Revenue Rescue

Revenue Rescue

COMPANIES by Mark Gordon | Managing Editor

Cliff Carothers grounded his corporate career to invest $500,000 in life savings - plus $1.5 million in loans - into a flying ambulance firm. The results have been sky-high success, with more expansion on the horizon.

When a company's customers include a Saudi prince looking to get to the Mayo Clinic, a crochet-loving Boca Raton grandma en route to a New York nursing home and a wealthy American looking to fly to Africa to see his elephant preserve one more time before he dies, it just has to be cool.

And that's just a tiny sampling of the customers at Sarasota-based U.S. Air Ambulance, which provides trips for medical patients and others in a health care crisis. The company also moved 147 patients stuck in New Orleans after Hurricane Katrina and has contracted with the federal government to transport dehydrated and blister-filled Mexican nationals picked up in Arizona back to their home country.

U.S. Air Ambulance President Cliff Carothers, though, does more than cool. The Wharton MBA-educated entrepreneur has brought a business-focused, long-term growth vision to the company he bought eight years ago with $500,000 of his personal savings and three times that amount in loans.

Carothers' first task was to turn the company, then based in Clearwater, from what was essentially a brokerage firm farming out medical trips to other providers into a full service ambulance in the sky - or railroad track or highway, depending on the specific case.

That mission has been successful.

Revenues, which were stuck in the $2 million a year range for several years under the former owners, have grown an average of 30% a year the past two years, from $6 million in 2004 to $8.5 million in 2005 to $10 million last year. The company has also hired about 10 additional people annually over that time and now has 60 employees, 45 of which work part-time as contracted pilots and doctors.

Carothers' long-term plans are even more ambitious, as he's intent on doubling or even tripling the size of the company over the next five years. He wants it to be big enough to be on the buying side of what he predicts will be a consolidation period in the industry, which is fragmented across the country, with about 80 companies doing something similar to U.S. Air Ambulance.

Reaching that point will necessitate getting into new business lines, Carothers says, such as working with cruise ships on training for responding to tragedies and terrorist attacks. The company is also doing more outside of just transporting patients, becoming essentially a bedside concierge for clients and their families between trips.

Says Carothers: "We've gone beyond the scope of a traditional air ambulance company."

Jet set

Traditionally, air ambulance companies have been self-defined: It's a business that flies sick people from here to there, with medical care throughout the trip. The guts of U.S. Air Ambulance, though, are more complicated.

A U.S. Air Ambulance trip actually starts and finishes in a bland room inside a bland office in the edge of a bland business park a mile from exit 205 of Interstate 75. That room serves as the company' central command post - its walls are plastered with maps of the world and white boards with various names and cities.

The boards and maps represent the crux of the company. Since 1990, going back to the previous owners, the company has moved more than 70,000 people across the world, touching down in every continent except Antarctica.

The bulk of those trips are made in Learjets. The company owns one - which costs about $2 million - and leases others from a stable of subcontractors. In a perfect world, Carothers would rather own a fleet of jets to have more control of the process, but so far, he says, the leasing model has been an inexpensive way of reaching as many customers as possible.

Carothers has spent the past five years or so looking for ways to expand the company's flight operations, reasoning that he could easily run things from Sarasota while flying people all over the world. Since 2002, the company has opened bases in Fort Lauderdale, to be close to the Caribbean, where cruise travelers are common clients; in Denver, after buying Air Response, an air ambulance competitor based there; in Raleigh, N.C., to be in between Florida and the populous Northeast; and Tucson, Ariz., to be close to the American-Mexican border.

Through acquisitions and outside investors, Carothers hopes to add even more bases and planes, in places such as Portland, Ore., Dallas, Chicago and New York.

Costly trips

The Sarasota-based command center coordinating all the activity between bases is manned 24 hours a day by a staff of case mangers, some of whom are bilingual. The case managers develop an itinerary, from who will monitor medical and life-supporting machines at the first location to making sure the ambulance is filled with gas to get to the airport to securing a room for the patient if he's heading to another hospital or facility.

The work is time and people sensitive, as the majority of cases revolve around people dealing with issues related to sick or potentially dying loved ones. A case manager will make about 25 calls per case, Carothers says, and spend more hours consoling and reassuring clients and their families. "They are the ones that baby-sit the trip," says Carothers. "There are a lot of handoffs throughout the process."

And those handoffs aren't cheap. For example, a standard U.S. Air Ambulance trip from Naples to New York will cost $15,000 on a Learjet, $12,500 on a prop plane, $8,000 by ground and $7,000 by train.

Little, if any, of the expenses are ever picked up by health insurance providers. That's why Carothers began looking into rail and long-term road transportation modes a few years ago, as the company looked to become the post office of medical transport providers: High costs - as opposed to sleet or rain - normally won't prevent a trip from taking place.

"We try to offer as many options as possible to lower the cost and make the trip more viable," Carothers says. "We'll do whatever we have to do to ensure the best possible outcome."

Capital challenges

Carothers, 46, sounds like a life-long dedicated medical professional when he talks about U.S. Air Ambulance. Maybe he's a doctor, or at least someone with medical training.

No on both counts. Carothers actually grew up with dreams to both go to business school and to run his own company one day. But up until his early 30s, he couldn't afford either goal.

Then, after the birth of his first of four children and at the urging of his wife, Carothers finally applied for and was accepted to the Wharton School of the University of Pennsylvania. The MBA experience was life-altering: Carothers learned many of the crisis management skills and perseverance he uses today on the way to becoming a Palmer Scholar, a spot reserved for students in the top 5% of the graduating class.

At first, Carothers used that experience to move up in his career with The AES Corp., an Arlington, Va.-based publicly traded power generator developer. But after 10 years of promotions and new assignments (read: moving his wife and growing family from town to town) Carothers decided to go for his second goal, owning his own business.

After settling on Florida, Carothers almost parlayed his passion for all-things Disney into a business. He nearly bought a 50-employee company that contracted with the theme park to change light bulbs.

Carothers settled on Sarasota, though, and found out about U.S. Air Ambulance through a business broker. He's invested several million dollars into the company through bank loans, in addition to the $1.5 million he borrowed to help finance the initial deal.

His next financial challenge, he says, will be to recruit venture capital firms, as loaning from banks has finally hit a wall. Says Carothers: "I've gone through every bank and internal lending source I could think off."

BY THE NUMBERS

U.S. Air Ambulance

Year Revenue Growth

2004 $6 million -

2005 $8.5 million 42%

2006 $10 million 18%

Average Annual Growth: 30%

2004 employees: 40

2005 employees: 50

2006 employees: 60

Source: U.S. Air Ambulance

Crisis Management

Entrepreneurs and executives spend a lot of their days in crisis management mode, beyond running the actual business. But at U.S Air Ambulance, a Sarasota-based medical transport company, dealing with crisis situations is standard, as the company's clients and their families tend to be in dire situations.

U.S. Air Ambulance President Cliff Carothers has therefore developed a crisis management playbook that he and his staff of case managers utilize daily. Here are some of the basics, tips that can be used for any business dealing with customers who have a crisis - real or imaginary:

• Stay focused: Empathy and sympathy are good qualities - but not the only skills needed in crisis management. The staff needs to come up with solutions that will give hope, not get caught up in the actual problem;

• Stay humble: Even a case that appears to have been handled flawlessly can be looked at for improvements. Carothers says the staff regularly looks at past cases to see how things can be done better and to see if a problem can be corrected with more training or with procedural changes;

• Stay consistent: Carothers and his case managers created computerized checklists and automated schedules so each case is handled the same. This helps, Carothers says, because "many of our services are life and death situations that require quick and precise reactions."

Executive reading tip

Cliff Carothers, president of U.S. Air Ambulance, says the "E-Myth" by Michael Gerber and "Who Moved My Cheese" by Spencer Johnson were helpful resources as he led the medical patient transport company to 66% revenue growth over the last two years, from $6 million in 2004 to $10 million last year.

The "E-Myth," focuses on showing entrepreneurs how to balance their business personalities and not get dragged down by "the tyranny of routine," while "Who Moved My Cheese" is about dealing with change in work and life.

REVIEW SUMMARY

Business. U.S. Air Ambulance

Industry. Emergency health care

Key. The company, part of a fragmented industry, seeks more organic growth so it can be big enough to grow through acquisitions.