Kaiser Permanente moves to acquire Geisinger in major deal

Greg Adams, chair and CEO of Kaiser Permanente (Photo by Kaiser Permanente)

In a major deal in the hospital industry, Kaiser Permanente has announced plans to acquire Geisinger Health, and the two systems are launching a new organization called Risant Health.

The two systems made the announcement Wednesday. Assuming regulators approve the transaction, Geisinger will join Risant Health. The systems said they hope the new organization will acquire other regional or community-based health systems.

Geisinger, based in central Pennsylvania, operates 10 hospital campuses and a health plan with more than 500,000 members. Based in California, Kaiser Permanente operates 39 hospitals, hundreds of medical clinics, and a health plan with 12.6 million members. Geisinger would maintain its name, the systems said.

Kaiser Foundation Hospitals is creating Risant Health to “expand and accelerate the adoption of value-based care in diverse, multi-payer, multi-provider, community-based health system environments,” according to a news release.

Risant Health plans to acquire “a portfolio of likeminded, nonprofit, value-oriented community-based health systems anchored in their respective communities,” the news release said.

Hospital systems that join Risant Health will still continue to operate as community-based organizations, but they would have the backing of Risant Health’s value-based platform, the release said. Risant Health will operate separately from Kaiser Permanente’s core business.

Greg A. Adams, chairman and CEO of Kaiser Permanente, cited Geisinger’s commitment to value-based care. “We can think of no better organization than Geisinger to be the inaugural health system to join Risant Health,” Adams said in a statement.

“Through Risant Health, we will make our value-based care expertise, technology and services available to community-based health systems, like Geisinger, to strengthen their ability to provide value-based care models with a focus on high-quality and equitable health outcomes,” Adams said.

Jaewon Ryu, president and CEO of Geisinger Health, has been named the first CEO of Risant Health. The plan is for Ryu to assume that role when the transaction closes.

Jaewon Ryu, president and CEO of Geisinger Health, speaks at the HLTH Conference in November 2022. Ryu will be named the inaugural CEO of the new Risant Health when the transaction is complete. (Photo: Ron Southwick)

Ryu said in a statement that he’s excited about the prospects of the new organization and its ability to serve Pennsylvania.

“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,” he said in a statement. “Kaiser Permanente and Geisinger share a vision for the future of health care, and as the Risant Health name indicates, we believe by working together we will reach new heights in health care and raise the bar for better health for all communities.”

Shifting to value-based care

In his statement, Adams said replicating Kaiser Permanente’s coverage model is not going to be feasible in all communities.

But he said, “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.”

In an interview with The New York Times, Adams said health systems that join Risant Health would invest in programs and services to keep people healthy. He didn't identify which other systems could join Risant, but The Times reported that Kaiser expects to invest $5 billion in Risant over the next five years and would add five or six health systems.

Risant would be based in the Washington, D.C. metro area, according to the news release from the systems.

In a presentation at the HLTH Conference in November, Ryu made an impassioned case for value-based care.

Ryu said value-based care offers the opportunity to reduce disparities in healthcare outcomes. Hospitals get far less reimbursements in Medicare and Medicaid, which have disproportionately minority populations, than they get from commercial payers. With a value-based model, health systems can focus on health efforts that can improve quality for all.

“Your focus is still on better health and we think that creates a more equitable environment,” Ryu said. “It shifts how you deliver care.”

More hospital mergers

While the pace of hospital mergers has slowed in the past couple of years due to the COVID-19 pandemic, analysts have projected that more health systems and hospitals would be looking to consolidate in the coming year.

More hospital mergers have been happening in recent months. Atrium Health and Advocate Aurora Health completed their high-profile merger in December, forming a consolidated organization dubbed Advocate Health.

UnityPoint Health and Presbyterian Healthcare Services said in March that they are exploring a merger. Earlier this month, two Wisconsin hospital systems, Froedtert Health and ThedaCare, said they plan to merge and form one organization. University of Michigan Health completed its acquisition of Sparrow Health earlier this month.

The Federal Trade Commission has been taking a closer look at hospital mergers and acquisitions to preserve competition and services and to avoid higher prices for patients. Following the opposition of regulators, several planned hospital mergers have been abandoned over the past year.