Next step: regulatory review
Federal and state regulators must approve the deal. Although Mr. Adams did not specify which other health systems he might approach regarding acquisitions, Kaiser said he hopes to invest $5 billion in Risant over the next five years, in addition to its expenses for Kaiser’s core operations. The company plans to add five or six health systems to Risant during this time.
Why it matters: Increase consolidation
Kaiser, which serves 13 million people in eight states and the District of Columbia, has built a reputation for providing high-quality care at low cost. The organization operates as a health maintenance organization, in which a fixed sum is paid to treat someone through a closed network of hospitals and doctors. But it failed to widely disseminate its model throughout the country.
The creation of Risant Health represents an opportunity for Kaiser, which made $95 billion in revenue last year, to grow into an even bigger and more influential organization by working with other hospital groups and health plans. health.
The formation of the company is also a response to the rapid changes taking place in the healthcare industry. Large, for-profit corporations like health insurers, drugstore chains and other corporations are raiding doctors’ offices and urgent care centers and devouring more of the nation’s health care dollars.
In line with Kaiser’s model, community health systems under Risant would invest in technology and preventive care to keep patients healthy, so they would need less expensive specialist and hospital care, Adams said.
As national systems and new actors grow, “they are moving away in some ways from our communities and our community health systems,” he said.
The new venture “is a way to really ensure that nonprofit, value-based community health is not only alive but thriving in this country,” Adams added.
Context: a difficult environment
As hospital groups emerge from the pandemic, many are grappling with higher expenses for supplies and labor. Both Kaiser and Geisinger posted operating losses in 2022.
“Covid has really shown that not having integrated, values-based relationships puts our health systems and our communities at risk,” Adams said.
While Geisinger has long focused on improving care, Dr. Ryu said the healthcare system would benefit from Kaiser’s ability to invest in the kind of technology and preventative care needed to keep people healthier. “This model made sense to us as a way to accelerate and further build those capacities and improve the health of our communities,” he said.
Because it specialized in providing care under arrangements where it is paid a fixed amount, Kaiser has become one of the largest insurers in the profitable Medicare Advantage market, where its private plans are sold as an alternative to traditional health insurance.
But Kaiser has not been immune to criticism for overcharging the federal government, and some people say his financial model means he can be slow to refer patients to expensive services. Kaiser has defended its billing practices and says its doctors work with patients to provide the most appropriate care.