By Dietrich Knauth
NEW YORK (Reuters) – Envision Healthcare, which is backed by private equity firm KKR & Co and provides outsourced emergency department services to hospitals, on Wednesday received U.S. bankruptcy court approval to split into two companies and cut over $7 billion in debt.
U.S. Bankruptcy Judge Christopher Lopez approved Envision’s restructuring at a court hearing in Houston. Lopez commended Envision’s bankruptcy lawyers for putting together an “incredibly complex” financial transaction while minimizing disruption to patients needing emergency care and the more than 20,000 doctors employed by Envision.
“At the end of the day, this is going to remain a viable business, and those people have not been forgotten,” Lopez said.
The bankruptcy restructuring will split Envision Healthcare into two separate companies, Envision Physician Services (EVPS) and AMSURG.
EVPS will focus on providing doctors to hospital emergency rooms, intensive care units and birthing suites, while AMSURG will operate outpatient surgery centers specializing in gastroenterology, ophthalmology and orthopedic care.
The company filed for bankruptcy in May, saying its high debt was unsustainable due to rising interest rates, high labor costs, and payment disputes with health insurers.
Envision had said its financial problems were exacerbated by the recent U.S. ban on “surprise” medical bills – typically sent to patients who unwittingly receive treatment from an out-of-network doctor, despite visiting a hospital or other medical facility that is in-network for their insurance.
Envision said in bankruptcy court filings that the “surprise billing” ban had unintentionally emboldened insurers in reimbursement negotiations, causing some to unilaterally refuse or delay payment for medical care after it was provided.
(Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and Bill Berkrot)
