Envision Healthcare – Q1 2022 update & labour dynamics

Staffing headaches as Great Resignation hits radiology professionals

In an Interview with Third Bridge Forum, the specialist told us radiologists are listed as “one of the higher burnout specialties in medicine” and that in this “epidemic” stage of COVID-19, there was again a shortage of them. The specialist said despite advances in AI, it was unlikely that radiologists could be replaced entirely, comparing the technology to pilots still being used to fly automated planes. 

The specialist said the shortage was inflating salaries, with certified registered nurse anaesthetists’ pay rapidly approaching “parity” with physicians’. We were told that the spread was previously about 50%, but was now closer to 25%. However, this was not reflected in salaries for emergency medical personnel – despite a similar increase in demand – due to residency programmes. 

As a result, the specialist said hospitals are increasingly insourcing services, to the benefit of companies like Envision, Mednax and TeamHealth. The specialist said healthcare facility operator HCA Medical was now the “largest funder of graduate medical education” after the government, and by “training people within their own system” it was reducing its need to insource other professionals. 

The No Surprises Act (NSA) is creating favourable conditions for payers, which we were told is a “material headwind if the rules don’t change” for companies like Envision. Although payers now determine reimbursement rates, this could change given lawsuits are being brought against the NSA.  

On Envision’s staffing mix, the specialist said it should bring in more orthopaedics given they have “great synergy” with anaesthesiology and are “the only high-margin specialty that’s left out there to meaningfully pick off”. The specialist said the “perfect” medical portfolio would include “40-50% emergency medicine” and the remainder split among anaesthesiology and radiology, with the skew to emergency medical professionals reflecting better cost controls.

The specialist said Envision’s decision to sell its home health business to Amedisys was justified “from an EBITDA point of view”. Home health wasn’t contributing to the company’s growth, we were told, and capital from the sale could go into profitable areas of the business such as anaesthesiology and emergency medical. The specialist speculated that Envision’s neonatology and paediatrics businesses could also be “spun off”, and that they could “easily see” UnitedHealth Group buying Envision in 2022. 

UnitedHealth would be the only company that could afford such a “huge” purchase, according to the specialist, and they also conjectured that UnitedHealth’s “big push” on the NSA was an attempt to devalue companies like Envision. If Envision isn’t sold, the specialist said recapitalisation would be unlikely because the “EBITDA is not there” for investors, lowering the expectation of a profitable return. 

To access all the human insights in Third Bridge Forum’s Envision Healthcare – Q1 2022 update & labour dynamics Interview, click here to view the full transcript.