Envision Healthcare finally files for bankruptcy

After long-winded lawsuits with UnitedHealthcare and weeks of speculation, Envision Healthcare, a physician staffing firm, finally announced that it has willingly submitted the documents for bankruptcy under Chapter 11.

The company also announced in its press release that it will be entering into a Restructuring Support Agreement (RSA) with key stakeholders, and the decision was triggered by the fact that the company now has about $7 billion in outstanding debt. Stakeholders are backed by more than half of its $7.7 billion debt.

Costly legal battles against health insurance giant UnitedHealthcare, labor challenges, and the firm’s inability to cope with reforms to the medical billing system have also influenced the decision.

Under the RSA, a framework will be put into effect to ensure that Envision and AMSURG can establish themselves as separate businesses. Until everything is finalized, however, Envision will continue to operate as normal.

“Envision’s teams play a critical role in the functioning of the U.S. healthcare system,” said Jim Rechtin, Envision Healthcare CEO. “We are grateful to the Envision clinicians, physician partners, and clinical support teammates for their continued commitment to caring for patients when they need it most.”

On the legal front, the firm has been at odds with UnitedHealthcare over the matter of reimbursements for a while now. In early 2022, the insurance company removed Envision as part of its network, citing the fact that rates sought by Envision were well over the market value. This would have meant higher costs for other members of the insurer’s network.

Earlier this year, however, an arbitration panel awarded Envision over $91 million in a case dealing with underpaid claims from between 2017 and 2018. During this time, Envision was still part of UnitedHealthcare’s network, and this judgment marked Envision’s win against the health plan.

This does not mark the end of Envision’s legal troubles, though. Since last September, the firm has been dealing with lawsuits regarding reimbursement for out-of-network claims once the firm was removed from UnitedHealthcare’s network.

On the financial front, Envision has been in trouble after it failed to report its financials before March 31. In addition to this, the firm had also been unable to make its April payment on its interest, which led to a 30-day deadline after which investors would have been able to force the provider into declaring bankruptcy.

Moody’s Investors Service had already predicted bankruptcy or a major restructuring in the firm’s near future when it downgraded Envision’s credit outlook to the lowest possible rating toward the end of last year.

 

About Envision Healthcare:

Envision was bought out by venture capital firm KKR in 2018 for around $5.5 billion. When accounting for debt, this value is raised to approximately $10 billion. The Wall Street Journal, in its report, explained that filing for bankruptcy means that KKR’s entire investment has been wiped out, making it the biggest loss for the venture capital firm in its history.

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