Kaiser Foundation Hospitals and Geisinger Health are launching a nonprofit entity to acquire health systems and create a national network for value-based care.
The entity, named Risant Health and headquartered in Washington, D.C., will become an affiliate of Oakland, California-based Kaiser but will operate as a separate organization from Kaiser’s core integrated operations.
Risant plans to acquire Danville, Pennsylvania-based Geisinger as its first system, contingent upon receiving state and federal regulatory approval. There is no acquisition cost, a Kaiser spokesperson said. Kaiser has pledged to invest up to $5 billion in Risant over five years for technology, tools and services.
The plan is a different approach to dealing with the headwinds that have battered the industry in recent years and led to consolidation. Hospital mergers and acquisitions slowed during the pandemic but are expected to rebound somewhat in 2023, especially in a challenging economic environment. Hospital systems also face a host of new competitors, ranging from Amazon to Walgreens and Dollar General, that are moving into healthcare services and grabbing market share from more traditional providers.
The announcement also marks another example of healthcare systems looking to partner despite operating in different regions. Advocate Health and Atrium Health, for example, closed a merger in December, creating a footprint spanning the Southeast and Midwest.
Kaiser Permanente CEO Greg Adams said Tuesday he views the strategy as an opportunity to stay innovative and relevant in the industry.
“I do see [Risant] as a counterbalance to some of the disrupters,” Adams said. “As you look at where healthcare is in this country, [as] you look at the dynamics that are playing out, there are new entrants. We’ve got technologies changing healthcare. We’ve got retail. I mean, healthcare is going through certainly the most significant transformation in my career.”
Over the next five years, Risant plans to acquire five to six health systems to become a $30 billion to $35 billion organization, Adams said. Executives did not share when they anticipate the Geisinger acquisition to close or if they are in talks with other systems.
Geisinger, which reported roughly $7 billion in 2022 revenue, would keep its name post-transaction and help develop Risant’s operating strategy. Geisinger operates 10 hospital campuses and a health plan with more than 500,000 members.
Health systems that join Risant will continue to operate as community-based providers drawing support from the larger organization. Through Risant, Geisinger will have access to capital and other resources to expand on its existing clinical services, value-based contracting and rural care delivery methods, executive said.
If the Geisinger acquisition is approved by regulators, Dr. Jaewon Ryu, president and CEO at Geisinger, would become Risant’s CEO. Geisinger has not named a successor to oversee its operations.
“It’s not like your typical acquisition,” Ryu said. “It really is about turbo-boosting some of these capabilities that we know are necessary on this journey towards deepening our chops in value-based care. We’ve always been an organization that’s been on that journey and pretty far out ahead in that journey, but we also know that Kaiser has been sort of defining the gold standard of what that represents across the industry.”
Risant’s CEO will report to the Kaiser Foundation Hospitals chair and CEO and the Risant board of directors, which will initially be comprised mostly of Kaiser representatives, plus two Geisinger directors and one independent director, the spokesperson said.
