Envision Healthcare hits the skids

[TheLoneWolf]

Envision Healthcare Hits the Skids

Backed into a corner financially, the private equity–owned physician staffing company could put doctors and patients at risk.

prospect.org

Private equity Healthcare is a mess

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[nimbus]

It’s funny how these guys repeatedly fail and still get multiple do overs. They must have a very good pitch.

 

[JoelJoel84]

“Drawing on lessons from other PE-owned companies facing financial distress—like Nine West, J. Crew, and Sears—KKR will likely emerge unscathed by dividing Envision into two companies, one with the valuable assets and the second with the remaining assets. For example, after the leveraged buyout of Nine West, Sycamore Partners immediately moved the most valuable brands out of the reach of creditors, leaving all of the original debt on Nine West. It paid itself a $40 million dividend, sold the better brands, and pocketed the proceeds. Nine West, meanwhile, filed for bankruptcy in 2018, laid off its workers, and closed all its stores.”


So easy to make tens of millions of dollars with no risk and very little effort, while I’m sitting here with an ASA 4 and post call.
My kids are going into finance.

 

[thinkorswim]

“Drawing on lessons from other PE-owned companies facing financial distress—like Nine West, J. Crew, and Sears—KKR will likely emerge unscathed by dividing Envision into two companies, one with the valuable assets and the second with the remaining assets. For example, after the leveraged buyout of Nine West, Sycamore Partners immediately moved the most valuable brands out of the reach of creditors, leaving all of the original debt on Nine West. It paid itself a $40 million dividend, sold the better brands, and pocketed the proceeds. Nine West, meanwhile, filed for bankruptcy in 2018, laid off its workers, and closed all its stores.”


So easy to make tens of millions of dollars with no risk and very little effort, while I’m sitting here with an ASA 4 and post call.
My kids are going into finance.

I wish I could do the same with my student loans.

This is a common business tactic to unload corporate debt. It borderlines on disgusting and unethical behavior, as is the case with what Johnson & Johnson is doing with their baby powder.

 

[anbuitachi]

um what. that big photo of EMERGENCY. is not the correct hospital!. Private equity doesnt even work there

 

[chessknt]

So the finance guys swoop in, ruin healthcare and extract it's value, then get to offload the debt to some nebulous debt investors while degrading the health system? How was this better than private practices being owned by physicians?

 

[D P356]

So the finance guys swoop in, ruin healthcare and extract it's value, then get to offload the debt to some nebulous debt investors while degrading the health system? How was this better than private practices being owned by physicians?

You know what you’re getting with PE. Some private groups are actually more predatory than PE.
The pendulum from terrible to great swings wider with PP.

 

[emergentmd]

Its a low risk, high reward game they play. Use a small amount of cash to buy a large asset with high debt. If they "turn things around" such as cooking the books, accounting magic, or truly turn things around they will go back to the market at a higher valuation. Put 500M into a 6 Bil asset, if asset is now worth 10Bil, they just make 4Bil on 500 Mil.

If they can't turn thing around, they split company into high performers and put all the debt on bad performers. High performers sold for a profit, bad performers go bankrupt/close shop.

That would be akin to me buying 10 properties for 1M down on a 10M asset. In 2 yrs, if 5 are worth 8M and the other 5 worthless then I should be down 2M. But I get to split them into 2 portfolio, keep the 8M portfolio with no debt and put the 9M debt on the 5 worthless ones.

Slick stuff that only corporate raiders can do.

 

[kidthor]

Its a low risk, high reward game they play. Use a small amount of cash to buy a large asset with high debt. If they "turn things around" such as cooking the books, accounting magic, or truly turn things around they will go back to the market at a higher valuation. Put 500M into a 6 Bil asset, if asset is now worth 10Bil, they just make 4Bil on 500 Mil.

If they can't turn thing around, they split company into high performers and put all the debt on bad performers. High performers sold for a profit, bad performers go bankrupt/close shop.

That would be akin to me buying 10 properties for 1M down on a 10M asset. In 2 yrs, if 5 are worth 8M and the other 5 worthless then I should be down 2M. But I get to split them into 2 portfolio, keep the 8M portfolio with no debt and put the 9M debt on the 5 worthless ones.

Slick stuff that only corporate raiders can do.

Meanwhile they blame the physicians for being greedy and overpaid, while the public at large has never heard of the nonsense played by these corporate entities and insurance companies. It's not a good look with a big bill comes with a doctors name attached to it, especially when that doctor had nothing to do with these games.

What really confuses me is how these games are not considered the "corporate practice of medicine", which is banned in all states yet in reality practiced in all.

 

[GravelRider]

I know I’ll be called a commie, but this is what happens in a society that places more value on capital than it does on labor. The problem is the scales are so enormously skewed towards capital that the balance is completely off right now. Healthcare is certainly not the only industry being gutted by these private equity vultures.

 

[emergentmd]

I know I’ll be called a commie, but this is what happens in a society that places more value on capital than it does on labor. The problem is the scales are so enormously skewed towards capital that the balance is completely off right now. Healthcare is certainly not the only industry being gutted by these private equity vultures.

No quite sure if its commie or not but whatever it is called the path will eventually end up in universal gov healthcare. Not sure when but it will happen in our lifetime.

 

[dannyboy1]

Its a low risk, high reward game they play. Use a small amount of cash to buy a large asset with high debt. If they "turn things around" such as cooking the books, accounting magic, or truly turn things around they will go back to the market at a higher valuation. Put 500M into a 6 Bil asset, if asset is now worth 10Bil, they just make 4Bil on 500 Mil.

If they can't turn thing around, they split company into high performers and put all the debt on bad performers. High performers sold for a profit, bad performers go bankrupt/close shop.

That would be akin to me buying 10 properties for 1M down on a 10M asset. In 2 yrs, if 5 are worth 8M and the other 5 worthless then I should be down 2M. But I get to split them into 2 portfolio, keep the 8M portfolio with no debt and put the 9M debt on the 5 worthless ones.

Slick stuff that only corporate raiders can do.

So who lends the money to the PE group. If it is such a high risk loan? Just asking….

 

[chessknt]

So who lends the money to the PE group. If it is such a high risk loan? Just asking….

I'm guessing it is another PE group that can perform similar magic asset offloading. Too bad we don't get to publicly execute the investors and sell their organs when they can't repay their debts...that would be almost worth it and would definitely discourage the practice.

 

[anbuitachi]

Meanwhile they blame the physicians for being greedy and overpaid, while the public at large has never heard of the nonsense played by these corporate entities and insurance companies. It's not a good look with a big bill comes with a doctors name attached to it, especially when that doctor had nothing to do with these games.

What really confuses me is how these games are not considered the "corporate practice of medicine", which is banned in all states yet in reality practiced in all.

the rich kids make the rules. its not corporate medicine because corporate paid their way out of the label

 

[UscGhost]

It's probably inevitable for everyone.

Insurance companies continue to gut physician reimbursement and we simply don't have the leverage that ASCs and hospitals have. The surprise bill legislation saw to that.

So when Medicare comes and cuts reimbursement for anesthesia each year and commerical follows suit.. eventually we will be reliant on hospital employment..large organizations with other revenue sources, etc. Not to mention the fact that the population is aging and we may even need to expect a single payor model at some point.

Writing is on the wall for most private practices. Won't be many left in 20 years.

 

[anbuitachi]

It's probably inevitable for everyone.

Insurance companies continue to gut physician reimbursement and we simply don't have the leverage that ASCs and hospitals have. The surprise bill legislation saw to that.

So when Medicare comes and cuts reimbursement for anesthesia each year and commerical follows suit.. eventually we will be reliant on hospital employment..large organizations with other revenue sources, etc. Not to mention the fact that the population is aging and we may even need to expect a single payor model at some point.

Writing is on the wall for most private practices. Won't be many left in 20 years.

i believe in 50 years, med school will be mostly free or theres some decent loan forgiveness plans. then residency hours will be reduced. and physicians will make like 100-200k todays money worth

 

[Twiggidy]

i believe in 50 years, med school will be mostly free or theres some decent loan forgiveness plans. then residency hours will be reduced. and physicians will make like 100-200k todays money worth

Aka.....the NHS

 

[DirtDocMD]

I know I’ll be called a commie, but this is what happens in a society that places more value on capital than it does on labor. The problem is the scales are so enormously skewed towards capital that the balance is completely off right now. Healthcare is certainly not the only industry being gutted by these private equity vultures.

Wouldn’t call you “commie”. My question is why most of this isn’t “fraud”??

If I buy a house (fixer upper), THEN take out a “home improvement loan”, pay myself a “bonus” (call MYSELF the contractor and sub, do little to no work), THEN default on the home loan AND the home improvement loan, THAT would be fraud.

When private equity buys a company, loads it up with debt (for “improvement”), pays themselves and leadership “bonuses” with that money, then declares bankruptcy (“Oops! This business model is not sustainable!!), the Govt allows them to walk away from it..

How is one different from the other, when it’s OBVIOUS the borrowed money was not being put to proper use???

 

[nimbus]

i believe in 50 years, med school will be mostly free or theres some decent loan forgiveness plans. then residency hours will be reduced. and physicians will make like 100-200k todays money worth

Aka.....the NHS

Will it take 7-8yrs of residency at reduced hours to become a fully trained anesthesiologist like the UK?

 

[Twiggidy]

Will it take 7-8yrs of residency at reduced hours to become a fully trained anesthesiologist like the UK?

Maybe....as you noted, basically residents are being used to fill rooms with the spawn these new "residency" programs.

 

[anbuitachi]

Will it take 7-8yrs of residency at reduced hours to become a fully trained anesthesiologist like the UK?

got a colleague who trained in europe. he says he likes it better. they are well trained, and chiller than here with LOTS of autonomy. senior residents can start cases at night without attending even in house. also salary in later stages is comparable to junior attending.

basically its just another job.

think of wall street analysts who work for 7-8 years making 70 to 170k, then get promoted to 500k+++.

in this 7-8 year chill anesthesiology residency, residents will work 40 hours a week, making 6 figures a year by the tail end of it. before getting another pay pump into attending

 

[deleted941485]

Will it take 7-8yrs of residency at reduced hours to become a fully trained anesthesiologist like the UK?

The UK system is probably even more hierarchical than the US. The Western European countries…I have no idea.

 

[CHARLESTONMMM]

So I could spend my 20s and my 30s becoming an anesthesiologist to continue to be disrespected and make even less money or I could become an investment banker at age 22 and break necks and cash checks…sounds like an easy answer to me.

 

[emergentmd]

So who lends the money to the PE group. If it is such a high risk loan? Just asking….

There are always suckers, friends, banks who dream of hitting the jackpot if VCs can rehab/exit the position. They know some will fail and some will hit big. They just need some to hit big for the failures to make it worth it.

 

[GravelRider]

Wouldn’t call you “commie”. My question is why most of this isn’t “fraud”??

If I buy a house (fixer upper), THEN take out a “home improvement loan”, pay myself a “bonus” (call MYSELF the contractor and sub, do little to no work), THEN default on the home loan AND the home improvement loan, THAT would be fraud.

When private equity buys a company, loads it up with debt (for “improvement”), pays themselves and leadership “bonuses” with that money, then declares bankruptcy (“Oops! This business model is not sustainable!!), the Govt allows them to walk away from it..

How is one different from the other, when it’s OBVIOUS the borrowed money was not being put to proper use???

Because you’re not a billionaire. If you do it, it’s fraud, if a hedge fund does it, it’s capitalism. Money has such an outsized influence on laws and policy in this country. The bankruptcy laws, which were meant to encourage people to take risks and start businesses have become exploited to be just another way to transfer wealth from the middle class to ultra-wealthy.

 

[deleted941485]

So I could spend my 20s and my 30s becoming an anesthesiologist to continue to be disrespected and make even less money or I could become an investment banker at age 22 and break necks and cash checks…sounds like an easy answer to me.

Honestly it’s the decision I should have made. Bankers especially the young ones are hated by everyone…do they care? Not in the least. They have a pile of money that you’ll never have. Everytime I read about a Goldman junior banker crying in a bathroom…i can’t stop laughing. How many of these dinguses committed suicide last year? It doesn’t matter.

Doctors…you take a single dollar that’s not yours they’ll put you on a ****ing list of undesirables, take your license away, turn you into a pariah.

 

[anbuitachi]

Honestly it’s the decision I should have made. Bankers especially the young ones are hated by everyone…do they care? Not in the least. They have a pile of money that you’ll never have. Everytime I read about a Goldman junior banker crying in a bathroom…i can’t stop laughing. How many of these dinguses committed suicide last year? It doesn’t matter.

Doctors…you take a single dollar that’s not yours they’ll put you on a ****ing list of undesirables, take your license away, turn you into a pariah.

prison time for doctors!

yes but a lot of pre meds dont know this. and they find out when its 'too late' . no one educates them on this stuff. all they hear is how respected and noble it is. applications to med school soared during covid

 

[deleted941485]

prison time for doctors!

yes but a lot of pre meds dont know this. and they find out when its 'too late' . no one educates them on this stuff. all they hear is how respected and noble it is. applications to med school soared during covid

Which is why we need to stop taking young people like this. They romanticize medicine and it clouds everything they do and in the end screwing over everyone else. They’re not good leaders not willing to make tough decisions and are desperate to make sure everyone likes them.

 

[MirrorTodd]

Which is why we need to stop taking young people like this. They romanticize medicine and it clouds everything they do and in the end screwing over everyone else. They’re not good leaders not willing to make tough decisions and are desperate to make sure everyone likes them.

You'd rather have 75 year old geezers (who aren't even capable of running the country) applying for medicine?

 

[deleted941485]

You'd rather have 75 year old geezers (who aren't even capable of running the country) applying for medicine?

I really don’t think that’s the choice we’re are being forced to make.

 

[secretasianman]

Patients paying to see a doctor and then only getting an unqualified mid level at the door, who may or may not have a clue, and just orders a bunch of labs/studies. Then at the end, gets an expensive medical bill for what just amounts to subpar expertise and care.. This all seems like bait and switch and fraud on a grand scale..

Remember when Obama told us if we want our doctor we can keep our doctor? Well now all we have are people that don’t practice medicine. They practice “healthcare.”

 

[deleted941485]

Patients paying to see specialists and then only getting an unqualified mid level at the door, who may or may not have a clue, and then getting needless tests ordered. Then at the end of it all, getting a ridiculously expensive medical bill for a subpar level of expertise and care.. This all seems like bait and switch and fraud on a grand scale..

Remember when Obama told us if we want our doctor we can keep our doctor? Well now all we have are people that don’t practice medicine. They practice “healthcare.”

All that’s happened to medicine in the last 12 years is a direct result of the policies his administration put in place. The blame lies with him and his advisors.

 

[nimbus]

On the other side, the folks whining and crying to Congress about OON EM docs made $17.3B last year. That’s $17.3B not spent on actual healthcare. It’s pillage and plunder time.

UnitedHealth Group earned $17.3B in 2021, according to earnings report

The company's full-year revenue grew more than $30 billion, or 11.8%, to $287.6 billion year-over-year.

www.healthcarefinancenews.com

 

[secretasianman]

All that’s happened to medicine in the last 12 years is a direct result of the policies his administration put in place. The blame lies with him and his advisors.

I agree with you 100% , even as a liberal. In 10-20 years, the majority of healthcare “providers” will be hacks, and the price will be even more ridiculous.

 

[chessknt]

All that’s happened to medicine in the last 12 years is a direct result of the policies his administration put in place. The blame lies with him and his advisors.

Look deeper, despite the vindication you feel in blaming Obama these problems have existed long before him. George hw bush signed in to the law the dog**** physician billing system we have in place today. Before him Nixon expanded medicare to dialysis patients at astronomical expense. There is more but to find one culprit who you don't like and shoulder the blame of half a century of a failing system is patently ridiculous.

 

[GravelRider]

All that’s happened to medicine in the last 12 years is a direct result of the policies his administration put in place. The blame lies with him and his advisors.

Midlevel encroachment started in 2008? I don’t think so. I was an internal medicine resident in 2008 and I can assure you, midlevel encroachment was already here and flourishing. I distinctly remember the cardiologists worrying about NPs doing caths and GIs worrying about them doing screening colonoscopies.

 

[Twiggidy]

All that’s happened to medicine in the last 12 years is a direct result of the policies his administration put in place. The blame lies with him and his advisors.

A lot of today's problems were put into motion long before Barry took office (a PA was my supervisor on ICU call and GWB was president). A good portion of today's problems are state-by-state issues and created by individual state legislatures.

 

[deleted941485]

Midlevel encroachment started in 2008? I don’t think so. I was an internal medicine resident in 2008 and I can assure you, midlevel encroachment was already here and flourishing. I distinctly remember the cardiologists worrying about NPs doing caths and GIs worrying about them doing screening colonoscopies.

And now they are doing colonoscopies right beside GI fellows at JHU. And if you have a problem with that then be prepared to be canceled.

 

[emergentmd]

Lawyers and politicians can push a hippo through an eye of a needle. It doesn't matter what laws are passed, Insurance companies/hospitals will find loopholes to make the law to their benefits.

Happens all the time. Save $$$$ people. You still make alot of $$$$. Docs have very little control over their futures.

 

[Dr. Rude]

And now they are doing colonoscopies right beside GI fellows at JHU. And if you have a problem with that then be prepared to be canceled.

Cancelled is a bit harsh. Ignored and passed over for advancement is the far more common scenario.

 

[deleted941485]

Cancelled is a bit harsh. Ignored and passed over for advancement is the far more common scenario.

It’s the same thing. No one at this level is being hauled off by the PC police.

 

[GravelRider]

And now they are doing colonoscopies right beside GI fellows at JHU. And if you have a problem with that then be prepared to be canceled.

I just googled it. Apparently that stopped because it exploited black patients.

A doctor trained nurse practitioners to do colonoscopies. Critics say his research exploited Black patients

The controversy has stoked concerns that the institution infamous for its role in the Henrietta Lacks story may have once again exploited marginalized people for medical research. The university denies any wrongdoing.

www.statnews.com

 

[deleted941485]

I just googled it. Apparently that stopped because it exploited black patients.

A doctor trained nurse practitioners to do colonoscopies. Critics say his research exploited Black patients

The controversy has stoked concerns that the institution infamous for its role in the Henrietta Lacks story may have once again exploited marginalized people for medical research. The university denies any wrongdoing.

www.statnews.com

But I thought URMs were victims of a racist greedy doctor hospital cabal and those goodie good nurse practitioners with their DNPs were just trying to ensure equitable health outcomes….oh calamity!!!

 

[bronx43]

I just googled it. Apparently that stopped because it exploited black patients.

A doctor trained nurse practitioners to do colonoscopies. Critics say his research exploited Black patients

The controversy has stoked concerns that the institution infamous for its role in the Henrietta Lacks story may have once again exploited marginalized people for medical research. The university denies any wrongdoing.

www.statnews.com

Classic.

So it’s totally not exploitation for mostly underserved populations to see only a midlevel for complex medical diagnoses and management (poorly reimbursed) but it is heinous exploitation when these same patients get a procedure (highly reimbursed) that one can train a non human primate to perform…

I honestly can’t remember the last time I referred a complex case to GI and didn’t get a nonsensical NP note back.

 

[GravelRider]

Classic.

So it’s totally not exploitation for mostly underserved populations to see only a midlevel for complex medical diagnoses and management (poorly reimbursed) but it is heinous exploitation when these same patients get a procedure (highly reimbursed) that one can train a non human primate to perform…

I don’t know the data, but I’m guessing there are just not enough primary care doctors in underserved areas. A midlevel is better than no one at all. John’s Hopkins is not an underserved area and it seems the issue here is more one of informed consent and not the fact that the midlevel was doing the procedure.

 

[bronx43]

I don’t know the data, but I’m guessing there are just not enough primary care doctors in underserved areas. A midlevel is better than no one at all. John’s Hopkins is not an underserved area and it seems the issue here is more one of informed consent and not the fact that the midlevel was doing the procedure.

I don’t mean pcps. I mean midlevels in specialty clinics where the GI docs are doing rote procedures which don’t require a decade of studying and training while the midlevels are trying to diagnose and manage pretty complex pathologies. And this isn’t just underserved areas- it’s everywhere including the large academic institutions in large metros.

And this sad misallocation of human capital is present solely due to the skewed reimbursement model.

 

[Neopolymath]

Classic.

So it’s totally not exploitation for mostly underserved populations to see only a midlevel for complex medical diagnoses and management (poorly reimbursed) but it is heinous exploitation when these same patients get a procedure (highly reimbursed) that one can train a non human primate to perform…

I honestly can’t remember the last time I referred a complex case to GI and didn’t get a nonsensical NP note back.

Every. Freaking. Time.

 

[GravelRider]

I don’t mean pcps. I mean midlevels in specialty clinics where the GI docs are doing rote procedures which don’t require a decade of studying and training while the midlevels are trying to diagnose and manage pretty complex pathologies. And this isn’t just underserved areas- it’s everywhere including the large academic institutions in large metros.

And this sad misallocation of human capital is present solely due to the skewed reimbursement model.

Oh, you’re preaching to the choir about that. Even in anesthesia we get all hot and bothered about a CRNA doing a block, meanwhile when I want to learn a new block, I watch 2 YouTube videos and have at it. The blocks, intubations, epidurals, etc are not where my value lies. Our current billing structure doesn’t reward thinking or complex problem solving. However, one could say the same thing about our economy at large. What value does Facebook (excuse me, Meta) add to society beyond being a glorified advertising firm?

 

[deleted941485]

Oh, you’re preaching to the choir about that. Even in anesthesia we get all hot and bothered about a CRNA doing a block, meanwhile when I want to learn a new block, I watch 2 YouTube videos and have at it. The blocks, intubations, epidurals, etc are not where my value lies. Our current billing structure doesn’t reward thinking or complex problem solving. However, one could say the same thing about our economy at large. What value does Facebook (excuse me, Meta) add to society beyond being a glorified advertising firm?

Stalkers now don’t have to waste gas following people anymore. Zuckerberg deserves every penny of his billions.

 

[ValentineD]

I know I’ll be called a commie, but this is what happens in a society that places more value on capital than it does on labor. The problem is the scales are so enormously skewed towards capital that the balance is completely off right now. Healthcare is certainly not the only industry being gutted by these private equity vultures.

We messed up, finance was supposed to exploit developing countries not exploit us!