AMCs Post Covid19

[StillAwake]

Envision Healthcare to Consider Bankruptcy Filing

Envision Healthcare Corp. has hired restructuring advisers and is contemplating a bankruptcy filing after the Covid-19 pandemic halted elective surgeries and left the company struggling to manage the $7 billion of debt from its 2018 leveraged buyout, according to people with knowledge of the matter.

www.bloomberg.com

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[ambiturner]

I’m sure this bankruptcy will result in a return to the halcyon days of the small anesthesia private practice and a completely fair shake for the employed docs, including but not limited to full pay as guaranteed in contracts and a release from non-competes...

 

[fittipaldi1of1]

What would happen to the envision employees in the event they do go bankrupt?

 

[StillAwake]

I’m sure this bankruptcy will result in a return to the halcyon days of the small anesthesia private practice and a completely fair shake for the employed docs, including but not limited to full pay as guaranteed in contracts and a release from non-competes...

Or just restructuring debt, which some we can presume are related to physician salaries.

 

[IMGASMD]

I’m sure this bankruptcy will result in a return to the halcyon days of the small anesthesia private practice and a completely fair shake for the employed docs, including but not limited to full pay as guaranteed in contracts and a release from non-competes...

I am not sure if this is sarcasm or for real?

 

[IMGASMD]

Or just restructuring debt, which some we can presume are related to physician salaries.

They already cut 30% of physician salaries. But cannot replace the groups now. But if envision keep their non compete intact.... sounds like a mess

 

[ambiturner]

I am not sure if this is sarcasm or for real?

I meant it to be sarcastic. The docs will definitely lose money and probably still have to obey non-competes as they will either become hospital employees or be absorbed by another AMC.

 

[BLADEMDA]

They already cut 30% of physician salaries. But cannot replace the groups now. But if envision keep their non compete intact.... sounds like a mess

But, if Envision failed to adequately staff the hospital due to bankruptcy proceedings the non compete can be challenged in court. If the hospital decides to employ the former Envision employees I don't think Envision will do well in court, not to mention the violation of all the contracts in terms of salary. If I was a Judge in charge of the cases I would not side with Envision in this situation.

 

[deleted162650]

You wouldn’t really be “competing” with them if they went out of business.

 

[deleted941485]

Have an MD buddy on the inside at envision. First they announced no bonuses then they announced 30% cuts in base. He would have stuck around for just the latter but a post COVID future and the bankruptcy. He’s now thinking he’d be better off putting in for 90 days when this is all said and done. Who knows envision might even do that for him.

 

[deleted941485]

You wouldn’t really be “competing” with them if they went out of business.

Yeah I don’t see how the noncompete sticks when your company literally cannot perform any of its tasks including paying your freaking salary.

 

[dannyboy1]

I meant it to be sarcastic. The docs will definitely lose money and probably still have to obey non-competes as they will either become hospital employees or be absorbed by another AMC.

If they are absorbed by the hospital they are inherently breaking the non compete. In fact that is the exact outcome that the non compete is there to prevent. It would be a strange bankruptcy case for sure. “ownership” of the practice really means that you have the docs on a non compete and you can negotiate better rates from insurers due to economies of scale. Envision would have to keep paying their docs. At the first hint of trouble the hospital would likely hire the docs that it needs thereby dissolving the envision group and making it worth exactly $0 in bankruptcy court. I would think it highly unlikely for a non compete to be enforced in the current COVID environment (we want to work in this state of emergency and save lives but this greedy hedge fund is threatening to sue).

 

[dannyboy1]

Have an MD buddy on the inside at envision. First they announced no bonuses then they announced 30% cuts in base. He would have stuck around for just the latter but a post COVID future and the bankruptcy. He’s now thinking he’d be better off putting in for 90 days when this is all said and done. Who knows envision might even do that for him.

Did they cut his hours 30% corresponding to they pay cut. Or have him sign a new contract ? If not the non compete may be null and void.

 

[aneftp]

If they are absorbed by the hospital they are inherently breaking the non compete. In fact that is the exact outcome that the non compete is there to prevent. It would be a strange bankruptcy case for sure. “ownership” of the practice really means that you have the docs on a non compete and you can negotiate better rates from insurers due to economies of scale. Envision would have to keep paying their docs. At the first hint of trouble the hospital would likely hire the docs that it needs thereby dissolving the envision group and making it worth exactly $0 in bankruptcy court. I would think it highly unlikely for a non compete to be enforced in the current COVID environment (we want to work in this state of emergency and save lives but this greedy hedge fund is threatening to sue).

I have yet to know of non compete being enforced with in house w2 hospital system take over of anesthesia from a private practice or amc practice.

hospital will simple absorb anesthesiologists and cRna as hospital employees. It’s not optimal for the hospitals since many do not know how to run anesthesia practices or ER contracts.

 

[deleted941485]

Did they cut his hours 30% corresponding to they pay cut. Or have him sign a new contract ? If not the non compete may be null and void.

They literally made the announcement within the last 2 days. I failed to ask if they sent around a new contract for them to sign. I’m sure their contracts have something to the effect that they can change what ever they want and if you don’t sign it you are terminated.

 

[deleted941485]

I have yet to know of non compete being enforced with in house w2 hospital system take over of anesthesia from a private practice or amc practice.

hospital will simple absorb anesthesiologists and cRna as hospital employees. It’s not optimal for the hospitals since many do not know how to run anesthesia practices or ER contracts.

Hospital employment would seem like the next step for these people as a lot of these Med staffing companies are in a similar boat.

 

[dannyboy1]

Hospital employment would seem like the next step for these people as a lot of these Med staffing companies are in a similar boat.

Yup. Unfortunately that would not be good for us. Once the hospital is the one paying the anesthesia staff salaries they would start to question the value of having a doc around to supervise CRNA’s. Right now the hospital wants us around because they don’t pay us, the staffing firm does.

 

[deleted941485]

Yup. Unfortunately that would not be good for us. Once the hospital is the one paying the anesthesia staff salaries they would start to question the value of having a doc around to supervise CRNA’s. Right now the hospital wants us around because they don’t pay us, the staffing firm does.

AMC is probably asking themselves the same question

 

[dannyboy1]

AMC is probably asking themselves the same question

Yes. But the hospital does not like independent CRNA practice. That will change when they are the ones paying the salaries.

 

[deleted171991]

Yes. But the hospital does not like independent CRNA practice. That will change when they are the ones paying the salaries.

Then it will change again when they get their first multimillion dollar-lawsuit.

 

[vector2]

If I’m a judge presiding over a non-compete case, my first question is how is a bankrupt company that can’t pay its workers is paying the legal fees to enforce a non-compete

 

[dannyboy1]

Then it will change again when they get their first multimillion dollar-lawsuit.

Maybe. But it seems to me that large entities just don’t care about potential lawsuits. They have lawyers and insurance for that kind of thing. What they really care about is the yearly profit statements so they can give themselves large bonuses. Potential lawsuits are a maybe problem, down the road, for someone else to deal with.....

 

[StillAwake]

But, if Envision failed to adequately staff the hospital due to bankruptcy proceedings the non compete can be challenged in court. If the hospital decides to employ the former Envision employees I don't think Envision will do well in court, not to mention the violation of all the contracts in terms of salary. If I was a Judge in charge of the cases I would not side with Envision in this situation.

What does the contract between Envision and a facility have to do with the restrictive covenant in the employment contracts of Envision's employees? Why would Envision's employees be able to challenge their restrictive covenants if Envision breaches its contract with a facility?

Envision is not going bankrupt like Blockbuster, they are restructuring debt, maybe let go of some less profitable contracts, but they are not going away. Envision can argue that the restrictive covenant becomes even more important to enforce during bankruptcy reorganization.

Just curious, how do you know Envision is in violation of their employment contracts in terms of salary? Do you have access to Envision's employment contracts? If you do, I'd love to look one over for my own education.

 

[Ezekiel2517]

Unfortunately, filing bankruptcy doesn't mean they're going out of business. If they do it, it's being done for debt restructuring. Also, from what I understand, the 30% salary cut is temporary while the surgery volume is at the current level and did not involve a new contract. And a big reason for the reduction is to subsidize Envision's productivity based income groups to bring them up to 70% of their typical income, since the productivity based groups basically have had an 80% or more decrease in income. Someone on here who works for envision may be able to confirm.

 

[nimbus]

Still workin’ it

Medical Staffing Companies Cut Doctors’ Pay While Spending Millions on Political Ads

While cutting benefits for emergency room doctors and other medical workers, TeamHealth and Envision have spent millions on ads meant to pressure politicians working on legislation to cap out-of-network costs for Americans.

www.propublica.org

 

[GravelRider]

Naive question, but can the docs at a particular Envision hospital look into buying out the contract? The contract has to be pretty worthless right now and you may get a deal on it.

If I were a doc at one of these sinking ships, I would resign yesterday. I would do some covid intubations in nyc while I figured out my next move. I would not wait around to see what the future holds at Envision, that’s for sure.

 

[kmurp]

So it looks like we will be able to resume elective surgery in various areas of NY. The catch for our ASC is twofold. Obtaining PPE for anesthesia staff for when we manipulate the airway is one. The policy also requires the patient to test negative for Covid Preop.
I have no idea if we can do either as the hospitals have all the tests and PPE.

 

[AdmiralChz]

Naive question, but can the docs at a particular Envision hospital look into buying out the contract? The contract has to be pretty worthless right now and you may get a deal on it

That would be a solid way to end up with an expensive lawsuit. I am sure such an activity would be prohibited by your contract (it certainly is in mine at a traditional PP). They’d probably argue you used corporate secrets to undermine their business, which could be a legitimate argument.

But you can’t just “buy” a contract - you have to convince the hospital to break the existing one and forge a new one. Hospitals are fairly lawsuit-averse, and again such a decision would likely leave them open to litigation. Only way this is happening is if essential operations aren’t being covered and ORs are ground to a halt due to staffing. That certainly isn’t happening during this pandemic where electives are all on hold.

The better way to do this is to find out when the existing contract ends and try to slide in at that time, somehow. That’s the model for what has been going on around the country with Mednax.

 

[Aether2000]

The CEO of Envision in a senior management telephone call on 4/21/20 made clear that the company adamantly denies considering a bankruptcy filing. It is unclear the timeframe for when full salaries will be restored but previously the company stated 3-6 months at reduced salary.

 

[AdmiralChz]

The CEO of Envision in a senior management telephone call on 4/21/20 made clear that the company adamantly denies considering a bankruptcy filing. It is unclear the timeframe for when full salaries will be restored but previously the company stated 3-6 months at reduced salary.

Source? Were you on the call?

No one publicly admits to considering bankruptcy it just happens. Can’t spook your incoming hires, potential investors, etc.

 

[deleted126335]

The CEO of Envision in a senior management telephone call on 4/21/20 made clear that the company adamantly denies considering a bankruptcy filing. It is unclear the timeframe for when full salaries will be restored but previously the company stated 3-6 months at reduced salary.

Comforting. Because in all of human history nobody has ever lied to people they were going to f#*k

 

[aneftp]

guys they are only threatening BK to get loan reduced. As envision really has no physical assets. Remember it’s basically a gloried staffing company. Even amsurg doenst “own” their surgery center. I know how it works. It takes a 51% of the facility fees from the GI “owners” plus since they run anesthesia at most amsurg facilities. They take 100% of Anesthesia fees.
There is no physical asset envision actually owned. They “lease” back “space”.
It’s essentially a Shell staffing company.

 

[apoondoc]

I think the tide is going to go out and we'll see who's been swimming naked (or in swimtrunks borrowed from physicians, who now shotly will be empiowered to demand them back).

Short-seller Jim Chanos has started a public crusade against Envision. He went on CNBC to say he's betting the company “might be worth nothing” and that its business model involved “deception or aggressive use of reimbursement.” In an email to Forbes, he called the company's basic business model a “scam.” Chanos wrote: “If you pay a big upfront cash payment to a group of doctors to ensure their below-market cost employment for [five to ten] years, you are simply capitalizing salary expenses.” He says that all the company's cash flow goes to signing up new practices. Envision says Chanos has its business model wrong. (Envision Healthcare Infiltrated America's ERs. Now It's Facing A Backlash)


The most controversial source of excess spending, though, is rent-seeking by health-care firms. This is when companies extract outsize profits relative to the capital they deploy and risks they take. Schumpeter has estimated the scale of gouging across the health-care system. Although it does not explain the vast bulk of America’s overspending, the sums are big by any other standard, with health-care firms making excess profits of $65bn a year. Surprisingly, the worst offenders are not pharmaceutical firms but an army of corporate health-care middlemen. (The Economist: Rent seeking in America's health care system - PNHP)


“Private equity consolidated large physician groups in an unprecedented financial gamble using capital and banking on revenue not skipping a beat,” Makary said. “When the investment model works, investors get rich. When the investment goes sour, who bears the risk? As in the mortgage crisis of 2008, taxpayers are bearing the risk of financial gambles of investors.” (Medical Staffing Companies Owned by Rich Investors Cut Doctor Pay and Now Want Bailout Money)

 

[Gas]

So it looks like we will be able to resume elective surgery in various areas of NY. The catch for our ASC is twofold. Obtaining PPE for anesthesia staff for when we manipulate the airway is one. The policy also requires the patient to test negative for Covid Preop.
I have no idea if we can do either as the hospitals have all the tests and PPE.

Another stipulation is that there has to be fewer than 10 new hospitalizations over a 10 day period in your entire county.

 

[aneftp]

Some places never stopped elective surgery or gi cases. One outpatient surgery center owned by 8 billion dollar hedge fund still doing 30-40 gi procedures a day. They made patients sign declaring statements they need their colonoscopies. I’m sure that colon single polyp they had 10 years ago That wasn’t really even a polyp needed to be urgently followed up.

 

[deleted941485]

I mean the old corporate practices will be in trouble but any new momeynthat wants to get into the AMC game will find a ripe buying opportunity.

 

[kmurp]

Another stipulation is that there has to be fewer than 10 new hospitalizations over a 10 day period in your entire county.

Yes. Our hospital which has tests and PPE can’t start because of that. Awaiting clarification from Dept of Health as to what this means for ASCs but as I mentioned , we don’t know if we can get testing for the ASC patients.

 

[skypilot]

The most controversial source of excess spending, though, is rent-seeking by health-care firms. This is when companies extract outsize profits relative to the capital they deploy and risks they take. Schumpeter has estimated the scale of gouging across the health-care system. Although it does not explain the vast bulk of America’s overspending, the sums are big by any other standard, with health-care firms making excess profits of $65bn a year. Surprisingly, the worst offenders are not pharmaceutical firms but an army of corporate health-care middlemen. (The Economist: Rent seeking in America's health care system - PNHP)

Just to clarify, they capture you with a non-compete agreement. Once you are captive, the risk is offloaded onto you.

It seems to be a popular business model. Find a captive, (like a diabetic or an "orphan" drug user) and raise the rent as high as you can possibly go.

MOC is also a version of this. Find a captive customer, (every Physician in the country). Lobby to make your crappy CME product mandatory. And then collect millions of dollars!

 

[deleted171991]

Just to clarify, they capture you with a non-compete agreement. Once you are captive, the risk is offloaded onto you.

It seems to be a popular business model. Find a captive, (like a diabetic or an "orphan" drug user) and raise the rent as high as you can possibly go.

MOC is also a version of this. Find a captive customer, (every Physician in the country). Lobby to make your crappy CME product mandatory. And then collect millions of dollars!

There is a reason investors like monopolies.

 

[skypilot]

There is a reason investors like monopolies.

The American College of Emergency Physicians’ 38,000 members include employees of large staffing firms as well as academic medical centers and small doctor-owned practice groups. The letter was signed by the group’s president, William P. Jaquis, whose day job is as a senior vice president at Envision Healthcare, a top staffing firm owned by private equity giant KKR.

Another reason we are sunk. The fox represents the hen house. Corruption at its finest.

 

[deleted171991]

The American College of Emergency Physicians’ 38,000 members include employees of large staffing firms as well as academic medical centers and small doctor-owned practice groups. The letter was signed by the group’s president, William P. Jaquis, whose day job is as a senior vice president at Envision Healthcare, a top staffing firm owned by private equity giant KKR.

Another reason we are sunk. The fox represents the hen house. Corruption at its finest.

The ASA is no better, I'm sure.

I think AAEM was created exactly because the ACEP had nothing to do with the best interests of EM docs.

 

[Ronin1]

Well we got our first paycheck today with a 30%reduction in base pay from envision. Our letter to corporate also went out regarding their breach of contract. At least in my contract if they breach non compete is voided. My thoughts are they will cure the breach in 60 days rather than let us walk.

 

[AdmiralChz]

The ASA is no better, I'm sure.

I think AAEM was created exactly because the ACEP had nothing to do with the best interests of EM docs.

Correct! AAEM often puts out statements about keeping midlevels under wraps, maximum ratios in EDs and other very popular things. But they have a fraction of the ACEP membership and have no real power. With the rapid erosion of EM (you think we have a midlevel problem, look over there), they are a little more organized and direct in their approach.

 

[AdmiralChz]

My thoughts are they will cure the breach in 60 days rather than let us walk.

Cure the breach you mean pay you the remaining 30%? That’s not a reasonable request, with volumes being down over 60% across the country.

 

[sethco]

Well we got our first paycheck today with a 30%reduction in base pay from envision. Our letter to corporate also went out regarding their breach of contract. At least in my contract if they breach non compete is voided. My thoughts are they will cure the breach in 60 days rather than let us walk.

Is there a Force Majeure in your contact that might allow them to reduce your salary in certain extreme situations?

 

[Ronin1]

Is there a Force Majeure in your contact that might allow them to reduce your salary in certain extreme situations?

No such language is included.

 

[Ronin1]

Cure the breach you mean pay you the remaining 30%? That’s not a reasonable request, with volumes being down over 60% across the country.

Our volumes may be down but our practice is over 1 million in the black for the year. They have made a ton of money from our practice and they have no legal basis to unilaterally amend the contract

 

[Shimmy8]

Is there a Force Majeure in your contact that might allow them to reduce your salary in certain extreme situations?

No such language in my contract either, and my group cut pay by 50% with simply an email. No new signed contracts.

We’re expecting small amount of elective cases to resume May 4, then back to almost full schedule May 11. However, the company won’t commit to paying us full salary once volume picks back up for fear of collections lagging. No definitive time table.

We all have non-competes, and this is clearly breaching contract.

 

[dannyboy1]

Well we got our first paycheck today with a 30%reduction in base pay from envision. Our letter to corporate also went out regarding their breach of contract. At least in my contract if they breach non compete is voided. My thoughts are they will cure the breach in 60 days rather than let us walk.

Just be aware that this may come back to bite you guys. If they can’t get a 30% salary reduction from you this way they may simply decide to lay off 30% of staff. I don’t think there is any employment contract that prevents layoffs especially in at at will employment state. You have to know what the market is for our services and at this point it is unclear at best...

 

[habibimarwan]

No such language in my contract either, and my group cut pay by 50% with simply an email. No new signed contracts.

We’re expecting small amount of elective cases to resume May 4, then back to almost full schedule May 11. However, the company won’t commit to paying us full salary once volume picks back up for fear of collections lagging. No definitive time table.

We all have non-competes, and this is clearly breaching contract.

They break contract, then you break contract! Say bye-bye to the bad guy!