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Is the NEMT Industry a Good Investment?

Last updated on August 3, 2012 by Sozo Staff

With recent changes to the structure of the health care market and the ambulance industry, many potential business owners are questioning whether medical transportation is a wise investment. Whether you’re considering entering the market for the first time or branching out into another area of medical transportation, the NEMT industry may offer a compelling opportunity.

Easy Market Entry

While emergency ambulance services have become increasingly consolidated, the majority of non emergency medical transportation services continue to be provided by independent privately-owned companies serving local markets. In recent years, some of the largest ambulance businesses have begun offering NEMT services. However, with big industry players such as American Medical Response being bought up by private equity firms, the market may be once again shifting in favor of small businesses.

By purchasing an existing medical transportation business for sale, NEMT investors can buy their way into an established location and customer base. While operating any medical transportation business can get expensive due to billing, equipment, and insurance costs, non emergency services are generally more affordable to operate than higher-risk emergency services that require advanced training and technology. In fact, many small NEMT businesses are home-based.

Aging Population

While there will always be steady demand for health care, the NEMT industry is practically guaranteed growing demand. As the nation’s baby boomers enter old age, their needs for medical transportation will continue to grow. According to government statistics released in 2009, the percentage of the U.S. population over 65 is expected to increase from 13 percent to 19 percent over the next two decades.

Because they rely on frequent appointments and are often unable to drive, elderly people make up the vast majority of non emergency medical service clients. In rural regions or small communities not served by an NEMT service, customers are often forced to use more expensive ambulance services. Because non emergency services are typically more affordable, it may not take much convincing to win new client contracts.

Regardless of the economy or the structure of the NEMT industry, customers will continue to exist.

Attractive Industry

When a market is strong, business owners have choices. Investors are always looking for business opportunities that pay off. If circumstances change or you eventually decide the ambulance business isn’t for you, it may be possible to leverage the same factors that drew you to the industry – such as a growing demand and low barriers to entry – to appeal to buyers.

On the contrary, should you decide to expand a successful company, you may choose to acquire or merge with one of the industry’s many small companies. With buyer-side representation from The Tenney Group, clients often find buying an existing business to be the most cost-effective strategy for growth.

Filed Under: Transportation

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