Envision Healthcare plans to emerge from Chapter 11 bankruptcy this month, the physician staffing company announced Wednesday.
The U.S. Bankruptcy Court for the Southern District of Texas approved a reorganization plan for Envision Healthcare that will eliminate 70% of its funded debt. The for-profit company expects to finalize the transaction within weeks, according to a news release.
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Under the agreement with its creditors, Envision Physician Services will operate separately from ambulatory surgery unit Amsurg. The two operations will have separate owners and leadership teams.
Envision expects the deal to leave it in a stronger position to navigate a challenging healthcare environment and pursue growth opportunities, President and CEO Jim Rechtin said in the release.
Rechtin will leave Nashville, Tennessee-based Envision to become president, chief operating officer and CEO of the health insurance company Humana next year, succeeding Bruce Broussard. Rechtin joined Envision in 2020 after serving as president of UnitedHealth Group subsidiary OptumCare.
Envision filed for Chapter 11 bankruptcy protection and entered into a restructuring support agreement for $7.7 billion in debt in May.
The bankruptcy filing followed months of turmoil at Envision, which struggled to navigate high labor costs and ongoing legal disputes with UnitedHealth Group. The No Surprises Act, which took effect last year, also dealt a blow to Envision's profits from out-of-network bills and allegedly led to hundreds of millions of dollars in underpayments and delayed reimbursements.
Moody’s Investors Service downgraded Envision's debt to a C rating in September 2022, citing an unsustainable capital structure.
Healthcare staffing firms have recently struggled to find enough workers to meet rising demand, blaming compressed margins and softening demand for contract labor.
