Hawaii air ambulance company buying its competitor

HONOLULU — A firm that controls one of two air ambulance companies in Hawaii is acquiring the other business.

Air Medical Group Holdings Inc., which owns Hawaii Life Flight, plans to buy competitor American Medical Response for $2.4 billion, the Honolulu Star-Advertiser reported (https://bit.ly/2gzjdqF) Monday.

The deal comes after Kaiser Foundation Health Plan sued Hawaii Life Flight last year, claiming the company charges exorbitant rates that are significantly higher than American Medical Response.

Honolulu Star-Advertiser research backed claims that American Medical Response charges thousands of dollars less than Hawaii Life Flight for similar flights.

A Hawaii Life Flight bill for emergency transportation from Hilo to Oahu in December 2013 totaled $70,580, with a base rate of $16,441 and a charge of $219 per mile, or $54,139 in mileage costs.

American Medical Response has said it charged a base rate of $14,000 per flight and $25 per mile, which would make the same flight about $20,000.

States are prohibitedfrom regulating medevac rates under the federal Airline Deregulation Act, passed in 1978, so air carriers are free to charge whatever they want.

“There could be some serious ramifications when a quasi-monopoly may be formed,” said state Rep. Angus McKelvey, who represents West Maui. “If they’re the only game in town, it kind of puts the health care consumer at a disadvantage.”

Air Medical spokesman Reid Vogel declined to comment on whether the Hawaii companies would be consolidated. He said working together could shorten response times and control costs.

“For me the concern would be: is this (purchase of AMR) going to cause a situation where now the higher price becomes the price and that’s it?” McKelvey said. “And now all these people are going to have to absorb this into their medical care.”

The acquisition is subject to approval by the Federal Trade Commission and is expected to close in October.