Tag: Envision Healthcare

RadPartners + Envision Consolidate Imaging Services

Posted on by Brian Casey

In a stunning consolidation of the imaging services segment, Radiology Partners has agreed to take over radiology contracts currently held by debt-laden national medical group Envision Healthcare. The agreement could bring up to 100 imaging sites and hundreds of radiologists into the RadPartners fold. 

The takeover is a remarkable comedown for Envision, which was once one of the largest national medical practices in the U.S. and employed some 25k physicians when it was acquired in 2018 by private equity giant KKR. 

  • Envision’s business crossed multiple medical specialties, with its radiology operation at one point employing 800 radiologists who performed over 10 million reads per year. 

But Envision struggled under a $5.3B debt load imposed by the KKR buyout, and eventually filed for Chapter 11 bankruptcy protection in 2023 in a move that also included spinning off its ambulatory surgery business. 

  • Many industry observers have viewed Envision’s rise and fall as a cautionary tale illustrating the perils of private-equity investment in American medicine.

Radiology Partners itself has evolved into the giant of the imaging services segment as it rolls up local radiology practices into a massive national network. Under the agreement with Envision, RP will … 

  • Take over Envision’s contracts with some 95 client sites, including teleradiology. 
  • Potentially bring some 400 Envision radiologists onboard (assuming they want to join RP).

The question is, how many Envision radiologists will choose to go with the contracts and join Radiology Partners? 

  • Speculation on industry bulletin board RadHQ.net proposes that Envision radiologists will be offered new contracts with RP – contracts that they can take or leave.

The Takeaway

Radiology Partners’ takeover of Envision’s radiology contracts will only enhance RP’s dominance of the imaging services market, which is already significant. While that may be good news to RP’s investors, it probably won’t be encouraging to those worried about the inexorable corporatization of radiology. 

Envisioning A Difficult Future

Posted on by Jake Fishman

S&P Global Ratings’ decision to downgrade Envision Healthcare might have been largely overlooked during another busy healthcare news week, but it could prove to be part of one of the biggest stories in healthcare economics.

About Envision – The private equity-backed mega practice employs more than 25k clinicians across hundreds of US hospitals, including roughly 800 radiologists who perform over 10 million reads per year. 

The Downgrade – S&P downgraded Envision Healthcare to ‘CCC’ (from CCC+) and assigned it a ‘Negative’ CreditWatch rating, citing the company’s “inadequate” liquidity, a missed financial filing deadline, and a challenging path forward. Envision owes $700M by October 2023 (and more after that), but S&P expects the company to end 2022 with less than $100M in cash, risking more short-term downgrades and bigger long-term disruptions.

The Background – If you’re wondering how Envision found itself in this situation, a recent Prospect.org exposé has some answers (or at least its version of the answers):

  • When private equity giant KKR acquired Envision in 2018, it burdened the company with billions in debt, including a $5.3B first-lien term loan due in 2025
  • KKR’s initial strategy involved keeping most of Envision’s clinicians out-of-network (and earning higher surprise billing rates), but Envision moved many of its physicians in-network amid public backlash and looming legislation 
  • Ongoing surprise billing legislation spooked investors, causing Envision’s first-lien term loan to trade for 50 cents on the dollar in early 2020, before bouncing back to a somewhat-less-distressed 70-80 cent range later that year
  • The COVID pandemic further strained Envision’s finances, as many of its core specialties saw major volume declines (emergency, anesthesiology, radiology, GI, etc.)
  • Envision avoided bankruptcy thanks to an estimated $100M CARES Act bailout and help from its creditors
  • The final surprise billing legislation turned out to be pretty favorable for Envision, but not as favorable as back in the pre-legislation days
  • As of March 2022, Envision’s $5.3B first-lien term loan was still trading in distressed territory (73 cents), and it has other loans to pay off too

The Path Forward – It’s hard to predict how this will work out for Envision, although Prospect.org suggests that it might involve KKR splitting Envision into two companies. One could be saddled with all the debt and destined for bankruptcy, while the other entity (and KKR) could emerge “unscathed.”

The Takeaway

For many in healthcare this is a cautionary tale about what can go wrong when private equity influences are combined with an over-reliance on a disputed business model (in this case surprise billing) and a global pandemic. It also makes you wonder if other mega practices are in similar situations.

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