What’s Next: Regulatory Review
Federal and state regulators must approve the deal. While Mr. Adams didn’t say which other health systems he might talk to about acquisitions, Kaiser said it wants to invest $5 billion in Risant over the next five years, in addition to spending on Kaiser’s core business. The company expects to add five to six medical systems to Risant by then.
Why It Matters: Enhancing Integration
Serving 13 million people in eight states and the District of Columbia, Kaiser is known for providing low-cost, high-quality health care. The organization works like a health maintenance organization, offering someone a set fee through a closed network of hospitals and doctors. But it has failed to roll out its model widely across the country.
The creation of Risant Health presents an opportunity for Kaiser, which had $95 billion in revenue last year, to become a larger, more influential organization by partnering with other hospital groups and health plans.
The establishment of the company was also a response to the rapid changes taking place in the healthcare industry. Big for-profit companies like health insurers, pharmacy chains and others are buying up doctors’ offices and urgent care centers and gobbling up more of the country’s health care dollars.
In keeping with Kaiser’s model, a community health system under Risant will invest in technology and preventive care to keep patients healthy, so they will need cheaper specialist and hospital care, Mr. Adams said.
As national systems and new players grow, “they’re in some ways moving away from our communities and our community health systems,” he said.
Mr. Adams added that new ventures “are a way of really ensuring that the health of nonprofit, values-based communities not only exists in this country but thrives.”
Background: difficult environment
As hospital groups emerge from the pandemic, many are struggling with higher supplies and labor costs. Both Kaiser and Geisinger reported operating losses for 2022.
“Covid has really shown that the absence of an integrated relationship based on values puts our health system and our communities at risk,” Mr Adams said.
While Geisinger has long been focused on improving care, Dr. Ryu said healthcare systems would benefit from Kaiser’s ability to invest in the technologies and preventative care necessary to keep people healthy. “This model is a way for us to accelerate and further enhance these capabilities and bring better health to our communities,” he said.
Because it specializes in providing care on a fixed-dollar arrangement, Kaiser has become one of the largest insurers in the lucrative Medicare Advantage market, with private plans sold as an alternative to traditional Medicare.
But Kaiser has also been criticized for overcharging the federal government, and some say its financial model means it may be slow to refer patients for expensive services. Kaiser defends its billing practices and says its doctors work with patients to provide the most appropriate care.