Occasionally, There Is Justice

Matthew G. Saroff
2 min readMay 28, 2023

So Envision Healthcare, which has gained notoriety for buying up hospital emergency room practices, and then cheating patients through balance billing, forcing doctors to upcode, and firing doctors who complained about their fraud, has had to file for bankruptcy:

Physician staffing firm Envision Healthcare has filed for Chapter 11 bankruptcy, citing its $7.7 billion in debt obligations, declining patient volumes, “flawed” implementation of the No Surprises Act and exclusionary health insurers as reasons for its financial decline in a restructuring announcement on Monday.

The bankruptcy wipes out private equity firm KKR’s investment in Envision. In 2018, the PE firm shelled out over $5 billion in 2018 to take Envision private, in a deal valued at $9.9 billion including debt. Last week, The Wall Street Journal reported that an Envision bankruptcy filing would be one of the steepest losses in KKR’s history.

The physician staffing firm suffered from declining profits amid hurdles from the COVID-19 pandemic and prolonged legal battles with health insurer UnitedHealthcare over payment to Envision clinicians, which caused Envision to lose its in-network status with the insurer in early 2021.

………

UnitedHealthcare sued the staffing firm in September, alleging that it overpaid Envision after it exaggerated the complexity of care provided by its clinicians. In April, Envision announced that it was awarded $91 million from an arbitration panel for payment disputes in 2017 and 2018. At the time, Envision CEO Jim Rechtin said it had three outstanding lawsuits against UnitedHealthcare that would take “several more years” to resolve.

Envision also targeted recent regulatory efforts to stop surprise out-of-network bills for patients in its bankruptcy announcement, saying that implementation of the No Surprises Act caused the company to lose “hundreds of millions of dollars” in delayed or reduced payments from insurers.

So a a healthcare operation whose business model was predecated on fraud is in bankruptcy, and the PE firm which created the firm in its current form lost billions.

I call that a good start.

My guess is that the lawsuit by physicians groups claiming that they were using shell companies to illegally acquire corporate control of doctor’s practices had something to do with this: (Ownership of medical practices by non-doctors is illegal in most states)

Physicians and consumer advocates are monitoring a California lawsuit against Envision Healthcare, which alleges that Envision uses shell business structures to retain de facto ownership of emergency room staffing groups and asks the court to declare these structures illegal, Kaiser Health News reported Dec. 22.

Milwaukee-based American Academy of Emergency Medicine Physician Group, the plaintiff in the case set to start in January 2024, said a victory would result in prohibition of the practice across California in emergency rooms as well as anesthesiology and hospital medicine.

I agree with LA Times writer Michael Hiltzik, this is, “A rare victory for patients in the healthcare business.”

For profit enterprises, particularly those pump and dump artists in private equity, are completely incompatible with public health.

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