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matthew holt

What Can We Learn from the Envision Bankruptcy?


Envision, a $10 billion physician and ambulatory surgery firm owned by private equity giant Kohlberg Kravis Roberts, filed Chapter 11 bankruptcy on May 15.  It was the largest healthcare bankruptcy in US history.   Envision claimed to employ 25 thousand clinicians- emergency physicians, anesthesiologists, hospitalists, intensivists, and advanced practice nurses and contracted with 780 hospitals.  Envision’s ER physicians delivered 12 million visits in 2021, not quite 10% of the US total hospital ED visits.

The Envision bankruptcy eclipsed by nearly four-fold in current dollars the Allegheny Health Education and Research Foundation (AHERF) bankruptcy in the late 1990’s.   KKR has written off $3.5 billion in equity in Envision.   Envision’s most valuable asset, AmSurg and its 257 ambulatory surgical facilities, was separated from the company with a sustainable debt structure.  And at least $5.6 billion of the remaining Envision debt will be converted to equity at the barrel of a gun, at dimes on the dollar of face value. 

KKR took Envision private in 2018 when Envision generated $1 billion in profit, in luminous retrospect the peak of the company’s good fortune.   Envision’s core business was physician staffing of hospital emergency departments and operating suites.    In 2016, then publicly traded, Envision merged with then publicly traded ambulatory surgical operator AmSurg.  This merger seemed at the time to be a sensible diversification of Envision’s “hospital contractor” business risk.   

Indeed, Envision’s bonus acquisition of anesthesia staffing provider Sheridan, acquired by AMSURG in 2014,  helped broaden its portfolio away from the Medicaid intensive core emergency room staffing business (EmCare), which required extensive cost-shifting (and out of network billing) to cover losses from treating Medicaid and uninsured patients.   It is clear from hindsight that where you start, e.g. your core business, limits your capacity to spread or effectively manage your business risk, an issue to which we will return.

The COVID hospital cataclysm can certainly be seen as a proximate cause of Envision’s demise.

The interruptions of elective care and the flooding of emergency departments with elderly COVID patients, which kept non-COVID emergencies away, damaged Envision’s core business as well as nuking ambulatory surgery. By the spring of 2020, Envision was exploring a bankruptcy filing.  An estimated $275 million in CARES Act relief and draining a $300 million emergency credit line from troubled European banker Credit Suisse temporarily staunched the bleeding.  But the pan-healthcare post-COVID labor cost surge also raised nursing expenses and led to selective further shutdowns in elective care and further cash flow challenges.  

While one cannot fault KKR’s due diligence team for missing a global infectious disease pandemic, with hindsight’s radiant clarity, there were other issues simmering on the back burner by the time of the 2018 deal that should have raised concerns.  Two large struggling investor owned hospital chains,  Tenet and Community Health Systems, began divesting marginal properties in earnest in 2018, placing a lot of Envision’s contracts in the pivotal states of Florida and Texas at risk.

More importantly,  there were escalating contract issues with  UnitedHealth, one of Envision’s biggest payers,  as well as increasing political agitation about out-of-network billing, which provided Envision vital incremental cash flow.  These problems culminated in a United decision in January 2021 to terminate insurance coverage with Envision, making its entire vast physician group “out of network”. 

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SPM-Creative Learning Exchange, Portland, OR (& virtual), July 16

As you may know I am on the board of the Society for Participatory Medicine (SPM) which is trying to promote a new partnership between patients and the health care system.

On June 16 at 8am-1pm PST SPM is hosting a Creative Learning Exchange in Portland, OR at OHSU. The topic is Advancing Health Equity Through Participatory Medicine and there’ll be patients, clinicians and other leading crucial discussions about how to move health equity forward.

If you are in Portland please come join the meeting and if you can’t get there, it will be broadcast online. (There’s a nominal cost for tickets but no one will be turned away if they can’t afford it) Click here to find out more.–Matthew Holt

Healthcare Data: The Disruption Opportunity + Why This Time Is Different


Knowledge is power. If this adage is true, then the currency of power in the modern world is data. If you look at the evolution of the consumer economy over the past 100 years, you will see a story of data infrastructure adoption, data generation, and then subsequent data monetization. This history is well told by Professors Minna Lami and Mika Pantzar in their paper on ‘The Data Economy’: “Current ‘data citizenship’ is a product of the Internet, social media, and digital devices and the data created in the digitalized life of consumers has become the prime source of economic value formation. The database is the factory of the future.” If we look no further than the so-called big tech companies and distill their business models down in a (likely overly) reductionist fashion: Apple and Microsoft provide infrastructure to get you online, and Facebook (Meta) and Google collect your data, while providing a service you like, and use that data to sell you stuff. Likely none of this is surprising to this audience, but what is surprising is that this playbook has taken so long to run its course in one of the world’s largest and most important sectors: healthcare.

Given the potential impact data access and enablement could have on transforming such a large piece of the economy, the magnitude of the opportunity here is — at face value — fascinating. That said, healthcare is a different beast from many other verticals. Serious questions arise as to whether target venture returns can be extracted in this burgeoning market with the scaled incumbents (both within and outside healthcare) circling the perimeter. Additionally, this is a fragmented ecosystem that has existed (in its infancy) for a few years now with well-funded players now solving for different use cases. Thus, another question emerges as to which areas are best suited for upstarts to capitalize. A key theme in our assessment of the space is that regulation is driving the move towards democratized data access in healthcare, but unlike in regulatory shake-ups of the past, this time start-ups will benefit more than scaled incumbents. Furthermore, we have identified some areas within each approach to this new ecosystem that particularly excite us for net new investment. Let’s dive in.

Why This Time is Different: Regulatory + Market Dynamics

The Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 brought about an explosion of digital healthcare data by expanding adoption of electronic medical records from ~12% to 96%.

Screenshot of Epic EMR (Demo)
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Matthew’s health care tidbits: Health care pricing is cray-zee

Each time I send out the THCB Reader, our newsletter that summarizes the best of THCB (Sign up here!) I include a brief tidbits section. Then I had the brainwave to add them to the blog. They’re short and usually not too sweet! –Matthew Holt

It’s no secret that health care pricing has been out of whack for a very long time. This past week PBMs and pharma manufacturers were in front of congressional committees trying to defend the indefensible–how much drugs cost and why? Hospitals have been required to publish their fictional price lists (their chargemasters) for a few years now and more recently have been instructed to reveal what they actually get from health plans for specific procedures. You would assume that this would move overall pricing pressure down to the “best price” but that effect seems to not be happening. At least not yet. This week also did see the bankruptcy of PE-backed (or should that be PE-toppled) emergency staffing corporation Envision. But that was more because its business model depended on surprise billing and not being in insurer networks.

More typical is the recent dispute in which primary & urgent care chain Carbon Health went public with its fight against Elevance subsidiary Anthem Blue Cross in California. While it was in-network Carbon claims that it received less than Medicare rates from Anthem, while its large delivery system competitors were getting 2-4 times Medicare rates.

This sounds about right to me. Late last year I had two identical telemedicine visits for back pain with specialists. One in a private practice, another with a doctor from UCSF–my local academic medical center. Before you troll me, they were both offered to me last minute, I didn’t know which doctor would be available if I needed a procedure, and it’s always good to get a second opinion. Plus I had blown through my deductible by then so they were free to me!

My insurer paid $795 to UCSF and $219 to the private doctor. So for exactly the same thing one provider got more than 3&½ times what the other did.

There’s still lots of chatter about the growth of value-based care, but even within Medicare Advantage there’s lots of fee-for-service, and it even pops up in places it’s supposed to be dead-–like Geisinger. We are nearly 20 years on from the Bush Administration talking about transparency as the solution to health care costs yet the opacity and confusion around pricing is as bad as it’s ever been. Yes, we know some of the numbers, but the US is a long way from seeing the invisible hand working its magic and making the same thing cost the same amount across health care. The only place where that happens is under the neo-Stalinist central pricing of Medicare. Not that that seems to work well either. 

There’ll be a couple more years while the “new” transparent plays out in the market, but don’t expect too much of a revolution. Then likely we’ll try something else.

THCB Quickbite: Aditya Bansod, Luma Health

Aditya Bansod is the CTO & co-founder of Luma Health. Matthew Holt spoke to him about their new offerings, following up on an interview with CEO Adnan Iqbal about 18 months ago. To their operational workflow tools which help providers route and manage the patient journey (think appointments, communications and much more), they have now added some data intelligence based on collating all the anonymized data they have access to and seeing what works best in actually getting patients to engage with their care.

Today (i.e. since this video was shot) Luma announced a new deal with major EMR player Meditech, which should get their tech into more hospital systems

Would You Picket Over AI?


I’m paying close attention to strike by the Writers Guild Of America (WGA), which represents “Hollywood” writers.  Oh, sure, I’m worried about the impact on my viewing habits, and I know the strike is really, as usual, about money, but what got my attention is that it’s the first strike I’m aware of where impact of AI on their jobs is one of the key issues.

It may or may not be the first time, but it’s certainly not going to be the last.

The WGA included this in their demands: “Regulate use of artificial intelligence on MBA-covered projects: AI can’t write or rewrite literary material; can’t be used as source material; and MBA-covered material can’t be used to train AI.” I.e., if something – a script, treatment, outline, or even story idea – warrants a writing credit, it must come from a writer.  A human writer, that is.

John August, a screenwriter who is on the WGA negotiating committee, explained to The New York Times: “A terrible case of like, ‘Oh, I read through your scripts, I didn’t like the scene, so I had ChatGPT rewrite the scene’ — that’s the nightmare scenario,”

The studios, as represented by the Alliance of Motion Picture and Television Producers (AMPTP), agree there is an issue: “AI raises hard, important creative and legal questions for everyone.” It wants both sides to continue to study the issue, but noted that under current agreement only a human could be considered a writer. 

Still, though, we’ve all seen examples of AI generating remarkably plausible content.  “If you have a connection to the internet, you have consumed AI-generated content,” Jonathan Greenglass, a tech investor, told The Washington Post. “It’s already here.”  It’s easy to imagine some producer feeding an AI a bunch of scripts from prior instalments to come up with the next Star Wars, Marvel universe, or Fast and Furious release.  Would you really know the difference? 

Sure, maybe AI won’t produce a Citizen Kane or The Godfather, but, as Alissa Wilkinson wrote in Vox: “But here is the thing: Cheap imitations of good things are what power the entertainment industry. Audiences have shown themselves more than happy to gobble up the same dreck over and over.” 

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THCB Quickbite: Michael Gould, ZeOmega

Michael Gould is AVP of Interoperability Strategy at ZeOmega, a utilization/care management company that predominantly helps payers manage population health for about 50m covered lives including AmeriHealth Caritas, home care company HealPros and more. Since 2016 they have also been in the interoperability game since they bought Health Unity. Since Michael came over to ZeOmega from Independence Blue Cross a few years back he’s been helping the data/API integration that replaces a lot of the fax and phone-based prior-auth. He told me about the cross-sell between the two sides of the company, in part driven by the new CMS regulations about prior auth–Matthew Holt

THCB Quickbite: Steve Yaskin, Health Gorilla

Steve Yaskin is CEO of Health Gorilla and probably the only non-lawyer who has read the entire 21st Century Cures Act, and decided that there was a business buried in it. If we are going to fix the data access problem and then move that data to where it is needed in the patient care experience, it’s a good bet that Health Gorilla’s health information network will be a big part of that future. Steve told me about the company, its technology for patient identity and matching (among others), and what it means to be an official QHIN exchanging data using FHIR. Will consumers and providers on their behalf demand access to data? Steve & Health Gorilla have raised over $80m to bet “yes”, and are doubling revenue every year–Matthew Holt

Anil Jain, Chief Innovation Officer, Innovaccer

For a while now Innovaccer has been aggregating data from different databases around health systems (think different EMRs). They have been overlaying information over that data to clinicians and providers for thinks like care gaps. Now they are bringing in claims data to look for patients or plan members, and of course they have their own AI chatbot to help make that data more accessible to clinicians and administrators. Chief Innovation Officer at Innovaccer Anil Jain, who in a former life was at Cleveland Clinic spinoff Explorys (a data pioneer that got sucked into IBM), told me about Innovaccer’s tech and where the providers and payers using their tools are now — Matthew Holt

A Life Well Lived, Fights Well Fought


I first became aware of Casey Quinlan in 2017, when she published an article in Tincture, which I was helping to edit.  In it, she discussed how she’d had her medical history and advance directive tattooed on her chest, out of frustration with the lack of health information exchange in healthcare.  As she said, “ALL. THOSE. FUCKING. FORMS. ON. CLIPBOARDS.”

Well, I thought: she sounds like an interesting person. 

I started following her on Twitter, enjoying her outspokenness and agreeing with many of her points of view.  Then early in the pandemic Matthew Holt started THCB Gang podcast, and I got to participate in many of them with her as a co-panelist. It was sometimes hard to get a word in edgewise, but when she was on we always knew it was going to be an extra-lively session.  And the stories she could tell…

I never met Casey IRL.  I never worked with her. I never even had a one-on-one conversation with her, unless you count Twitter replies.  There are large parts of her life that I don’t know anything about.  But, boy, the force of her personality, the strength of her will, the sharpness of her intellect, and the fearlessness of her spirit were always clear. 

She fought her cancer as fiercely as she lived her life generally.  We knew the end was inevitable, but it nonetheless was hard to imagine.  There have been outpourings of support on Twitter, on CaringBridge, and elsewhere. I have to mention in particular the efforts of Jan Oldenburg, who was there with her near the end and also took on the various bureaucracies on Casey’s behalf when Casey was no longer able to. 

Casey’s passing is a loss to her friends, her followers, and the patient community at large.  And to those of us who got to know her even a little bit.