REACH air ambulance buys Sacramento-area competitor CALSTAR

REACH Air Medical Services has acquired a nonprofit air ambulance service based out of the Sacramento area.

REACH Medical Holdings, the holding company for the emergency air transport service, has bought California Shock Trauma Air Rescue, more commonly known as CALSTAR, the companies announced on Thursday. Financial terms were not disclosed.

CALSTAR, located in McClellan in Sacramento County, will be turned into a limited liability company and will operate as CALSTAR Air Medical Services. REACH said the purchase price for acquiring CALSTAR will go to fund a new nonprofit foundation “to benefit the public,” given that there were no owners to cash out on the deal. Details about the foundation will be released at a later time.

CALSTAR will join Santa Rosa-based REACH Air Medical services and Cal-Ore Life Flight under the corporate umbrella of their holding company, REACH Medical Holdings. It’s part of Air Medical Group Holdings, one the largest air medical firms in the country. Powerhouse investment firm KKR owns Air Medical Group.

The companies said in a statement that “the goal is to maintain current operations,” though no other decisions regarding base locations or staffing of their fleets have been made.

CALSTAR CEO Lynn Malmstrom and two of his top lieutenants will leave within the next year, after helping with the sale. The company, founded in 1984, has 225 employees and 14 aircrafts.

CALSTAR operates in Northern California with nine bases, including one in Ukiah. REACH and CALSTAR have historically provided backup coverage for each other around Lake and Mendocino counties.

In an interview, Malmstrom said it would be tough for CALSTAR to survive, especially as reimbursement rates for government programs such as Medicare provide funding that is greatly below the cost of providing the services ­- as much as 70 percent. Private insurers also are starting to balk at the rates they pay for air medical services.

“There is a lot of pressure on this level right now,” Malmstrom said.

REACH has been headquartered in Santa Rosa since its founding in 1987 by physician John L. McDonald Jr.

Its holding company has 40 rotor and fixed-wing aircraft at more than 30 bases in California, Oregon, Nevada, Wyoming, Montana and Colorado. It also has bases affiliated with hospitals in Texas. About 600 people work for the company.

You can reach Staff Writer Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com. On Twitter ?@BillSwindell.