Worried About the Possible Envision Bankruptcy? You Should Be.

Envision, a private equity-backed clinician staffing firm that also manages ambulatory surgical centers and care after hospitalization, is expected to file Chapter 11 bankruptcy if reports from the Wall Street Journal prove true.

If Envision goes bankrupt, it could impact emergency departments, hospitalist services, anesthesia, radiology, and services for women and children.

While Envision did not make perfect business decisions over the past few years — it has received criticism for its out-of-network billing practices, for example — it will not be the only healthcare provider who could suffer this fate. In fact, if the growth and power of private payers like UnitedHealthcare, Cigna, and Aetna is unchecked by new government regulations, we could see a slew of care providers go bankrupt in the coming months.

Lawmakers and regulators need to protect patients, hospitals, and providers from this dramatic shift in power and influence.

Bankruptcy in Healthcare

Bankruptcy in healthcare is not new, and it accelerated during and after the COVID pandemic due to inflation costs and staffing challenges.

But Envision’s bankruptcy still could have significant ripple effects on the industry. And it is different.

While organizations may use bankruptcy to restructure their financial obligations, and can continue operations while they do so, the uncertainty of Chapter 11 could harm employees and clients as they wait to hear about potential layoffs, renegotiated contracts, services, and altered benefits.

Additionally, of the 46 healthcare bankruptcies filled in 2022, only five had liabilities over $500 million. Envision’s financial collapse would likely be more significant — and it could be one of the first canary in the provider services and hospital-based coal mine.

Antecedents to the Balance Sheet Problem

We can blame COVID and its lingering effects for rising provider expenses and declining revenues. We also can blame the No Surprises Act implementation, gumming up the arbitration system, which is difficult to access and often costly for providers.

But providers were in trouble long before COVID, inflation, and the No Surprises Act.

There has been a steady decline in reimbursement from both government and non-government payers over the last several years.

For example, the Medicare Physician Fee Schedule and PAYGO ties increases and decreases to provider reimbursement to sustainable funding for the program — even though funding is not keeping up with inflation. Currently, the Medicare coverage rate for a relative value unit (RVU) sits at $33.89, which, if it had been adjusted for inflation, would be significantly higher. Allocations that increased RVU amounts for services in non-hospital-based practices also shift dollars away from hospital-based services.

Moreover, the Emergency Medical Treatment & Labor Act (EMTALA) — the unfunded mandate — compels emergency doctors to treat patients regardless of insurance coverage. Though crucial, this law burdens physicians with hefty costs. For uninsured patients, doctors’ groups receive minimal or no compensation from Medicare, despite shouldering the expenses of patient care. For a company like Envision, which has heavy penetration in hospital-based services and emergency services specifically, these cuts and mandates are likely especially challenging.

However, one of the biggest drivers of Envision’s revenue decline allegedly came from one of the nation’s largest health insurers: UnitedHealthcare.

UnitedHealthcare’s first quarter revenues grew 13% to $70.5 billion and its operating earnings grew 14% to $4.3 billion. Most of the revenue was derived from their Optum provider services, Medicare Advantage plan participation, and pharmacy benefits managers. However, in late April 2023, United Healthcare lost a legal battle with Envision, which had sued the insurance giant in 2018 over billing practices. While this may not change Envision’s reportedly impending bankruptcy, it emphasizes the role of private payers in the declining revenues of care providers.

Notably, UnitedHealthcare is not the only payer amassing major revenues and profits.

We Have a Payer Problem

CVS Health’s revenue topped $300 billion in 2022 — even before news broke that the company will snap up more primary care clinics. Aetna, CVS Health’s insurance wing, brought in $91.4 billion in revenue in 2022, an increase of almost $10 billion from 2021. By the end of 2022, both UnitedHealthcare and CVS had revenues of $330 billion. Add Cigna and the three companies combined made nearly $1 trillion in revenue in 2022, an amount more than the GDPs of more than 160 countries.

Not all the money is coming from insurance premiums and membership growth. Each of these companies has expressed a keen interest in value-based care models due to their involvement in managed Medicare plans like Medicare Advantage. (Medicare Advantage plans pay taxpayer dollars to private insurers up front for the care and management of patients.)

These companies also have amassed power by creating vertically-integrated conglomerates in the market, which are going unchecked.

UnitedHealthcare, for example, is made up of the nation’s largest health insurance company, the largest provider network through Optum (more than 60,000 physicians), and Optum RX (a pharmacy benefit manager). CVS Health, the world’s largest healthcare company by revenue, owns CVS retail pharmacies, Aetna (the country’s sixth-largest health insurer), CVS Caremark pharmacy benefits manager, CVS MinuteClinics, and, now, Oak Street Health.

Consolidation may ensure integrated, coordinated care of patients, but that benefit cannot come at the risk of access and choice for patients and negotiating power for hospitals and providers.

While we march towards value-based care, we must ensure we aren’t incentivizing the creation of monopolies.

FTC Asleep at the Wheel

Despite concerns, the Federal Trade Commission (FTC) has continued to approve mergers. We are now seeing the results.

Since these models encourage patients to remain within tight networks, patients generally have fewer choices. Additionally, other businesses that interface with these giants have reduced ability to negotiate.

While payers profit, around 50% of hospitals finished 2022 in the red. Hospital closures mean less patient access, which often leads to worse outcomes for patients.

If Envision could not make it in this environment, how can smaller providers? When I speak with CEOs and CMOs of hospitals and provider groups, the number one reason for financial woes are continued concerns with reimbursement challenges with payers.

In a market-based economy, UnitedHealthcare is doing what is expected of them: making a profit. But that does not mean they are above regulation or enforcement.

We must address the issue of market domination by a limited number of powerful entities.

In order to tackle vertical integration and consolidation, it is crucial for state legislatures to take measures to enhance and back the antitrust enforcement powers of state attorneys general and federal regulators (the FTC), ensuring patients are safeguarded from increased expenses and limited options.

The federal government also must enforce the Affordable Care Act 80/20 Medical Loss Ratio rule for insurers and define more clearly what “quality improvements” mean under that rule. Lawmakers must invest in Medicare, shifting the PAYGO rules and adjusting fee-schedule rates.

On the care provider side, clinicians must better educate themselves about what is happening in healthcare and develop the business knowledge to meet the challenge. To my fellow physicians I say: Understand the issues, and the financial incentives, and advocate for patients and yourselves.

As a country, we cannot watch private payers-provider conglomerates amass power while hospitals close, healthcare outcomes worsen, provider groups shutter, and physicians burn out.

If we don’t act, the whole system will bankrupt.

N. Adam Brown, MD, MBA, is a practicing emergency medicine physician, founder of ABIG Health, and a professor of practice at the University of North Carolina’s Kenan-Flagler Business School. Previously he served as president of emergency medicine and chief impact officer for one of the nation’s largest national medical groups.


Brown previously served as medical director, president of emergency medicine, and chief impact officer of Envision Healthcare.

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