Do you want to know how much money private ambulance businesses make yearly? If YES, here are factors that determine the profit margin for private ambulance services. Currently, the world’s population is over 7.7 billion people, therefore the need for hospitals, doctors, nurses, and other medical practitioners is growing too. Aside from these requirements, there is another service that is most sought-after in the wellness industry, and that is ambulance services.

Ambulance and medical transportation companies are becoming more in demand as the elderly population grows. An ambulance company can provide emergency medical services, non-emergency transportation, or both. Ambulance companies can be private or part of a city’s public safety department.

Presently, there is a huge dearth of ambulance services in the United States. The number of ambulance services that are operating in the United States is far lower than the recommended number by WHO (World Health Organization). Therefore, healthcare companies seek private ambulance companies who can render instant and trustworthy services.

However, to meet the demand, the private ambulance businesses require capital, knowledge of various medical equipment, and trained staff. Commencing a business is a thrilling adventure that requires strategy, strength, and concentration.

Ambulance companies that are run for profit receive revenue from a few sources depending upon the service they provide. Fees generated by private ambulance companies tend to depend upon the type of services a patient receives. Although insurance companies will handle much of the reimbursement, patients are also required to fulfill their deductibles and co-pays. These fees vary depending upon the client’s medical needs.

Factors that Affect The Amount A Private Ambulance Company Can Make Yearly

The exact amount a private ambulance company can make yearly will depend on many factors. These factors include:

  1. Average Reimbursement Per Encounter

In the USA, public insurers like Medicare (the public insurance for the elderly) and Medicaid (the public insurance for the poor) are the dominant payers. (Private insurance often follows public insurance pretty closely, but with much higher rates.) Note that Medicare pays according to three factors: emergency vs. non-emergency, low (BLS) vs. medium (ALS1) vs. high (ALS2) vs. helicopter-level acuity, and mileage.

(There are also relatively minor differences in urban vs. rural rates and some unusual special situations (rural non-transport paramedics, critical access hospitals.) For emergency calls, both require that it be an actual emergency event (interpreted broadly) in order to be paid, both require that the client be transported to the hospital (or they don’t pay). Medicare charges 20 percent co-pay, which is around $80.

  1. Location and Miles

It is important to note that income for private ambulance companies varies across the country. The eastern portion of the US earns more than the western, for instance. For example, vehicles for companies in Nevada and California can generate between $30,000 and $50,000 per vehicle annually while vehicles in Maine or New York might generate around $40,000 to $56,000 each year.

Ambulance Companies also charge Medicare and Medicaid for each mile from where the patient is to the hospital. And they don’t get paid at all if they don’t take you – say if you are a diabetic and they give you intravenous sugar and wake you up, but you don’t want to go to hospital, they can’t charge public insurance.

  1. Days to Bill and Days in Accounts Receivable

The faster claims are paid, the better. Note that the number of days to bill a claim, and therefore the number of days in AR (Accounts Receivable), can constrict your cash flow and is a direct indicator of issues with billing, payers, or staff. However, the general timeframe to bill a clean claim is one to three business days.

Please also note that keeping an eye on frequent reports that indicate how many claims didn’t pass initial scrubbing (and addressing the causes promptly) is very pertinent to the profit of your private ambulance company. To figure out your days in AR, divide your total outstanding AR balance by your average daily charges for the last 90 days.

Please also note that more than three days to bill a claim can be a sign of inconsistent business procedures. Providers not locking charts, incomplete documentation, or not collecting insurance information are common procedural deficiencies. AR delays can be a sign that billers aren’t submitting claims quickly enough, or that payers are delaying payment for inaccurate claim submission.

  1. Time in business

Note that the longer a private ambulance company is in business, the more profitable they become. As regular clients spread the word of their satisfaction with your business, it becomes easier to get more new clients. Insurance rates will also tend to fall as you establish yourself as a responsible business with the right practices in place to reduce risk, and thus have fewer claims.

  1. Additional tools and overhead costs

Have it in mind that expertise in various types of medical transportation scheduling software can also benefit your company. The more knowledge of the technological business side you have, the easier it will be for you to set up relationships with your potential partners.

In addition, insurance, payroll, vehicle maintenance, fuel, building, utility, and software costs will impact each company differently. Generally, as a fleet adds more vehicles, its overall overhead per vehicle drops, allowing the business to become more and more profitable as it grows.

  1. Front Desk Collection Rate

Simply put, the front desk collection rate is the percentage of collections gathered by the front desk from patients before or after using the company services. This number is typically a reflection of the overall collection percentage per ride. Emergency ambulance service provided without an exclusive contract is usually billed to the patient.

The ambulance company will be assigned calls depending upon their availability, but are normally required to meet some minimum availability percentage to be eligible. In this case, the company is expecting that the revenue received from patients that pay will offset the cost of providing service to those that do not.

  1. First-pass Resolution Rates

The first-pass resolution rate is the percentage of claims that are paid without resubmission. Note that this number is calculated as the total number of claims paid (by payers or transferred to the client’s responsibility), divided by the total number of claims submitted. First-pass rates can vary depending on the payer but can be a clear indicator of coding and documentation inaccuracy.

However rejected claims not only cost time and money for biller resubmission, but they also affect cash flow and cost providers money. A high first-pass resolution rate means claims are being documented, coded, and billed correctly the first time. When it comes to claims submission, “Get it right the first time” should be the keyword.

  1. Kickbacks from hospitals

Although not directly, because it is against federal law in the US. However, there is a special exemption for restocking the ambulances for the stuff they use from the hospital, and paramedics do require physicians to approve and oversee their written medical protocols they follow and to consult with them in real-time for complex cases, and quite often that service is provided for free by the hospital.

In conclusion, monitoring these KPIs can help maintain the financial health of private ambulance companies, but they are just a few of the many data points that can indicate the success and profits of a private ambulance company. Data is only valuable if viewed on a consistent basis, the meaning behind the numbers is correctly interpreted, and the necessary actions are taken to correct any issues and get revenue on track.

Profit Margin of a Private Ambulance Company

Typically, the fee structure of private ambulance companies includes a base rate, charges for mileage, additional care, night and weekend charges, and others. The bill may also depend on the category. For instance, for Basic Life Support (emergency or non-emergency), the rate may be $400 plus $6.50 per additional mile rate.

Other categories may include Advance Life Support, Level 1 at $450 plus $6.50 per mile rate while an Advanced Life Support Level 2 may rate $875 plus $6.50 per mile rate. A Specialty Care Transport may be charged $450 plus a $6.50 per mile rate.

All in all, private ambulance company owners can expect to earn between $40,000 and $60,000 annually, this is the average profit margin for private ambulance companies per year. Although there aren’t standard rates set up across the U.S. and costs of the private ambulance services vary from provider to provider. It tends to depend on the variables contracts, the number of hospitals, population, how many nursing homes, sports arenas the company can service.

However, a small private company (1 or 2 ambulances) may make $750,000 annually, while a larger company (20–30 vehicles) can make $20 million. But after their overhead expenses, that figure drops dramatically due to the high cost of equipment, computers, supplies, maintenance, facilities, bad debt, ongoing training, payroll, etc. It basically depends on the size of the municipality, how much competition the company is facing too.

Private ambulance service providers barely break even. It is a bad business to be in. Medicare covers the cost of the actual ambulance call (about $400), but none of the overhead of standing by (which is 60% of the time in the most efficient emergency systems, unlike non-emergency transport where crews can be moving people almost all the time), training, the communications system, etc.

Medicaid pays ¼ of Medicare (about $100). So, private insurance and self-payers get gouged with bills up to $2,000 in order to subsidize the public insurance. But now there has been a 10 percent shift from private to public insurance in the last few years, so they can’t break even anymore. Even so, air ambulance operators are turning profits, according to reports. Air Methods, for instance, had an average annual profit margin of 9.1 percent from 2012 to 2016.

Solomon. O'Chucks