There has been growing criticism in recent years that the U.S. air medical system has too many aircraft, a factor that drives excessive use of patient air transport when ground transportation would be more cost effective and, in some cases, even more time effective.

Now the CEO of the nation’s largest air medical provider is weighing in on the topic. On a recent conference call with stock analysts, Air Methods CEO Aaron Todd appears to agree with his industry’s critics–up to a point.

 “I don’t mean to be glib, but a lack of efficiency in the healthcare system of the United States is hardly new,” Todd said, noting that this apparent inefficiency actually guarantees patients better access to aircraft. “The U.S. air medical fleet has doubled in the last 10-plus years, and we estimate that 82 million more Americans now have access to critical emergency air medical transport services, which allow them to access a high level of care–level I, level II trauma centers–within the golden one hour.”

He continued, “A helicopter that used to fly two patient flights per day in this country is now averaging only one flight per day, and there’s no question that this has dramatically increased the cost per patient transported. But on the other hand, 82 million more Americans now have access to high-end healthcare for critically ill and injured circumstances within that critical golden hour who couldn’t before the fleet expanded.”

Todd attributes this apparent over-saturation to market forces: “It is an ongoing struggle between access and affordability. Air Methods never adds bases where we are uninvited. In some cases we are adding bases a little reluctantly, but we know that if we don’t respond to that community’s desire for closer services, our competition will. Fewer…Americans now have access to commercial insurance because of the lower labor participation rate, so fewer and fewer patients are paying higher and higher charges to facilitate this expanded access. We’re just responding to market demands.”

 “Do we need 900 air medical helicopters to serve this country? I’d say probably not; maybe 500 or 600 could do well, but it’s an open market.”

U.S. courts have ruled that air ambulances are governed by the federal Airline Deregulation Act and therefore can be added in any amount to any market, even if it does not make economic sense. Ground ambulances can be added to markets only if individual communities or healthcare providers demonstrate a “certificate of need” to their state health departments. While air ambulance companies have sought to cut costs in recent years by consolidating operations and switching to single-engine helicopters and single-engine turboprop airplanes wherever possible, these measures have not offset the elevated average fixed costs generated by lower flight frequencies per air medical aircraft as heightened competition has driven expansion of the fleet.

This changed business model has dragged down margins and stock values at most air medical providers. Air Methods has seen the value of its stock cut almost in half in the last 18 months and at least one large institutional shareholder, Voce Capital, which owns 4.9 percent of Air Methods, is agitating for the company to be sold. This may in turn explain why Air Methods has amassed a $400 million credit line, to possibly buy out a competitor and thereby shrink the market.