Kaiser Permanente’s subsidiary, Risant Health, has finalized its acquisition of Geisinger Health, signifying the initial stage of a groundbreaking initiative to establish a multisystem, multiregional value-based care organization.
The announcement, made public by Kaiser Permanente, the Oakland, California-based healthcare giant, comes nearly a year after the formation of Risant Health and the unveiling of the broader strategic vision. The acquisition, approved by relevant federal and state regulatory bodies, officially closed on March 31, 2024.
Geisinger, headquartered in Danville, Pennsylvania, with its network of 10 hospitals, was chosen as the ideal launch partner for this budding value-based care platform. Geisinger’s experience managing a health plan encompassing roughly 600,000 members solidified its position as a perfect fit.
“Through Risant Health, we will leverage our industry-leading expertise and innovation to increase the country’s access to high-quality and evidence-based health care, which we know improves care quality and the patient and member experience,” declared Kaiser Permanente CEO Greg A. Adams, who also serves as Risant Health’s board chair, in Tuesday’s announcement. “We will also learn and benefit from Geisinger and the additional health systems that become part of Risant Health in the future, to help them grow in new ways, be more affordable and bring value-based care to more people.”
As per the announcement, Jaewon Ryu, M.D., who has served as Geisinger’s president and CEO since 2019, will transition into the role of Risant Health CEO. Once the handover is complete, Terry Gilliland, M.D., will assume Ryu’s position at Geisinger.
Risant Health operates as a separate entity from Kaiser Permanente’s core model, which revolves around a closed, integrated care network. It is structured as a non-profit subsidiary. The long-term vision is to unite multiple regional health systems under a single umbrella – aiming for four to five additional systems within the next five years. By harnessing the collective expertise of each system, Risant Health plans to develop a technology-driven care platform designed to optimize patient outcomes and minimize costs. Additionally, Kaiser Permanente emphasizes Risant Health’s role in “help health systems and their patients know how to easily understand, access and navigate to the right care at the right time and place.”
Industry experts posit that Risant Health’s extensive reach will serve as a safeguard against other major players like UnitedHealth Group, Amazon, or Aetna CVS Health. This scale is also projected to provide a significant advantage as Risant Health, unlike Kaiser Permanente’s core model, will need to collaborate with a diverse range of payers and providers.
Prior financial filings reveal a commitment of up to $5 billion from Kaiser Permanente, earmarked to support Risant Health’s core functionalities, technological advancements, essential tools, and future investments. From this pool, Risant Health has allocated a minimum of $2 billion to Geisinger until the end of 2028. These funds will be used to “support necessary hospital infrastructure, ambulatory facilities, technological advancements, and other strategic and routine capital expenditures,” according to the filings, which also mention significant investments planned for Geisinger’s health plan, care delivery services, and research activities.
Tuesday’s announcement reaffirmed the intended resource allocation from Risant Health to Geisinger. It emphasized the continued expansion of Geisinger Health Plan and the intention to provide members with “enhanced health insurance options” alongside broader access to clinical programs and patient-centric health management offerings.
“Geisinger is proud to formally join Risant Health as its inaugural health system, which will accelerate our vision to make better health easier, more affordable and more accessible for the communities we serve,” stated Ryu in the announcement. “Geisinger now can extend its vision, strategy and impact to more Pennsylvanians because of the access to an expanded set of tools, expertise and capital that joining Risant Health provides.”
Details regarding further acquisition targets for Risant Health have not yet been disclosed by Kaiser Permanente.
For the year 2023, Kaiser Permanente reported operating revenues and expenses exceeding $100 billion each. The organization, having incurred losses in 2022, achieved $329 million in operating income (translating to a 0.3% operating margin) and roughly $4.1 billion in net profit during the past year.
