UPDATED on May 15, 2023 at 9:58 a.m.
Following reports last week that the physician staffing firm was exploring a bankruptcy filing, Envision Healthcare announced on Monday that it had officially submitted the voluntary filings under Chapter 11.
The provider said in a press release that it has entered into a Restructuring Support Agreement with key stakeholders that is backed by more than 60% of its $7.7 billion in debt. As part of the RSA, the company will establish a framework for restructuring that will establish Envision and AMSURG as separate businesses.
Envision will continue to operate as normal during the restructuring process, according to the announcement.
“Envision’s teams play a critical role in the functioning of the U.S. healthcare system,” said Jim Rechtin, Envision Healthcare CEO, in the announcement. “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.”
Physician staffing firm Envision Healthcare is planning to file for Chapter 11 bankruptcy, according to a report from The Wall Street Journal.
Sources told the newspaper that the company now has about $7 billion in outstanding debt and has faced labor challenges along with a lengthy, costly legal spat with health insurance giant UnitedHealthcare. In addition, a core element of the provider's model took a major hit in reforms to surprise medical billing.
The WSJ reported that Envision failed to report its financials before March 31 and did not make an April payment on its interest, which kick-started a 30-day window after which its investors could force the provider into bankruptcy.
Envision is owned by venture capital firm KKR, and the bankruptcy would wipe out the firm's full investment, according to the article. KKR bought out Envision in 2018 in a $5.5 billion deal, though the value is worth more like $10 billion when accounting for debt.
Should the bankruptcy go through, it would be among the biggest losses for KKR in its history, WSJ reported.
As the financial issues mounted, Moody's Investors Service downgraded Envision's credit outlook to its lowest possible rating last September, warning that bankruptcy or a major restructuring would be likely in the near future.
The firm has been embroiled for months in a multifront legal fight with UnitedHealthcare over reimbursement. The insurer cut Envision from its network in early 2021, saying that the rates the provider group seeks are above market value and leading to higher costs for its members.
Envision did score a win against the health plan earlier this year, when an arbitration panel awarded it a $91.3 million judgment over underpaid claims from between 2017 and 2018, when Envision was still in UnitedHealth's network.
Other legal challenges, such as a pair of dueling lawsuits filed in September, center on reimbursement for out-of-network claims after Envision was removed from UnitedHealthcare's network.