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What Growing Demand for Hospitals & Facilities Means for the Ambulance Business

Last updated on September 24, 2012 by Sozo Staff

While most sectors have put construction on hold in recent years, the health care industry is breaking ground on more projects than ever. More than two-thirds of hospitals had a construction project in the works in 2011 – up 35 percent from the previous year, according to Becker’s Hospital Review. Information firm Reed Construction Data predicts funding for health care construction (like new facilities and expansions of existing facilities) to grow 8 percent in 2012 and 13 percent in 2013.

What makes the health care business different than other industries? It all comes down to demand. Between now and 2020, it’s estimated that the number of Americans over age 65 will grow from 40 million to 55 million. A larger elderly population means a greater need for hospitals, doctors’ offices, outpatient clinics, assisted living facilities, and nursing homes. It also means a greater opportunity for ambulance business owners.

New Contracts

For most medical transportation services, it’s not enough to rely on individual clients. Contracts with hospitals, clinics, and other health care facilities provide a steady and reliable stream of income. As new facilities are built and existing ones expand, medical transportation business owners may be able to diversify their core customer base with new contracts. Expanding opportunities will prove especially helpful for new ambulance companies, which often have difficulty breaking into markets served by one or more rivals.

Strategic Acquisitions

Even if you don’t plan on putting up your ambulance business for sale any time soon, you probably want to ensure a market will exist for your company if and when you do decide to take your chips off the table. As demand for medical transportation increases, so do your exit options.

Buyers of ambulance companies tend to fall into two categories: financial and strategic. Financial buyers are typically individuals looking for a stable income, while strategic buyers tend to be existing companies – including medical facilities – hoping to use an acquisition to achieve their long-run objectives. Strategic buyers are often able and willing to pay more for an ambulance company for sale because they have greater access to capital and are interested in not just current value, but future value. If a hospital, assisted living facility, or physical therapy center believes they can benefit by offering their own transportation services, they may pay handsomely for your business.

Greater Security

At the most basic level, growing demand for health care services serves to reassure business owners that a market will continue to exist for their companies. The last several years have been rough on businesses in every industry, including the medical transportation business. New technologies, rising gas prices, and a growing number of regulations have increased expenses, while consumer caution has taken a toll on earnings. But while consumers may be able to cut back on luxuries, they can’t usually eliminate health care. It’s impossible to predict what the economy will look like in a decade – or even a year from now. However, one thing is certain: people will still need to get from point A to point B. That’s good news for the ambulance business.

Filed Under: Transportation

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