Air Medical Group Negotiates Consent Decree to Resolve FTC’s Competition Concerns

On March 7, 2018, the United States Federal Trade Commission (“FTC”) announced it entered into a settlement agreement with Air Medical Group allowing it to acquire AMR for $2.4 billion.

The two providers of ambulance services agreed to divest inter-facility air ambulance transport services in Hawaii to resolve FTC concerns that their proposed merger would likely harm competition among air ambulance transport services that transfer patients between medical facilities on different Hawaiian islands.

According to the FTC’s complaint, Air Medical Group and AMR Holdco are the only two providers of air ambulance services in Hawaii that transport patients between medical facilities on different islands.  Patients depend on these services when they need medical or surgical care that is not available in their local communities, according to the complaint.  Without a remedy, the acquisition is likely to lessen competition and will tend to create a monopoly in the market for inter-facility air ambulance services in Hawaii, in violation of U.S. antitrust laws.  The merger as proposed would also increase the likelihood that consumers, third-party payers, or government health care providers would be forced to pay higher prices or experience a degradation in service or quality, according to the complaint.  The FTC alleges that new entry into the market for inter-facility air ambulance transport services, or expansion by existing firms in adjacent businesses would not be likely, timely, and sufficient to restore the lost competition without a remedy.

Under the terms of the proposed settlement, AMR Holdco will sell its inter-facility air ambulance transport services business and supporting assets to AIRMD, LLC, which does business as LifeTeam.  AMR Holdco will divest to LifeTeam the four fixed-wing aircraft it uses for inter-island air ambulance transport services, support LifeTeam’s application for a Certificate of Need with the State of Hawaii to operate ground ambulances, and offer LifeTeam the option to purchase up to four ground ambulances to support its air ambulance transport services.

AMR Holdco is a wholly-owned subsidiary of Envision Healthcare. LifeTeam is a large, established company that currently operates the FAA-certified aircraft used by AMR Holdco to provide air ambulance transport in Hawaii.  LifeTeam has the experience to manage AMR Holdco’s assets and operations in that state.

The FTC worked closely with the State of Hawaii Department of Attorney General in investigating this matter.  The FTC vote to issue the complaint and accept the proposed consent order for public comment was 2-0.

Observations

The action demonstrates that the FTC will work closely with state AGs to protect competition in narrow local regional healthcare markets.  The FTC action also shows that it continues to block anticompetitive acquisitions that would raise healthcare costs to payors, and ultimately to patients.  In this instance, the deal is allowed to go forward, but only after a divestiture in a local market.  To resolve the competition concern, the FTC accepted a structural and behavioral remedy.

Andre Barlow
(202) 589-1838
abarlow@dbmlawgroup.com