Envision, private equity and patient care: Substituted values 2.0

Arthur E. Palamara

He was only 41, already burdened with multiple health problems. Diabetes, hypertension and renal failure had put him on dialysis, caused the amputation of his left leg, and now left him with poor circulation in his right leg. Signs of gangrene were already present in his toes. Only bringing more blood to his leg would prevent him from being a bilateral amputee, a condition that would place him entirely dependent on his family, who were already stressed by his debilitating illness. His two teenage sons visited him daily to give him courage. Only his mind remained mostly intact. And even then, his mental functions waxed and waned. 

Scheduled for an angioplasty in the early afternoon, his procedure was delayed by staffing issues: there were insufficient “anesthesia providers” to cover the case. The days of having a fully-trained anesthesiologist to provide anesthetic care were long gone. Previously, high-risk individuals like him were seen the night before, recommendations made, then delivered anesthesia the following day. Now, care was provided by anesthesiologists employed by a private equity firm, Envision Healthcare/KKR, an entity with different goals. Here, profitability was valued over patient care. Staffing was a problem, and high turnover resulted in a condition where the patient became a “case.” Whoever was available carried out the case, be it a doctor, a certified nurse practitioner or an anesthesia assistant. The shortage was made worse by the pandemic. Since large Wall Street firms cared little for their employees, the employees felt no loyalty to their employer, and moved from one hospital to another. The days of institutional loyalty were long over. 

The afternoon dragged on and the patient had not eaten since the day before. He received insulin that morning, but the insulin had little food to work on. The patient was sleepy but arousable. He smiled weakly, opening his eyes, and muttered a few incomprehensible words. His vital signs remained stable. One o’clock became two o’clock, then three then four. Finally, an anesthesia provider was found. He was placed on the radiology table and the case was set to begin. 

The nurse anesthetist, just assigned to the case, was very competent, but knew little about the “case” except an outline of his major problems. The procedure, minimally invasive, and done with local anesthesia and sedation, carried little risk of blood loss or serious complications. She gave the usual medications, the patient was prepped, and the procedure was about to begin. As the surgeon began, he felt no pulse in the femoral artery into which he was to place his needle. Wires and balloons would subsequently be inserted to open the blocked arteries. That was not to be. 

“Are we okay?” 

“Let me check,” the nurse anesthetist responded. 

He could hear the whirring of the blood pressure machine attempting, but failing, to find a blood pressure. The heart monitor recorded a stable heart rhythm, but the oxygen monitor bleeped a lower pitch with each heartbeat, consistent with falling oxygenation. 

“Start chest compressions! Call a code!” she yelled. 

A series of misadventures followed, and, while the heart was restarted, his brain—bereft of oxygen for an extended period of time—did not. He was left brain dead, and life support was discontinued two days later. 

Corporate overseers 

Reassessing this and similar events suggest that patients would be better protected by anesthesia departments that are staffed with a stable, dedicated and available workforce. Such aspirations are difficult to achieve in a Wall Street, entrepreneurial environment. The pandemic has taught us that physician and mid-level practitioners feel no obligation to corporate overseers who have asked them to provide service with little regard to their own well-being. This includes pay reduction, increased and dangerous staffing, liability exposure, and life-threatening illness. In fact, anesthesiologists look into the throats of mortally ill COVID-19 patients who potentially spew virus-laden droplets as endotracheal tubes are inserted into their windpipes. While these caregivers wear protective equipment, it is not a guarantee of their safety. Many of them have died. 

On April 20, Bloomberg News published a story describing KKR, or Kohlberg Kravis Roberts, one of the largest physician staffing companies in the United States, initiating a Chapter 11 bankruptcy. KKR was in the process of completing a leveraged buy-out of Envision, a company that employs a large number of anesthesiologists and radiologists. Envision’s debt of $1.23 billion has been trading at deeply reduced levels, about 30 cents on the dollar. Because of the pandemic and reduced outpatient/elective surgeries, Envision’s business was down about 70%. KKR agreed to buy Envision for $9.9 billion. Envision’s assets represent little more than an assemblage of physician contracts protected by restrictive covenants. Of course, like all good businesses experiencing declining revenue, it appealed to the federal government for a bail out under the CARES Act. 

Doctors and patients alike suffered the deleterious effects of this bankruptcy. Highly-skilled physicians were obligated by Envision to accept a “hold back” of a third of their 2019 salary. It was to be paid as a bonus on March 30, 2020. That “bonus” was canceled. Further, they were required to accept an indefinite 30% reduction of their current salary. 

More recently, an article was printed in the American Prospect by Eileen Appelbaum and Rosemary Batt—March 4, 2022— entitled “Envision Healthcare Hits the Skids,” which asserted: “Envision Healthcare—the private equity–owned emergency medicine group with some 70,000 health care professionals staffing 540 health care facilities in 45 states—is in serious financial trouble. Creditors have lost confidence in its ability to repay its huge debt. Envision’s $5.3 billion first-lien term loan, due in 2025, was trading in distressed-debt territory at the beginning of March 2022, at 73 cents on the dollar; and its senior unsecured note due in 2026 was trading at 53 cents on the dollar. How did this happen to the largest U.S. physician staffing firm, owned by KKR, one of the most financially successful private equity firms in the world? How can KKR extricate itself and protect its investment? And what happens to its doctors and patients?” 

Private equity firms like to boast about their closely guarded “secret sauce” recipe for how they buy a company, load it with debt, introduce new high-tech practices that increase efficiency and revenue, and then exit at a profit. But KKR and Envision demonstrate these assertions are empty. KKR acquired Envision in 2018 in a leveraged buyout that burdened the company with billions in debt. But KKR’s plan for paying off the debt, and garnering a high return for its investors, was low-tech. 

An article in Bloomberg by Eliza Ronalds-Hannon and Davide Scigliuzzo, from Oct. 5, 2022, details its immense challenge: Envision is in dire straits since it lacks the ability to support the roughly $7 billion debt that KKR structured into its 2018 buyout. Angelo Gordon & Co. and Centerbridge Partners, fund managers, were offering more than $1 billion of new capital. Even more unpalatable is the requirement that Envision must divest itself of its most profitable asset: AmSurg. Envision is in deep trouble because of high labor costs, patient-protection (surprise billing) legislation, as well as a drop in hospital visits. Further compounding Envision’s prospects are rising interest rates. Its position is additionally threatened owing to complex loans and bonds that make it difficult to determine Envision’s actual worth. Potential creditors have little protection and face steep challenges if faced with a default. A looming recession further dampens Envision’s chances of a successful outcome. 

What does this mean for anesthesiologists, surgeons and patients? Anesthesiologists are dedicated doctors who deal with complex patients in critical situations. Since they have little faith in their employers’ ability to pay them, and anticipate little future security, many have left for greener pastures. Locally here, three anesthesiologists resigned in the past month, while others are retiring. As such, hospitals have trouble recruiting new anesthesia providers. This lack of an essential service causes delays and postponement of cases. Complex cases are performed later in the day when adequately trained operating room personnel are not available. (Complications and mortality increase by 10% when cases are done “off-hours” or on weekends.) The “great resignation,” traveling nurses, and professional ennui have reduced the number of trained, experienced personnel. New hires are often unacquainted with complex procedures, which increases the chances of unfavorable outcomes. 

While most operations are straightforward, vascular cases are especially complex since many are hybrid. “Team” experience is the best safeguard to reduce errors. 

The anesthesia turnover is so great that it leads to loss of confidence in the person at the head of the table. With enthusiastic but inexperienced personnel providing anesthesia care, many anesthesia providers are unfamiliar with the surgeon and the procedure, and cannot anticipate what could potentially go wrong. Since most cases are being covered by nurse anesthetists or anesthesia assistants, albeit supervised by an anesthesiologist, newly minted providers lack the expertise to avoid trouble. 

The margin between success and failure is thin. Medicine is very personal. The surgeon looks the patient in the eye and assures them that they can expect a favorable outcome. It is incumbent that all of us as providers see patients as a person with a husband or wife, children and a life story. To the patient, the fact that the surgeon is unfamiliar with the anesthesia provider elevates their level of tension. Concern rises when this crucial element in the surgery is found to be untried and untested. 

The concerns cited above are real but correctable. Entities such as Envision/ KKR—interested as they are in their own profitability—provide no demonstrable benefit to patients, surgeons or hospitals. They provide even less benefit to the likes of anesthesiologists and anesthesia assistants themselves who are placed in an undesirable position through no fault of their own. These dedicated caregivers are additionally exposed to litigation, financial damages and professional sanctions. 

Envision/KKR’s position will become more precarious in 2023 and can only lead to under-performance of services. This will, by necessity, negatively impact on the quality of care. It is apparent that the solution lies in anesthesiologists (and mid-level providers) being hired by hospitals and treated as the dedicated professionals that they are. 

Hospitals may consider this an unnecessary administrative headache and financial burden, but their obligation to patients as well as protection of their reputation, make this an inevitable strategy. Private equity in healthcare consumes much, but yields little. 

Arthur E. Palamara, MD, is a vascular surgeon in Hollywood, Florida. 


  1. A Q for Dr. Palamara:
    Please peel back the onion some more. The vast majority of MD’s are not participating in a truly free market for the exchange of their services. Prices are arbitrarily and politically set by the government and by extension, insurance companies. Unable to be sustained in private practice under these conditions, MD’s are either employed by either private equity or huge hospital systems. Your article focuses on the issues with the former, but I am aware that locally where I live, it is no better with the latter. My question is about price controls. Is this the root cause of why quality of access to care is limited?


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