Kaiser Permanente is acquiring 10-hospital Geisinger Health in a deal described as the first step toward a new multisystem value-based care organization, according to a Wednesday announcement.
That new entity, called Risant Health, will be a nonprofit organization that operates “separately and distinctly from Kaiser Permanente’s core integrated care and coverage model,” the organizations said.
"Upon regulatory approval, Geisinger becomes part of the new organization through acquisition," the organizations wrote in the announcement.
Of note, Kaiser said it intends to bolster Risant beyond Geisinger by acquiring additional “like-minded, nonprofit, value-oriented community-based health systems.”
These systems, like Geisinger, would continue to operate as regional or community-based providers with the benefit of additional “expertise, resources and support” from the larger organization, Kaiser said.
“We know fully replicating [Kaiser Permanente’s] closed integrated care and coverage model is not viable in all communities,” Greg Adams, chair and CEO of Kaiser Permanente, said in the announcement. “By helping other health systems achieve our value-based quality outcomes and savings in multi-payer, multi-provider environments, we believe Risant Health can deliver a transformative new solution to America’s systemic health care problems. And, given its history in this space, we can think of no better organization than Geisinger to be the inaugural health system to join Risant Health.”
Financial terms and a timeline for the deal, which is subject to regulatory approval, were not disclosed. The deal would see Geisinger maintain its branding and continue working with other health plans, employed physicians and independent providers, according to the announcement.
In an interview with The New York Times, Kaiser leadership said it’s aiming to invest $5 billion into Risant over the next half decade and expects to add “five or six” additional systems to the new entity.
Oakland, California-based Kaiser Permanente is among the country’s largest nonprofit systems with 39 hospitals. Its operations span eight states coast to coast with roughly 13 million members who receive care through its integrated model. The organization reported $95.4 billion in operating revenue across 2022 as well as a $1.3 billion operating loss and a nearly $4.5 billion net loss.
Geisinger is a fellow nonprofit system based in Danville, Pennsylvania, with 10 hospital campuses and a health plan covering about 600,000 members. It reported $6.9 billion in operating revenue during 2022 as well as $239 million in operating losses and $842 million in net losses.
The organizations describe the deal as a chance for Geisinger to strengthen its care services and, due it its participation in a broader value-based platform, benefit from enhanced model design, pharmacy, consumer digital engagement, health plan product development and purchasing. Its position at the front of the line also allows Geisinger to mold nascent Risant’s strategy and operational model.
“Geisinger is excited for what joining Risant Health will mean both for our system and for the communities we serve in Pennsylvania,” Jaewon Ryu, M.D., president and CEO of Geisinger Health, said in a statement. “Geisinger will be able to accelerate our vision and continue to invest in new and existing capabilities and facilities, while charting a path for the future of American health care, through Risant Health.
Ryu is slated to transition from his role at Geisinger to a new position as CEO of Risant should the deal go through, according to the announcement.
That said, healthcare consolidation has become a major concern for the Biden administration and lawmakers.
Federal regulators have had no qualms about stepping in to block hospital acquisition deals—though these usually tend to involve acquisitions in which systems in similar geographies are increasing their market power as opposed to so-called cross-market mergers.
Kaiser and Geisinger’s announcement also landed as representatives on Capitol Hill were holding a hearing on, among other healthcare issues, whether provider consolidation and healthcare payers’ vertical integration purchases warranted new legislation or other strengthened enforcement.