November 15, 2006
Mr. David R. Humphrey
Accounting Branch Chief
Securities and Exchange Commission
100 F Street N.E.
Mail Stop 3561
Washington D.C. 20549
Re: Air Methods Corporation
Form 10-K for the Year Ended December 31, 2005
Commission File Number: 000-16079
Dear Mr. Humphrey,
Pursuant to my conversation with Ms. Kristin Shifflett on Monday, November 6,
2006, below is a summary of our Community Based Transports and Gross Fees for
the nine months ended September 30, 2006 and the fiscal years ended December 31,
2005 and 2004. The following gross fees reconciled to the publicly filed
financial statements after taking into consideration our contractual discounts
with Medicare and Medicaid and some earnouts related to prior acquisitions.
Sept. 30, 2006 Dec. 31, 2005 Dec. 31, 2004
--------------- -------------- --------------
Transports 25,727 31,841 30,159
Gross Fees:
Base Fee $ 232,470,132 $ 240,169,118 $ 169,934,928
Addt'l Mileage Based Fee $ 71,446,271 $ 73,788,565 $ 93,938,215
Medical Supplies $ 952,425 $ 1,544,860 $ 840,392
The Base Fee is our standard charge for the provision of service regardless of
how long the transport takes. It is the minimum charge for medical services
provided, including the use of the aircraft. The Additional Mileage Based Fee
is an additional charge for the medical care provided by our trauma nurses and
paramedics during the time of transport. Medical Supplies relate to consumables
used during the patient transport. Included in Medical Supplies would be
oxygen, medications, bandages, etc.
Please note that the rates for the Gross Fees are set by Air Methods and are not
subject to regulation. We have total flexibility on how much we charge for the
Base Fee and the
Additional Mileage Based Fee components. If we desired, our entire bill could
be represented by just a Fee. Our Gross Fees are designed to cover all of our
operational and corporate costs. The decision as to how we describe services in
our billing is ours, and in essence is substantively for the provision of
emergency medical services. It would be incorrect to associate the Additional
Mileage Based Fee solely with the transportation component of our revenue.
Consequently, we respectively point out to the staff that we believe that
unbundling our revenue at this time would be arbitrary as these are inseparable
components and would not be meaningful.
The Health Care Guide clearly includes 'emergency care facilities' and
'ambulatory care organizations' within its scope. We respectfully advise the
staff that we do not believe that the provision of medical services while
transporting should be viewed any differently than provision of medical services
in an emergency room or ambulatory care facility which do not separately
distinguish "facility" charges from "care" charges. We make significant
investments in each of our aircraft units (1) to outfit the interiors of our
aircraft with medical equipment, including medical monitoring, oxygen, and
patient loading systems and (2) to train of all of our medical personnel and
flight staff to provide our medical/life support services. Accordingly, we
believe that approximately ninety-eight percent of our revenue is derived from
the provision of emergency medical care services. In this regard, we point out
that our primary sources of revenues are derived from billings for the transport
of medical professionals (in our specially equipped helicopters) to locations
where they provide emergency medical assistance to accident victims at the
accident site and while in transport to hospital facilities. We also provide
emergency medical transports for critically ill or injured patients between
hospital facilities and provide life support/medical services during transport.
We believe our services and our equipment are very similar to those services and
equipment used in a typical emergency room and, accordingly, we do not believe
that there should be any different accounting rules for us as opposed to a
hospital.
We would appreciate the opportunity to discuss this with you further, if
necessary, at your convenience.
* * * * * * * * * * * * * * * * * * * * * *
As part of this response, Air Methods acknowledges that it is responsible for
the adequacy and accuracy of the disclosure in the filings, that the staff
comments or changes to disclosure in response to staff comments in the filings
reviewed by the staff do not foreclose the Commission from taking any action
with respect to the filings, and Air Methods may not assert staff comments as a
defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
Please contact me at 303-792-7400 if you should have any further questions or
comments.
Sincerely,
Trent J. Carman
Chief Financial Officer
Air Methods Corporation