A U.S. Bankruptcy Court on Wednesday approved private equity-backed radiology provider Envision Healthcare’s reorganization plans, the same day the company’s CEO said he’s leaving to lead Humana.
The Nashville, Tennessee-based multispecialty group voluntarily filed for Chapter 11 in May, seeking to cancel $5.6 billion in debt. Envision has been challenged in recent years by drops in patient volumes amid the COVID-19 pandemic, payment disputes with health insurers, clinician shortages and rising inflation.
Under terms of the deal, Envision will eliminate 70% of its obligations accumulated prior to filing the bankruptcy petition.
“I am pleased to have reached an agreement with our key stakeholders and look forward to emerging from Chapter 11 in the coming weeks,” CEO Jim Rechtin, MBA, said in an Oct. 11 announcement. “The confirmed plans allow Envision to emerge from the process in a strong position to navigate the current healthcare environment and take advantage of future opportunities to grow while continuing to deliver high-quality care to patients when they need it most.”
Envision employs more than 17,000 clinicians, primarily in emergency and hospitalist medicine, anesthesiology and neonatology. Another 500 of its physicians practice in radiology, completing roughly 8 million reads last year, according to its 2022 Clinical Impact Report released in April (and confirmed by a spokesperson). This will mark the largest loss ever for its private equity backers at KKR, which invested nearly $10 billion (including debt) as part of a highly leveraged buyout completed in 2018.
After exiting bankruptcy, Envision and its ambulatory surgery center platform, AmSurg, will separate into two standalone companies with different leadership teams and ownership groups. Finalization of the bankruptcy process is subject to “customary closing procedures and conditions,” with Envision hoping to emerge from the proceedings by the end of this month.
Meanwhile, health insurance giant Humana also announced Wednesday that it is naming Rechtin as its next chief executive. He’ll take over as president and COO on Jan. 8 “as part of a long-planned CEO transition.” Rechtin will report to current leader Bruce Broussard until the latter half of next year, when he will take the CEO reins. Broussard then plans to remain as a strategic advisor to the insurer into 2025. He’s held the chief executive title for Louisville, Kentucky-based Humana since 2013, earning compensation of nearly $17.2 million last year.
Rechtin first took over as Envision’s top exec in February 2020. He has more than 22 years of experience in healthcare, including serving as president of UnitedHealth’s OptumCare. Prior to that, he was SVP of corporate strategy and president of the California market for kidney care giant DaVita. Rechtin will collect a base salary of $1.1 million as chief operating officer which will climb to $1.25 million as CEO. He’ll be eligible for additional incentive compensation at 200% of base earnings, along with company stock grants worth $6 million and long-term incentive pay at another $6 million, according to an SEC filing.
“It has been a true privilege to serve Envision’s community of clinicians and support teammates through extraordinary times,” Rechtin said in a LinkedIn post shared Wednesday afternoon. “With the company on a promising new path and many opportunities ahead, the time is right for me to leave Envision in the capable hands of our strong clinician and executive leaders. I’m honored to be joining Humana in January as President and COO, and I look forward to working closely with Bruce Broussard, whose passion and leadership have helped establish Humana as a leader in value-based care.”
Envision also issued its own separate statement following news of Rechtin's departure, wishing him "all the best in his new role."
"As we complete our restructuring and prepare to emerge in a position to grow, the board thanks Jim for his leadership. Envision’s board will work closely with Jim to ensure a seamless transition to a new executive leader," the statement read.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.