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Envision Healthcare, a physician staffing business backed by the global investment firm KKR, has filed for Chapter 11 bankruptcy. It cited the company's $7.7 billion in debt obligations, declining patient volumes, "flawed" implementation of the No Surprises Act and exclusionary health insurers as reasons for its financial decline in its announcement earlier this week.
Envision is one of the nation's leading medical groups, delivering physician and advanced practice providers through Envision Physician Services. Its AMSURG unit partners with physicians to operate more than 250 ambulatory surgery centers nationwide, specializing in gastroenterology, ophthalmology and orthopedic care. In 2018, KKR invested $5 billion to take Envision private, in a deal valued at $9.9 billion including debt. Last week, The Wall Street Journal reported that an Envision bankruptcy filing would be one of the steepest losses in KKR's history.
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Envision suffered from declining profits amid hurdles from the COVID-19 pandemic and prolonged legal battles with health insurer UnitedHealthcare over payment to Envision clinicians, which caused Envision to lose its in-network status with the insurer in early 2021. In the bankruptcy announcement, Envision again sparred with health insurers without naming UnitedHealthcare specifically, saying Envision has "been proactive and negotiated in good faith on in-network agreements with health insurers" but that its clinicians "do not always get paid for their services when insurers exclude them from their networks."
Related: UnitedHealthcare ordered to pay Envision Healthcare $91M in billing dispute
UnitedHealthcare sued the staffing firm in September, alleging that it overpaid Envision after it exaggerated the complexity of care provided by its clinicians. In April, Envision announced that it was awarded $91 million from an arbitration panel for payment disputes in 2017 and 2018. At the time, Envision CEO Jim Rechtin said it had three outstanding lawsuits against UnitedHealthcare that would take "several more years" to resolve.
Envision also targeted recent regulatory efforts to stop surprise out-of-network bills for patients in its bankruptcy announcement, saying that implementation of the No Surprises Act caused the company to lose "hundreds of millions of dollars" in delayed or reduced payments from insurers.
Envision currently has more than ample cash to continue providing quality care and services and funding ongoing clinical operations without interruption, ABL Advisor reported. The Chapter 11 filing will enable Envision to complete the transactions encompassed in the restructuring support agreement and facilitate opportunities for long-term growth by reducing its debt and strengthening its capital structure.
Envision expects its case, filed in a federal bankruptcy court in Houston, to wrap up within three to four months
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
