REACH's next mission
Published: Sunday, December 16, 2012 at 4:01 a.m.
Last Modified: Sunday, December 16, 2012 at 8:31 a.m.
Five flat-screen monitors towered above a dispatcher at REACH Air Medical Services in Santa Rosa as she tracked dozens of calls for emergency medical trips throughout the region.
A clock on her desk read "Texas time" and others blinked the hour in the Mountain and Central time zones, a sign of the company's growing role in the business of transporting patients in helicopters and airplanes to distant hospitals.
With its acquisition this month by Bain Capital subsidiary Air Medical Group Holdings, the largest air medical transport company in the world, REACH has become part of a growing empire.
Local executives are hoping the influx of cash from Air Medical Group will enable them to replace aging equipment and upgrade their fleet of aircraft, which they couldn't afford to do under local ownership.
"We got to a point where we believed that to ensure the success of the company in the future, we needed an owner that could provide more resources," said Sean Russell, a 21-year veteran at REACH who was named president after the sale.
Enter Bain Capital, the private equity giant founded by Republican presidential candidate Mitt Romney. Though Romney left the firm about a decade ago, Bain became the focus of a fiery debate during the 2012 campaign.
Supporters pointed to its successful investments, saying Bain helped turn around struggling companies and created jobs. Critics pointed to its failures, depicting it as a corporate raider that got rich by plundering weak companies and slashing jobs.
Bain was a natural suitor when REACH — short for Redwood Empire Air Care Helicopter — began looking for a buyer eight months ago. The Boston investment firm had quickly become the largest player in the air ambulance business, acquiring Air Medical Group Holdings in 2010 for about $1 billion, according to a Dow Jones report.
REACH's board of directors wanted a buyer that would enable the company to improve without sacrificing the level of care it provides, Russell said. While narrowing the field of suitors, REACH executives spoke with representatives from other medical companies bought by Bain and liked what they heard.
"They have very much appreciated that Bain has a strong investment in health care," Russell said. "There were very minimal to no changes on the negative side."
Among the medical companies it has acquired, Bain is regarded as experienced in the medical field, said Greg Taylor, director of clinical services for REACH.
"A lot of the private equity groups don't have that knowledge, and you have to explain everything," Taylor said.
And it has plenty of resources. Air Medical Group borrowed $245 million to acquire REACH and upgrade its equipment, Russell confirmed. He is not concerned that the level of debt could lead to pressure to cut costs.
"The budget goals set forth for us are easily attainable," said Russell, who started at REACH as a flight paramedic in 1991.
As part of the deal, former CEO Jim Adams stepped out of his role at REACH and took on a new role at the parent company.
Altogether, seven of the company's 400 employees lost their jobs and four were relocated. The affected employees received two months' notice and three to six months of severance pay. Most of those positions were in roles that duplicated those in other parts of the company, such as finance, accounting, billing, marketing and human resources.
When combined with the elimination of unfilled positions, staff reductions have amounted to just 1.5 percent since the deal was announced earlier this month.
"There's always apprehension when you bring on new owners, but I've been really impressed with how the staff is taking this change," Russell said.
Air Medical Group, the parent company, now owns five subsidiaries: Air Evac Lifeteam of West Plains, Mo.; Med-Trans Corp. of Dallas; and EagleMed of Wichita, Kan., as well as REACH and Cal-Ore, the Oregon company REACH acquired a year ago.
The expanded footprint enabled REACH to boost its membership program, in which residents of rural areas pay around $50 a year for emergency helicopter transportation benefits. The cost will stay the same, but members will benefit from expanded geographic coverage, so if they're in Missouri, for example, they can take advantage of their membership there.
REACH will also benefit from the buying power of being part of a large company. For example, jet fuel costs about $6 a gallon, but will be cheaper when purchased in bulk by Air Medical Group for REACH and its sister companies.
"Helicopters drink a lot of jet fuel," said Vicky Spediacci, director of operations. "Sixty gallons an hour."
It also will benefit from bulk discounts on parts and maintenance for its fleet.
"When aircraft go down for maintenance, we wait for parts from Germany," Russell said. "Our parent company has set up parts distribution sites ... so that really excites us."
Those savings can be funneled into upgrades. For example, the company's Agusta helicopter is getting older, and managers want to transition to a newer model. Upgrading the fleet may enable REACH to transport larger teams of doctors with patients, which hospitals are requesting more frequently.
REACH, with 21 aircraft, mostly helicopters, has grown as hospital groups have concentrated specialists in central locations, with far-flung medical centers handling general medical care.
"In the last three years we've grown quite a bit," Russell said. "We probably could grow three or four times what we're growing. It's definitely taken off."
Since its formation by Memorial Hospital emergency room Dr. John McDonald in 1987, REACH has transported more than 55,000 patients, many of whom live in remote areas far from hospitals.
As it grows, executives say they'll provide the same commitment to service that McDonald instilled as a company value. A wall at the company's headquarters decorated with photos and stories is dedicated to McDonald, who died in the crash of a rented plane in 2000.
Taylor, the director of clinical services, spent about two decades working at REACH and appreciates the culture instilled by McDonald.
"I've never found any place else in emergency services that had a collection of people like that," Taylor said. "He was no bones about it. Do whatever you need to do to take care of that patient."
The company's dedication to those values will not change under the new owners, Russell said.
"We don't believe anything will change in the approach to the way we care for them (patients)," he said. "My hope is that they will just see an improved service. We are proud of the way we're doing things, and we're not planning to change."
(You can reach Staff Writer Cathy Bussewitz at 521-5276 or firstname.lastname@example.org.)
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