Envision is the first

[Tenk]

KKR-backed Envision Healthcare files for bankruptcy

KKR & Co Inc-backed Envision Healthcare Corp and its wholly owned subsidiaries filed for Chapter 11 bankruptcy protection on Monday.

www.reuters.com

Here we go!

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[RustedFox]

Yeah; but they're not snuffed out. They're "reorganizing to continue".

Continue stealing money and expanding corporate bloat.

My site (along with what seems to be like the whole division, but don't ask me for specifics) is now under a different name altogether under HCA.

 

[emergentmd]

I would be interested how this plays out. I think I know what will happen but with expensive money, I have no idea if there will be a white knight coming after they clear debt. Physician management without any true ownership is just not the money cow that VC will want to put their money in.

 

[bravotwozero]

Sounds like a nothingburger to me

 

[Tenk]

Sounds like a nothingburger to me

Na it’s good. Their crappy CMG staffing methods clearly don’t work and generate any profit. Thus, if PE actually wants to profit they have to either cut costs further or get out of EM. I am sure they will try to cut further but we’ll see, maybe people will wake up.

 

[namethatsmell]

Na it’s good. Their crappy CMG staffing methods clearly don’t work and generate any profit. Thus, if PE actually wants to profit they have to either cut costs further or get out of EM. I am sure they will try to cut further but we’ll see, maybe people will wake up.

Exactly. Status quo of them humming along is not good for docs. Them declaring bankruptcy is a potential boon/opportunity for pit docs.

 

[FlaminHotER]

Envision be like

Redirect Notice

 

[FlaminHotER]

Dang it

Can some one help out with gif lol

 

[Tenk]

Dang it

Can some one help out with gif lol

A Naked Gun reference? Anytime.

 

[FlaminHotER]

View attachment 371477
A Naked Gun reference? Anytime.

Thanks!

 

[FlaminHotER]

I think envision will do the typical corporate speak and jargon non sense

Behind the scenes the puppeteers are moving around debt and asserts to gut the operations and squeeze every last drop of profit left before they abandon ship

Just like what happened to K-mart, Sears, Radio shack, Toys R Us, etc.

The writing is on the all

 

[FlaminHotER]

Just read AAEM will continue their court case against envision

Good!

ER Doctors Vow to Pursue Case Against Envision Despite Bankruptcy - California Healthline

The lawyer for an emergency physicians group says its lawsuit against Envision Healthcare should be allowed to proceed even though the company has filed for Chapter 11 protection.

californiahealthline-org.cdn.ampproject.org

 

[scummie]

I was wondering why I was getting paid a few days early….you’re telling me it wasn’t out of the goodness of their hearts???!

 

[CajunMedic]

I think envision will do the typical corporate speak and jargon non sense

Behind the scenes the puppeteers are moving around debt and asserts to gut the operations and squeeze every last drop of profit left before they abandon ship

Yup. Got this in the email today. Had a W2 per diem gig at an Envision site that sent me a contract addendum for a raise, AFTER they sent me a letter telling me they didn't need me anymore and my contract would expire.

Dear Clinician Colleagues: I want to reach out about the Chapter 11 announcement and what it means for both you and your care teams. Envision Healthcare Corporation and certain of its subsidiaries have taken an important step by filing voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The reorganization will allow Envision to 1) reduce its debt, 2) help ensure its continued investment in high-quality care and services that you deliver to our hospital partners and patients, and 3) strengthen its capital structure to support our care models. While it’s understandable this news may cause you concern, it is very important that you understand that Envision is not going out of business and will be entering this restructuring with plenty of cash to fund ongoing operations. In other words, we have the financial resources to continue to operate in the ordinary course through the Chapter 11 process. We expect no changes in the way you are paid or receive your benefits because of this. We are seeking court authorization to continue to pay clinicians’ and teammates’ wages, salaries, and health and welfare benefits as usual. The court typically approves this in the first few days after the filing. Continued normal wages also apply to locums and independent contractors. Some other key things to keep in mind: Patient care stays the same and remains at the center of what we do The focus on clinician recruitment, staffing and retention will remain the same Malpractice insurance coverage for clinicians doesn’t change, including tail coverage We still pay our bills to vendors, suppliers, and others Our top priority is to ensure that you are not impacted, your team remains stable, and there are no disruptions in your partnership with the hospitals in delivering care. Once we emerge from bankruptcy, both Envision and AMSURG will be under new and separate ownership, comprised of current lenders rather than KKR. We will be developing a more detailed plan to identify the support needs of the two companies coming out of the restructuring process. But in general, the teammates who support the medical group today will stay with Envision and continue in their current capacities. We expect the anesthesia services our medical group provides to some AMSURG surgery centers will continue as usual. We recognize you will have other questions, so we have included FAQs below. As a reminder, there are several places you can get additional information: You can email your questions to [email protected]. This email address is not for just HR questions, rather will act as a centralized question triage center for all topics with teammates on hand to help provide and track down answers. We also have a dedicated website where information is available at https://www.envisionhealthfuture.com/ for our teams, hospital partners, vendors and the public. We will also send regular updates via email through a newsletter titled Transition Edition to bring you news as we transition from this announcement to our emergence from Chapter 11. Townhalls will continue and updates will be provided. Please join when you can if it doesn’t interrupt patient care. CLICK TO DOWNLOAD FAQS

Throughout the Chapter 11 process, our plan is to provide you with the best possible support so that you can continue to focus on what you do best, taking care of the patients who depend on us. We will work diligently to complete this restructuring process as quickly as possible. We greatly appreciate you and all you do for the hospitals, communities, and patients we have the honor of serving. Chan Chuang, MD, FCCP, FACP President, Envision Physician Services Chief Medical Officer, Envision Healthcare

 

[CajunMedic]

And here is what TH is putting out:

TeamHealth Colleagues, As you may have heard, Envision Healthcare, a significant physician practice group and emergency medicine employer, has filed for Chapter 11 bankruptcy protection. Our thoughts are with those going through significant uncertainty at Envision, and I want to reassure you that the situation at Envision should not cause you similar concern about TeamHealth. TeamHealth is in a materially better financial position than Envision. We have substantial equity cushion in our capital structure, a collaborative lending group and access to available funding to help bridge unanticipated adverse situations. Our clinical teams provide a critical service and lifesaving care to patients 24 hours a day in client hospitals and post-acute facilities. Operational excellence and our focus on patient safety and quality in the provision of these services creates significant value to our clients and clinicians, which will help ensure the long-term success and stability of TeamHealth. Companies typically use borrowed money to fund a portion of their capital structure, with the use of debt allowing organizations to deploy capital more efficiently and enhance returns. This can also negatively impact a company when it sustains losses. With a higher level of borrowed money at Envision, it made them susceptible to interest rate increases, operational risk and industry shocks like the pandemic and the federal No Surprises Act law. The financial community has been anticipating the Envision bankruptcy for some time. Our financial position remains strong and our success in litigating and arbitrating unfair payments from managed care will ensure the continued strength of our financial position. Sincerely, Leif Murphy CEO

 

[emergentmd]

Good Luck fellow docs. The only way Envision comes out of this alive would be to cut costs after all the debt restructuring. I foresee increased APC hiring, and more pph coming the provider way.

 

[JacobMcCandles]

If you have to put out a letter saying how viable you are…

 

[emergentmd]

If I were working for Envision, I would be looking for another job. They prob will come out in business but things will only get worse.

 

[Jabbed]

I was vaguely surprised that the president of Envision was a physician so I googled him and this was number 2 on Google.

Chan Chuang

 

[emergentmd]

If I were a doc in Texas, I would start cold calling around to see if you can get into FSERs. They may not last but a much better job and docs are fleeing the hospitals for them.

 

[xaelia]

As much glee as we'd like to have here, it basically looks to have zero operational effect.

It has about $7B+ in debt, and basically it sounds like $5.5B of that is just gonna get canceled. The investors who held that debt just lost a ton of money.

The filing states they have about $600M in cash-on-hand, and their annual revenue is around $1.6B. AmSurg, which is getting spun out, operates at a profit. The rest of Envision has been operating at a loss, but not so enormous it's unviable

The main issue is simply the amount of debt they had, not the actual envisioning part of envision.

 

[JacobMcCandles]

I was vaguely surprised that the president of Envision was a physician so I googled him and this was number 2 on Google.

Chan Chuang

Him being a physician is like saying I’m still a child (I’m not).

 

[Rekt]

I was vaguely surprised that the president of Envision was a physician so I googled him and this was number 2 on Google.

Chan Chuang

“Crime lord”

Seems accurate

 

[Apollyon]

“Crime lord”

Seems accurate

I am, still, laughing at "riff raff nonsense"!

 

[nVictus]

Parasites will continue to survive, it cannot be stopped unless there is a complete overhaul of how we do business as physicians. This is why there is doom and gloom in medicine... the current situation is poor but the outlook is worse. I don't pretend to have answers.

 

[Tenk]

As much glee as we'd like to have here, it basically looks to have zero operational effect.

It has about $7B+ in debt, and basically it sounds like $5.5B of that is just gonna get canceled. The investors who held that debt just lost a ton of money.

The filing states they have about $600M in cash-on-hand, and their annual revenue is around $1.6B. AmSurg, which is getting spun out, operates at a profit. The rest of Envision has been operating at a loss, but not so enormous it's unviable

The main issue is simply the amount of debt they had, not the actual envisioning part of envision.

Normally yes. Unfortunately (or fortunately if you were hedging this) we are currently in the beginning of the biggest contagion event in history. Buckle up.

 

[thegenius]

As much glee as we'd like to have here, it basically looks to have zero operational effect.

It has about $7B+ in debt, and basically it sounds like $5.5B of that is just gonna get canceled. The investors who held that debt just lost a ton of money.

The filing states they have about $600M in cash-on-hand, and their annual revenue is around $1.6B. AmSurg, which is getting spun out, operates at a profit. The rest of Envision has been operating at a loss, but not so enormous it's unviable

The main issue is simply the amount of debt they had, not the actual envisioning part of envision.

What kind of bankruptcy system do we have if debt just gets “canceled”? What are the consequences of that?

 

[xaelia]

What kind of bankruptcy system do we have if debt just gets “canceled”? What are the consequences of that?

The consequence is that someone made a risky investment – probably by loaning them money at extraordinarily high interest as a gamble Envision would be able to repay the loan – and ends up with pennies and/or equity in what is still a company operating at a loss.

 

[EctopicFetus]

If I were working for Envision, I would be looking for another job. They prob will come out in business but things will only get worse.

Pay cuts around the corner. Other cmgs to follow.

 

[DocEspana]

What kind of bankruptcy system do we have if debt just gets “canceled”? What are the consequences of that?

It's a system that's supposed to offer forgiveness. The idea is that if you are willing to fully open your books to the government (really a judge and some court agents) and prove that you do have a viable business model (questionable), but are just over leveraged, you can get forgiveness. Specifically, you have to let the government decide how you are going to spend every last cent of your remaining money before they will allow you to just wipe out any remaining debt. And by definition they tell you that you have to pay you are employees and your contractors and whatever is left over you can tell your investors "tough titties. Take it or leave it."

We obviously don't love it if it's bailing out the bad guys, but it's a good idea to have a system in place like this. We just don't like that the bad guys are benefiting. But it's probably a good thing for society that a company that gets over leveraged but still has viability if it could just get itself out of debt can actually do so with the government's blessing

 

[gruemd]

No fooling, literally just got an email from Envision saying to come visit their booth at SAEM23 the next 2 days. I'd hate to be the people trying to recruit right now.

In the email they talk about Envision's "unique organization structure" and "vast operational expertise"....genius

 

[DocEspana]

The consequence is that someone made a risky investment – probably by loaning them money at extraordinarily high interest as a gamble Envision would be able to repay the loan – and ends up with pennies and/or equity in what is still a company operating at a loss.

I mean that's the entire business model that all of these CMGs work on. They basically want to have increasingly more risky gambles with every company that buys into them. Basically hoping that they are not the last company holding the bag when the whole house of cards collapses.

I explained this on a Facebook group to some other doctors who asked about the business model of this all. Essentially, these companies don't care all that much about how viable any given contract is. They are trying to get into this system of buyouts and subsequently leveraged buyouts. And in that case, the quality of each contract doesn't matter, it's market share that matters. If you have a massive market share, You're going to have a great selling point, even if your books are not the most healthy. So these companies expand. They expand aggressively. They add new sites. They buy ancillary industries like anesthesia and ambulances. And they just keep expanding.

And then one day finances come by with blank checks stating that they will either buy the company out right, or offer to fix all of the CMG's problems by throwing a tremendous amount of money at the problem. In both cases, their particular plan is to get a huge profit at the end. If they own the company, what they want to do is flip it off to someone else at a profit the same way they bought it - So they keep doing the same expansion technique that made them want to buy it in the first place. If they gave money, they want a very specific and outrageously inflated amount of money in a handful of years. And the only way this company is going to actually come up with that money is if they either suddenly become the world's greatest business people, or if they can expand their footprint enough that someone else comes by and offers them an even larger amount of money. And they can use that money to pay off the old debt, but now they have a new even bigger debt.

The cycle continues forever until the company suddenly can't keep growing, or the whole world runs out of money. The latter hasn't happened yet, but the former did. Envision, more than any other CMG, was extremely heavily invested in the ambulatory surgery market. When COVID came by, they simply lost such a tremendous amount of money on that arm of their company. An amount of money that they had no way of ever making up, and which made the entire business book stink so much more than it already kind of did given how they run emergency departments. So right now their debt is due for one of those loans from a few years back. And no one wants to buy the company anymore because the amount of money it lost during covid on ambulatory surgery has made it far too toxic.

What's terrible is that chapter 11 allows them to basically clear off all the debt, but does nothing to disincentivize them from just starting the same spiral right up again from the start. Because, honestly, once they get rid of the debt, their company with a massive market share and someone is definitely going to bite and try to buy them.

 

[emergentmd]

The onus is on the people giving the money. Eventually, they will not be willing to take the risks and the money will run Dry. The next round when they need money and will not be available. Then they will be stuck.

 

[JacobMcCandles]

What's terrible is that chapter 11 allows them to basically clear off all the debt, but does nothing to disincentivize them from just starting the same spiral right up again from the start. Because, honestly, once they get rid of the debt, their company with a massive market share and someone is definitely going to bite and try to buy them.

As emergentmd mentioned, this will be a death blow for them. They can't continue on this path without infusion(s) of cash. PE isn't just throwing cash around like they have in the past. Even industries/companies in much better position are seeing this money drying up. They won't disappear tomorrow but this is the true beginning of the end for them. They can probably carry on for a few more years but they're brain dead on life support.

 

[DocEspana]

The onus is on the people giving the money. Eventually, they will not be willing to take the risks and the money will run Dry. The next round when they need money and will not be available. Then they will be stuck.

As emergentmd mentioned, this will be a death blow for them. They can't continue on this path without infusion(s) of cash. PE isn't just throwing cash around like they have in the past. Even industries/companies in much better position are seeing this money drying up. They won't disappear tomorrow but this is the true beginning of the end for them. They can probably carry on for a few more years but they're brain dead on life support.

I want to stress that all of these companies have gone through MULTIPLE rounds of this that have always been EXCEPTIONALLY lucrative for everyone except for KKR this one time. Given KKRs worth, this is somewhere between a 1.8 and 3.6% loss of worth for them. Aka this is something just above a rounding error for them. They all knew this was a possibility that eventually there would be enough capital built upon capital built upon capital that someone would be over invested.... But also these companies are viewing this as easy money and the possible losses as a sharp sting but little more.

Trust me, "investments are drying up" is a problem for startups in silicon valley. This is not relevant for companies that have massive market shares already and a successful investment and return on investment model 24-times-out-of-25 (or whatever it is). This is an incredibly safe bet for these companies. Everyone (except KKR, but even them eventually) are thrilled to get back in on a staffing company that is about to go through a fire sale and ask for more reasonable numbers for their next round of people buying.

If envision collapses because of this, it's not going to be because me investment market has soured on them. It's going to be because in these next few years, while they build up enough worth to try to sell themselves off again - if the workers and the hospitals revolt and refuse to play ball with them, they will lose market share and will just never be marketable again. I'm just betting incredibly heavily against that because they already have the market share and I don't think hospitals truly care all that much about dumping them on some principled stance when envision is offering them continuity of service.

 

[JacobMcCandles]

Trust me, "investments are drying up" is a problem for startups in silicon valley. This is not relevant for companies that have massive market shares already and a successful investment and return on investment model 24-times-out-of-25 (or whatever it is). This is an incredibly safe bet for these companies. Everyone (except KKR, but even them eventually) are thrilled to get back in on a staffing company that is about to go through a fire sale and ask for more reasonable numbers for their next round of people buying.

It is completely relevant when there’s not a viable way of making money moving forward. I’ll guess we’ll see how incredibly safe these bets are and how thrilled PE is about giving money to them because there are going to be more “opportunities” like this in the future.

 

[emergentmd]

Under terms of the restructuring, Envision and its ambulatory unit will be owned separately by lenders. Its ambulatory unit will purchase Envision’s surgery centers for $300 million, plus a waiver of intercompany loans held by the unit. All of Envision’s debt, with the exception of a revolving credit facility for working capital, will be equitized or canceled, deleveraging about $5.6 billion, according to the company.
Envision’s clinical operations will continue in the meantime without interruption, the company added.

GL to everyone.

 

[xaelia]

I'm here to endorse @DocEspana – would have written the same thing in almost the same words.

 

[MechEDoc]

If I were working for Envision, I would be looking for another job. They prob will come out in business but things will only get worse.

I think there is working for Envision and then there is working for HCA with the illusion that you are working for Envision. HCA is making money and want their cheap ER labor to continue.

 

[FlaminHotER]

Good article on this

The Rise and Fall of Envision Healthcare - Hospitalogy

This week, the Wall Street Journal reported that Envision Healthcare, after a long and beleaguered battle, is expected to file for chapter 11 bankruptcy. Given Envision’s history, I thought it’d be interesting for subscribers to dive into a ‘post-mortem’ of sorts on what went wrong in the rise...

workweek.com

 

[emergentmd]

KKR acquired the company for a staggering $9.9 billion, including a resounding $7 billion in debt financing – one of the largest leveraged buyouts at the time

KKR’s Americas Fund XII has already written off the $10B investment, and still holds a 19% net annualized return

I mean you load a company with debt (Think Toys R Us), and know the only way to make the company profitable is to have the perfect storm of good fortune which almost never happens. But hey, so what, even at its base case outcome they get a 19% yearly return.

The rules are made where these VC leverage buyouts are fullproof.

 

[JacobMcCandles]

KKR acquired the company for a staggering $9.9 billion, including a resounding $7 billion in debt financing – one of the largest leveraged buyouts at the time

KKR’s Americas Fund XII has already written off the $10B investment, and still holds a 19% net annualized return

I mean you load a company with debt (Think Toys R Us), and know the only way to make the company profitable is to have the perfect storm of good fortune which almost never happens. But hey, so what, even at its base case outcome they get a 19% yearly return.

The rules are made where these VC leverage buyouts are fullproof.

Just curious where those numbers came from because it looked like it closed as a $14B fund in 2017. $10B would be a large portion of that.

 

[Fox800]

If I were a doc in Texas, I would start cold calling around to see if you can get into FSERs. They may not last but a much better job and docs are fleeing the hospitals for them.

Yeah except $130-150/hr 1099 at some of those places is not worth the squeeze. Especially if you are seeing 1.5-2 PPH with varied levels of entitlement.

0.5 PPH, and sleeping at night, sure but that's not the case at most FSEDs in the Austin area.

 

[FlaminHotER]

Another pretty good article

Explains much of the history behind Envision and other cmgs

So Long but Not Farewell to Envision

The private equity–owned ER doctor practice, now headed to bankruptcy, was one of the defining companies of 21st-century American medicine.

prospect.org

 

[sloh]

Another pretty good article

Explains much of the history behind Envision and other cmgs

So Long but Not Farewell to Envision

The private equity–owned ER doctor practice, now headed to bankruptcy, was one of the defining companies of 21st-century American medicine.

prospect.org

Wow thanks for sharing. Both of those reads were excellent. The second one was so eye opening. I’m not even EM. I’m PM&R but really appreciate those shares. Think there’s something to learn from those articles for all specialties and every field that PE has infiltrated.

 

[dannyboy1]

Under terms of the restructuring, Envision and its ambulatory unit will be owned separately by lenders. Its ambulatory unit will purchase Envision’s surgery centers for $300 million, plus a waiver of intercompany loans held by the unit. All of Envision’s debt, with the exception of a revolving credit facility for working capital, will be equitized or canceled, deleveraging about $5.6 billion, according to the company.
Envision’s clinical operations will continue in the meantime without interruption, the company added.

GL to everyone.

How does this work? It’s as if I tried to transfer the lien of my entire mortgage to the small shed in the backyard and got to keep the house. How??!

 

[emergentmd]

How does this work? It’s as if I tried to transfer the lien of my entire mortgage to the small shed in the backyard and got to keep the house. How??!

Its like if you had a few Rental Properties. One Ambulatory property made alot of money, one Envisions property losing money with lots of debt. You split the business into the Ambulatory property that is profitable. You put most of the bad debt onto your envision property and then tell the bank you will cancel most of the debt and they can have some equity in the envision property.

You now have two properties. One with decreased debt and cash cow. One property still loses money but has less debt. Eventually you will just hand over the bad property and come out smelling like a rose.

 

[NothingBurger]

As much glee as we'd like to have here, it basically looks to have zero operational effect.

It has about $7B+ in debt, and basically it sounds like $5.5B of that is just gonna get canceled. The investors who held that debt just lost a ton of money.

The filing states they have about $600M in cash-on-hand, and their annual revenue is around $1.6B. AmSurg, which is getting spun out, operates at a profit. The rest of Envision has been operating at a loss, but not so enormous it's unviable

The main issue is simply the amount of debt they had, not the actual envisioning part of envision.

What kind of bankruptcy system do we have if debt just gets “canceled”? What are the consequences of that?

During the low interest rate era, investors made loans with less protections and now it's coming to bite them in their behind. Envision will be fine but their investors, not so much.

The Debt Deal That Shows How Ugly Things Are Getting for Lenders

Investors who once flocked to the loans that financed the takeover of Envision Health ended up fighting over crumbs. Rising rates and recession risk augur more such battles ahead.

www.bloomberg.com