The newly merged Envision Healthcare is looking into divesting its once indispensable ambulance and medical transportation business to focus on growth of its bigger physician staffing division and reduce debt.

Presenting at the Raymond James Institutional Investors Conference Monday, Envision CEO Chris Holden said physician service revenue and earnings before interest, taxes, depreciation and amortization are growing faster in physician services than medical transportation.

Greenwood Village, Colo.-based Envision also has a plump pipeline of potential acquisitions of physician practices, an industry still fragmented and dominated by small “mom and pop” groups, Holden said.

Meantime, Envision’s medical transportation business remains the largest in the U.S. with almost 5 million patient transports last year and more than 270 contracts for 911 services.

But the lion’s share, or $750 million, of Envision’s $900 million capital budget in 2017 is earmarked for physician practice acquisitions vs. $75 million for medical transportation.

The opportunities that Envision sees in physician services is what is giving rise to a strategic review of whether to sell the medical transportation business, known as American Medical Response, and a much-smaller population health management division called Evolution Health.

Envision’s all-stock merger with Nashville-based Amsurg in December created the nation’s largest physician-staffing company, with more than 19,000 physicians and clinicians and annual revenue of more than $10 billion. “It is the engine of the company,” Holden told the Raymond James analysts.

Physician staffing vendors such as Envision, TeamHealth and Mednax provide contract doctors to various hospital departments, including the emergency departments, hospitalists, radiology, anesthesiology and neonatology.

Before the merger, medical transportation was viewed by Envision management as critical to the company’s growth strategy.

Then-CEO Bill Sanger, who is now executive chairman of the merged Envision, noted during earnings calls that medical transportation provided cross-selling opportunities to hospitals for physician services and would play a role in Envision’s ability to bundle services from transport to departments across a hospital.

“But that was the old Envision,” said Richard Close, securities analyst in the Nashville office of Canaccord Genuity.

In the merger, Envision and Amsurg brought their own customer bases to the tie-up, providing abundant cross-selling opportunities, Holden said.

And Envision wants to bring down its leverage a bit, Close said.

At Raymond James, Holden said Envision’s debt is about 4.3 times EBITDA, which is above the 3 to 4 times EBITDA that the company feels comfortable at.

If AMR were to be sold, it would bring Envision down into that range, he said.

Original article can be accessed here.