Changes in the Air Ambulance Market and Effects on Individual Health Outcomes

Wednesday, June 26, 2019: 1:00 PM
Lincoln 3 - Exhibit Level (Marriott Wardman Park Hotel)

Presenter: Elizabeth Munnich

Co-Authors: Melanie Guldi; Steven Talbert

Discussant: Diane Alexander

As health care expenditures in the U.S. continue to rise, new high cost technologies have been the subject of increased scrutiny. This paper examines one high cost innovation that has increased access to medical services for some patients: rotor wing air ambulances (also known as Helicopter Emergency Medical Services, or HEMS). As a substitute for ground ambulance services, HEMS give patients from remote areas direct access to specialized trauma services that are typically not available at local health care facilities. However, this access comes with a steep price tag, as HEMS transport has both high fixed and high marginal costs. For example, the median price of helicopter air transport increased from $17,000 to $30,000 between 2010 to 2014; by contrast the median cost of transportation by ground ambulance in 2010 was only $429.

Between 2000 and 2010, the number of HEMS in service in the U.S. more than doubled. While the number of aircraft increased by 62 between 1990 and 1995, 353 HEMS were added between 2000 and 2005 alone. This rapid growth has been accompanied by a rise in expenditures for medical air transport, driven by increases in both the number of services and cost per service. If air ambulances increase access to medical services either by reducing transport time or taking patients directly to a trauma center, the additional costs may justify the benefits of these services. On the other hand, if air ambulances increase the cost of medical transport without adding value to patients, increased utilization of HEMS may contribute to inefficient health care spending.

In this paper, we exploit the timing of the phased-in introduction of Medicare’s ambulance fee schedule beginning on 2002 to estimate the effect of air ambulance transport on patient outcomes. Using data from the National Inpatient Sample, we show that increased Medicare payments for medical transport by HEMS led to fewer hospital-to-hospital transfers. Medicare’s payment changes are also associated shorter hospital length of stay and lower in-hospital mortality rates, suggesting that greater access to air ambulances lead to improved patient outcomes. We supplement these findings with a rich set of data on trauma patients in Kentucky to gain insight into the mechanisms through which HEMS access could improve patient outcomes. These findings of this paper are important in the context of rising health care costs; while air transport is expensive, our results suggest that greater access to air ambulances may improve consumer welfare.