Six months after filing for bankruptcy, the physician staffing firm Envision Healthcare has bounced back after extensive restructuring that cut the company’s debt by more than 70%.
The biggest change, according to a press release from the company, is that Envision is no longer linked to AMSURG, its ambulatory surgery center, because the health system reorganized by splitting into two separate entities.
An AMSURG press release from last month stated that the two “will remain strong partners,” despite having separate leadership and new equity owner groups.
“Now that our financial restructuring has been completed successfully, we are driving Envision’s future growth from a position of stability and strength,” Envision CEO Jim Rechtin said in the press release, noting that the company has “significantly less debt” and a “strong operating model.”
Nashville, Tennessee-based Envision is backed by private equity, acquired by Kohlberg Kravis Roberts, or KKR, in 2018. When Envision announced in a May press release that it was filing for bankruptcy with a voluntary petition for reorganization, some of the reasons cited included decreasing patient volumes as COVID-19 lessened, reimbursement issues, and what they called “flawed implementation” of the No Surprises Act (NSA), which aims to protect patients from surprise medical bills.
Of the NSA-eligible claims submitted through the independent dispute resolution process, “only a small fraction has been resolved, and of those that were resolved, many remain unpaid by health insurers,” Envision said, noting that these delays have caused “hundreds of millions of dollars in underpayments and delayed payments from all health insurance plans.”
Adam Brown, MD, MBA, an emergency medicine physician and business leader, told MedPage Today that the recent restructuring relieved Envision of the bulk of its debts, though he cautioned that the company isn’t out of the woods yet.
“Significant financial headwinds exist for Envision and most hospital-based healthcare service providers,” he said, citing ongoing challenges including “continued wage inflation pressures and legal challenges,” as well as “Medicaid disenrollments, reimbursement declines from private payers, CMS rate cuts for physicians next year, and the ever-present drag of the poorly administered, legal-challenged, and backlogged No Surprises Act.”
“While Envision may have gained some much-needed breathing room in the short term, these challenges necessitate ongoing strategic realignment,” Brown added.
When Envision first announced its bankruptcy, Brown wrote about how these issues aren’t new — and aren’t unique to Envision. Just a few months after Envision filed for bankruptcy, American Physician Partners (APP), another physician staffing firm, also folded.
APP is also backed by private equity, being partially owned by Brown Brothers Harriman & Co., along with member physicians and management. When APP announced its closure in July, the American College of Emergency Physicians said it was “deeply concerned” about the event and the “impact this disruption will have on thousands of emergency physicians, their families, patients, and communities.”