Non emergency medical transportation business appears to be one of the most recession proof industries I believe one can enter right now.
I think a valid argument can be made that relatively speaking, if you’re going to enter the transportation business, non emergency medical transportation business may be the most recession proof business you can enter into because it offers a “perfect storm” of that sweet and loving government money pouring in, while simultaneously our country’s population is aging (over 10,000 people a day, yes a day, are entering retirement age). Adding to the steady flow of current and future clients is the statistic of more than one in ten seniors are no longer driving.
Furthermore, I think we can even drop the “transportation” requirement part and simply state NEMT is likely in fast-growth mode, and recession or no recession, business and opportunity is and will continue to grow for the foreseeable future. In fact, if I was (younger) and/or wanting to start a business, this is the one I would pick. There are few other opportunities where someone can buy a van with a wheelchair lift and be in business in under 90 days. How many other businesses can you go from zero to making money in under 90 days, and not have it be a “get rich quick YouTube ad?” In most jurisdictions, a standard driver’s license is all the licensing that’s required.
With real-life income levels of $30 per hour and higher, it’s a great way to make an honest living without spending $200,000 in college and lost opportunity costs getting a four year degree. Not that I have anything against education. My wife has a Master’s degree, and I’m less than a year away from a doctorate, so my family believes in education. With three sons we also encourage a few things too. Including the Japanese expression for “goodbye” called “gannbatte” which translates into “do your best” (have to love how the Japanese culture always promotes success). The second expression my sons always hear from me is Kaizen, another Japanese expression that translates into “continuous improvement,” so you know I’m not against education. That said, a formal college education isn’t for everyone, and it really shouldn’t be.
You don’t need to be an EMT to provide non-emergency medical transportation service…
Many people ask what’s required in terms of medical or life saving training and the answer is usually nothing, nodda, zero. The ability to save someone’s life isn’t required because it’s not an emergency type of service. This is transportation of people who simply are no longer driving (usually), albeit like everyone, need to get to the doctor somehow from time to time. It’s likely highly intuitive to you the frequency of trips to the doctor increase as people age beyond retirement age. While CPR isn’t required, one component for any truly successful business owner is to have a high regard and respect for their clients.
If you don’t value and respect your clients, regardless of your business (ok, maybe some government workers don’t have to respect everyone they deal with and still keep their job), if an owner doesn’t appreciate and place a high value on their clients, they will migrate to other service providers. The free market is one of the magic wands increasing all of our standard of living. The same is true even in recession-proof industries too.
That’s why the non-emergency medical transportation industry is so exciting to me. It’s a great way to give back and help others, especially those in our society that are in their golden years and also so vulnerable and in need of caring and responsible people to help them obtain safe mobility to get out of the house and seek the medical care they require to live as high of quality of life as possible.
Circling back to why NEMT is recession proof in my estimation, is the fact that Federal rulings all but require states to pay for the transportation service. That means to the new business owner that they’re not dependent on seniors having to choose between paying their electric bill or taking a trip to see their doctor. With the government footing the bill, it’s no longer a consideration.
Take non emergency medical transportation care in Texas for example. According to the Texas Medicaid Medical Transportation Program website at the time of writing, the following qualify for government transportation. And by transportation, I mean trips not only to the doctor, albeit also to the dentist, drug store, or other covered health care services, including to neighboring states of Louisiana, Arkansas, Oklahoma, and New Mexico locations as appropriate.
So far, I’ve only discussed seniors, however, NEMT doesn’t only apply to seniors. Beyond private paying clients of all age groups, Medicaid may pay for the transportation of children and relatively young disabled adults too. In short, the availability of clients spans a wide spectrum of possible clients for you to transport.
What’s the downside?
For one, you have to get relatively expensive insurance. That’s where I play a part of course, albeit I’ll discuss my role in other posts in greater detail. There are three or four types of insurance that are in appropriate. The first is of course commercial auto insurance that is specifically for NEMT. This isn’t the same coverage you may have for your personal vehicle. Personal auto generally has an exclusion for what’s known as “business pursuits.” Business pursuits doesn’t mean exactly what many people think it might mean. You don’t have to own a business to have business pursuits. Take for example a Pizza delivery person. This person is often in high school or college and sometimes driving their parent’s car. The simple act of moving pizzas from the oven to the front door is a business pursuit within this context because the transportation is in pursuit of financial gain, and not for commuting or for pleasure.
Personal auto policies have to exclude business pursuits to keep the rates as low as they are (ok, I get that many don’t think their rates are low, and you won’t get a dispute from me, albeit I’m referring to personal auto on a relative basis compared to commercial auto within the transportation of people industry. Simply put, the risk is much higher for someone driving eight hours a day than someone who drives two or less. That should make sense, and if it doesn’t feel free to ask me for greater clarity.
Also, commuting from work and back is often a solo event. On the other hand, by definition, NEMT means there’s a passenger (and often more than one) in the vehicle for the six to eight hours a day as the NEMT van navigates through busy streets.
Anyway, commercial auto for NEMT is where you’re going to experience the highest insurance quote of them all almost always. For example (and by the time you read this, it could be greatly outdated, so take the publish date into consideration) a one unit start-up operator in Michigan with a clean record may be nearing $20,000 a year for NEMT commercial auto insurance premium, while the same start up may cost $4,000 or less in Texas. In Wisconsin, the same operator may be about half at $10-12,000 per year for insurance premium. So, where you’re located makes a HUGE difference in your cost. Places like Indiana, North and South Carolina, and Colorado generally fall somewhere in the middle. Illinois is closer to Michigan, and that depends greatly on how close to Chicago the operation is. The upside is most or all of your competition are in the same boat, having to pay the same relative insurance premium, so the billed revenue and amount of business will vary depending on the state and the costs associated.
The next key coverage is general liability. Do not, I repeat, do NOT get the wrong policy. Many NEMT general liability insurance policies have exclusions for entry and exit of vehicles. These types of insurance policies shouldn’t be sold to many people who unknowingly buy them. Most of my clients (willing to bet lunch over 98%) never read their policy unless they’ve had an issue. Now that could be self filtering because my clients trust I do know what I’m offering them, so I’ll make the same bet for other business owners. I bet at least 90% have never read their insurance policy and all its forms included from front to back, regardless of how much they’ve paid for it. People will spend hours and hours looking at a car or cell phone they want and do a million comparisons, but when it comes to non medical transportation insurance polices often coming in at (only) 50 or more pages, there simply isn’t time allocated to reading and learning it. You can get a policy excluding entry and exit for less than half the cost of one that provides entry and exit from the NEMT vehicle. That’s awfully tempting for someone who doesn’t know the difference. Many agents (I want to say most, however, for the sake of giving the benefit to the doubt, I’ll stick with “many”) don’t know neither because they don’t work in this industry enough to know.
You’ll want to budget a starting premium of about $2500 per year for NEMT general liability and then add about $1500 per vehicle per year as a start up.
The other types of coverage include professional liability and workers’ comp. Since many start ups are one man or one lady bands, workers’ comp for NEMT service doesn’t usually apply as appropriate. Professional liability depends on the situation. For some, it’s recommended, and for others, not as much. The thing with insurance is you can NOT insure for everything. If you try, the only person who makes money from your business is the insurance agent.
Believe it or not, there’s an upside to having high insurance costs. Granted, it’s not a big one, albeit as an agent who talks to new NEMT business owners and people considering the business, it’s one for sure. The simple fact is, the high cost keeps many out of the industry so those that enter have less competition. My impression is the cost scares many people from pulling the trigger. This makes a lot of sense when you consider that someone can make a lot more money in non emergency medical transportation than delivering sub sandwiches, and yet more people apply to delivery fast food than go into the people moving business. In a sense, the high cost creating a barrier of entry helps to keep those already in the business making money. Something to consider as you decide if the industry is right for you.
Can self-driving cars burst the NEMT bubble?
No, and I’ll say why with a caveat. First the caveat. As we all know, technology keeps moving forward and there’s zero reason to think it’s about to stop. Growing up the thought of everyone having the world’s information right at your fingertips in your pocket (almost) regardless of where you go was at best a dream. I do actually recall having a conversation with an older educated adult when I was in high school how I believed computers would be able to correct my spelling and grammar someday. He kinda shook his head in disbelief and said computers were great at numbers because that’s how they’re designed, but we’ll never see computers correcting spelling, much less grammar, in part because it’s (the English language) so complex. I can assure you and him that my computer has made many suggestive changes to both grammar and spelling as I’ve wrote this. While it’s true I didn’t take all the suggestions, it’s also equally true I took most of them….
So yes, robots are likely to bridge the gap between the entry and exit of vehicles that now require human assistance. However, (hopefully I don’t sound too much like Gus, my computer spelling doubter, here), albeit I don’t believe it’s going to happen in the next twenty years. Maybe as early as thirty we could see it, albeit you have to remember that for robots to work in this situation, it has to work over 95% of the time, or a human is required. It’s not like “some” people simply get left at home because we want self-driving cars performing NEMT.
20 years is a long long long time. Because so much is likely to change in the next 20 plus years, it’s crazy to predict that far out. Plus, if you’re already positioned as a leader with contracts in NEMT it makes sense that you would be the one buying the robots and self-driving cars and the net net result is a lowering of cost for the government and/or passengers, but you’ll still be there (with a bunch of self driving cars and robots) performing the service. I think it’s a reasonable argument to take a position of those already in the business now will have the best opportunity to transition to using automation. That said, I stand tall and strong on my contention the business is recession proof for those entering now and willing to change with the times.
What happens when the baby boomers die off? Won’t the business retract then?
First thought is that’s a long ways away. It doesn’t mean it won’t ever happen. So, it’s a valid thought, however, it’s far enough into the future that one will likely have to look at the current landscape they find themselves standing on. Back to using Japan as an example, the country has more adults wearing “diapers” than babies. What that means to a NEMT business owner is the availability (supply) of people to drive relative to the need (demand) for providers should, until something changes, continue to be super great for as far out as anyone can reasonably predict. It’s not a guarantee of riches to be sure, however, what other business looks nearly as attractive for people looking to have something of their own? I propose the options are few and far between that exceed the risk vs reward possibility of NEMT business right now.