The State of the EMS Market and Life Link III September 2013 - - PowerPoint PPT Presentation

September 2013

The State of the EMS Market and Life Link III

Robert Sannerud, MBA, CPA, Life Link III

Industry Introduction

September 2013

Overview

 Flight Plan  Scope of Services  History  Air Medical EMS Market  Life Link III Fleet and Finance  Comments & Questions

September 2013

Flight Plan – definitions

September 2013

Air Medical Services (AMS) includes all types of medical transportation that are performed by specially trained clinical staff in specially equipped aircraft . . . .  Rapid Evacuation  Ability to access sick and injured patients and reduce the time enroute to definitive care.  Critical Care Services  Deployment of high performance clinical teams to initiate definitive care in the field.

 Integrated Delivery System  Recognized as a key element of any regional emergency medical service response.

Flight Plan – rapid and critical

 Rotor Wing - Specially equipped helicopters that allow rapid evacuation from unimproved landing areas. Scene response and interfacility transports.  Fixed Wing - Specially equipped airplanes that allow longer range means for rapid evacuation. Interfacility transports.  Critical Care Ground Transport Vehicles - Specially equipped ground ambulances used in support of air operations. Interfacility transports.

September 2013

Flight Plan – Air Medical Program Staffing

September 2013

Clinical Crew types  MD:RN/EMT-P  RN:RN  RN:EMT-P  Specialty Transport Teams Aviation Crew Types  Single/Dual Pilot  A&P Mechanic  Other Support Staff  Aircraft Specific  Component Specific

Flight Plan History – military roots

September 2013

Korean War  French Revolution  "To afford the wounded speedy assistance": Baron Dominique Jean Larrey and Napoleon Vietnam and Gulf Wars

Flight Plan History – civilian evolution

September 2013

 1970s  1972 first civilian program Flight for Life

• St. Anthony Hospital – Denver

 1980 – 32 programs 39 Helicopters 17,000 transports  1982 – St. Mary’s Hospital Grand Junction, CO

Flight Plan History - Life Link III

September 2013

1974: Bio Medical Research Associates (BMRA) provides intra aortic balloon pump (IABP) and hemodynamic monitoring services. 1985: Life Link III buys BMRA; opens first helicopter base 1988: Contracts with Air Methods (AIRM) to provide aircraft and aviation services. 2000 to 2008: Opens 4 new helicopter bases; adds 5 new members 2008 to 2011: Rapid growth results in an

• perational turnaround

September 2013

Current Life Link III Helicopter Service Area

History – civilian evolution (US)

September 2013

 Mid-1980s to Early 1990s  Moderate growth of programs and aircraft  Mid-1990s to Mid-2000s  Rapid expansion, primarily # of aircraft  Late 2000s to date  Continued growth  Many structural changes

Pre-2004: Harris J, US Hospital-based EMS Helicopter Accident Rate Declines Over the Most Recent Seven-year Period, Helicopter Safety, Vol. 20 No. 4, July-August 1994 2004-2012: Atlas and Database of Air Medical Services (ADAMS), 10th Edition, 2012.

September 2013

2004

September 2013

Air Medical Market – US/International Aircraft Mix

September 2013

Source - Ascend: A Flightglobal Advisory Service, August 7, 2013; compliments of American Eurocopter

US International Total 1,159 2,063 Single Engine 50.4% 30.4% Twin Engine 49.6% 69.6%

Aircraft Mix

Air Medical Market – Market Composition

September 2013

AIRM 31% AMGH 24% PHI 10% Metro Aviation 3% Hospital and Other 32% US Market Composition

(based on revenue)

Source: Air Methods Corporation: Corporate Presentation, August 2013

Air Medical Services – statistics average per base*

September 2013

Rotor Wing  Average 600 Transports/base Per Year  70% Interfacility  30% Scene Response  Average 40 Loaded Miles Per Transport  Average Patient/Clinical Mix  Trauma  Cardiac  Pediatric/Neonatal  Stroke

*Source: Association of Air Medical Services, 2013 Air Medical Services in the United States

Fixed Wing  Average 300 Transports/base Per Year  90% Interfacility  10% Scene Response  Average 200 Loaded Miles Per Transport  Average Patient/Clinical Mix  Trauma  Cardiac  Pediatric/Neonatal  Other

Life Link III Fleet and Finance Strategy  Three key factors:  Aircraft and Mission Profile  Clinical/patient care  Financial Criteria

September 2013

Life Link III Aircraft fit to Mission

 Fitch Associates analysis  NICU isolette  Full patient access  IFR vs. VFR operations

September 2013

Life Link III Clinical - CPR technology

 Lucas2 Device  Life Link III observed increasing incidence of cardiac arrest during transport  Clinical challenges due to current aircraft configuration  Equipment storage  Physical space to perform manual CPR  Stabilization of patient  Cost ~$17,000

September 2013

September 2013

 Video Laryngoscopy  Intubation is a high risk, low volume procedure  Provides optimal view for a clinician who does intubations less frequently than anesthesia providers.  Increases first attempt success and minimizes time of the first attempt  Allows for teaching  Has multiple blades to accommodate all ages and sizes, (neonate to adult)  Cost ~$25,000 for complete set of pocket monitor and four blades

Life Link III Clinical – video laryngoscopy

Life Link III Clinical - balloon pump technology

 The service that started Life Link III  Bridge therapy  Pioneered by Texas Heart Institute early ’70s  Portability allows for uninterrupted therapy for patient to definitive care: heart transplant, or permanent assist device  Cost ~$80,000

September 2013

September 2013

Life Link III Financial Criteria – Operations  Deliver cost effective quality care  Consortium Model  No member subsidy  Life cycle ownership costs  Staffing  RN:EMT-P  Part 135 aviation services contracted

September 2013

Life Link III Financial Criteria - Revenue  Payor mix

(1) (2) (3)

Payor Source EMS AIRM LL3 Medicare 55% 32% 36% Medicaid 15% 22% 22% Insurance 25% 33% 37% Uninsured 5% 13% 5% 100% 100% 100% Transport Volumes, Payor Mix

September 2013

Life Link III Financial Criteria - Revenue  Payor mix and payment rates

(1) (2) (3) (2) (3)

Payor Source EMS AIRM LL3 AIRM LL3 Medicare 55% 32% 36% 20% 16% Medicaid 15% 22% 22% 9% 26% Insurance 25% 33% 37% 76% 70% Uninsured 5% 13% 5% 2% 2% 100% 100% 100% Transport Volumes, Payor Mix

Payment rate % of charges

September 2013

Life Link III Financial Criteria – Receivables and Cash  Receivables management  Seasonality of business  Target DSO = 65 days  Cash management – no subsidy  24-month rolling forecast  Target Days Cash range = between 60 and 90 days  Line of Credit

September 2013

Life Link III Financial Criteria – Financing strategy

 Timing is everything – cost of borrowing  Lease versus own  Financing  Tax Exempt process

Lease Debt Traditional Debt Tax Exempt Credit Financing amount Interest rate Issuance costs

Financing Comparison

Question time

September 2013

Air Medical EMS and Life Link III

Contact Information

Robert Sannerud MBA, CPA CFO, Life Link III bobs@lifelinkiii.com 3010 Broadway Street NE, Minneapolis, MN 55413 612.638.4905 office 952.564.1528 cell

September 2013

RESOURCES

 Atlas and Database of Air Medical Services http://www.adamsairmed.org/public_site.html  Association of Air Medical Services http://www.aams.org  International Helicopter Safety Team http://www.ihst.org/Default.aspx?tbid=1507&language=en-US

September 2013