-enabled options continues to increase, the cost of routine medical care and the number of missed doctor appointments will decrease, improving healthcare outcomes.

MHT Partners, a leading healthcare services investment bank, believes that private investment can be a force for good in the ambulance and medical transportation industry, and that companies investing in technology to improve care and manage costs are poised for long-term success. If you would like to learn more about MHT’s healthcare services advisory practice, please e-mail Taylor Curtis (tcurtis@mhtpartners.com) or Alex Sauter (asauter@mhtpartners.com).

 

Sources: Inappropriate Ambulance Use study; “Did UberX Reduce Ambulance Volume?” by Leon S. Moskatel and David J.G. Slusky (10/24/17)

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