June 28, 2002 

Published by ASTNA in Across the Board
Volume 18, Issue 2 - April 2002

Merger of two companies

By JODIE HIGNITE
Louisville Medical Center STATCARE

I had flown for ten year when I heard the rumor that the two very competitive services in the city were going to merge. I was a flight nurse for the "trauma hospital" and very dedicated to my service. We did a lot of scene work and had, in my opinion, a very glamorous job. The thought of consolidating in 1997 was a difficult one to consider. These were highly competitive services with highly competitive vendors. One service concentrated on trauma and bringing patients to the Level 1 trauma center. The second was very good at critical care and cardiac care. Most of their transported patients were admitted to one of the region's premier heart / lung centers and transplant facilities. Although there were two services for the city, each had a specialty with a great reputation.

In the fall of 1997 the consolidation was started. The merger of STATFlight and SKYCARE air medical services formed STATCARE. The goal of the consolidation was to continue to provide quality services to the community while doing so in a more cost-effective manner. Helicopter programs are expensive. As hard as it was to lose the individual established identities, it only made sense to unite and utilize the current resources more efficiently.

Merging the equipment and aircraft was tedious but not difficult. The biggest challenge was the evaluation of the inventories of each program, deciding what we had and then what we needed. Issues that were not often thought of as important within the hospital were now monumental tasks. For example, how did you handle ancillary services such as laundry, pharmacy, and biomedical support? These were much bigger challenges when the FBO (Fixed Base Operator) was away from the hospital. The hospitals that supported the two previous services stepped up to the plate. They were committed to the success of the new merged program and provided support services.

Staff issues were also a concern to the STATCARE board. Staff members from each service had to apply and interview for a position with the new service. The STATCARE management would also be new, and interested parties had to apply and be interviewed. Once the staff was hired, there was a fear that old loyalties would prevail and be a problem. Would these professionals be as supportive of the new program and each other as they were at their previous service? Initially, the schedule for the on-duty crew would consist of flight personnel from each of the original services. This was to hopefully alleviate the possibility of cliques and alliances within the new service. However, once these professionals began to fly together, they realized they weren't so different. Friendships developed quickly, and the feared personnel problems never materialized.

The merger that began in 1997 had been successful. The staff, equipment, communications center, and management were temporarily relocated, and in February of 1998, STATCARE Transport Service was incorporated. In April that same year, STATCARE moved to its current FBO at Bowman Field in Louisville, Kentucky.

Then came the final step in the first phase. Initially, in 1998, both programs were committed to keeping both vendors until their contracts expired in February, 2002. This was not to be an easy task. Due to corporate policies and FAA guidelines, both vendors required secure spaces from which to operate at the new FBO. This involved having separate offices, sleep areas, maintenance spaces and storage facilities. To ensure a smooth and seamless transition, all involved parties had to be cooperative, professional and be willing to make some concessions. Vendor #1 compromised on staff and aircraft. The ship availability was decreased from a 24/7 aircraft to 12/7 schedule. The reduction in availability of that aircraft to a 1/2 ship required a reduction in staff. Unfortunately a mechanic was relieved along with a pilot. Changing the aircraft model resulted in additional cost savings. One of the original programs utilized a Dauphin N2. The decision was made to transition to a Dauphin N model.

Vendor #2 made a commitment to reduce flight hours because STATCARE now had a second ship. This also decreased the vendor's revenue. In addition, a pilot retired during the merger leaving a position available. This vendor hired the pilot released by vendor #1 as the replacement pilot, thus preventing the pilot from losing his job. This was also beneficial to STATCARE as he was already familiar with the area, and the fact that the crews knew him added to the comfort level of this transaction. The first phase of the merger was complete.

In November of 1999, STATCARE had the opportunity to expand its services. The aircraft that was used for the twelve-hour shift was relocated to a satellite base. By satelliting this aircraft we were able to increase volume, making it necessary to have the second ship available twenty-four hours a day, seven days a week. We better employed our resources by using a high fixed-cost aircraft more than twelve hours a day. We also improved customer service because 25% of the transports were from the satellite area. In a business where minutes matter, it was important to get closer to the patient and decrease response time. Finally, we were supporting our sponsoring hospitals' strategic plans. The 95-mile drive was an issue for the crew and pilots, but the schedule was better and the facility was new. Another positive result of increasing aircraft availability was that we needed to employ a second mechanic. We were able to hire the original laid-off mechanic. Now our air medical family was complete. Both vendors continued to work well together and no major issues ensued.

STATCARE continued to have two vendors for a while. The benefits to the new service were numerous. The support services were topnotch and each provided exemplary customer service. They were professional and attentive. Eventually, STATCARE would transition to one vendor. The issue of which vendor remained undecided and the evaluation process was ongoing.

In July of 2001, the contracts for each vendor were expiring. What started three years prior was coming to a close, and the RFP (request for proposal) process started. A pre-bid conference was held that July and eight attendees were present. By the end of August, five vendors presented proposals to STATCARE. Each was evaluated and our current vendors presented the two best proposals. This was very exciting in that our current vendors had been up to the challenge. They had provided great service during the initial phases of the transition and both were equally qualified to continue. During the process, STATCARE evaluated the mission and decided on the aircraft necessary to complete that mission. This was decided after input from the staff, management, and the board of directors.

The current vendors presented their final proposals, including aircraft operations, in January 2002. One considered option was to continue with both vendors. It was an admirable working relationship that had been established and functioned well for nearly four years. It would also allow STATCARE to continue to benefit from the expertise of each of these vendors. However, neither vendor could operate one aircraft as efficiently as two helicopters at one site. All things being equal, with each vendor being highly capable of providing aviation expertise, the decision was to be based strictly on financial considerations.

To date, the transition from two vendors to one is going well. There has been no gloating by the successful vendor staff. In fact, they have been supportive and instrumental in providing information to the other vendor. The second vendor has also been very accommodating. Each vendor's staff is well liked, professional, and a part of our STATCARE family. It would be a huge loss to STATCARE if any of the pilots relocated. All are in good standing and would be greatly missed. By February 2003 it is anticipated that the transition will be complete, but is contingent on the arrival of two new aircraft. Although a work in progress, everyone involved anticipates that it will continue to be seamless.