Our Take: Risant Health acquires Geisinger, completing the transaction Kaiser Permanente announced a year ago
On Tuesday, Risant Health issued a news release stating that the nonprofit organization had completed its acquisition of Danville, Pa.-based Geisinger on March 31, bringing to fruition a plan unveiled last April by California-based Kaiser Permanente and Geisinger “to expand and accelerate the adoption of value-based care in diverse, multiplayer, multi provider, community-based health system environments.”
Although Geisinger is the first health system to become part of Washington, D.C.-based Risant Health, the plan is for Risant to acquire four or five additional health systems in the next several years. Kaiser officials said the goal is for Risant Health to reach total revenue of between $30 billion and $35 billion, Healthcare Dive reported.
Geisinger and other organizations that join Risant Health will retain their names and continue to operate as regional or community-based health systems.
Dr. Jaewon Ryu, who has been CEO and president of Geisinger since 2019, will now transition into the role of CEO at Risant Health, and Dr. Terry Gilliland will assume Dr. Ryu’s roles at Geisinger.
Joining Risant Health will accelerate Geisinger’s vision “to make better health easier, more affordable, and more accessible for the communities we serve,” Dr. Ryu said in the press release. “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”
As part of Risant Health, Geisinger will have access to additional capital, technology, and resources to improve its facilities, invest in patient care, and expand Geisinger Health Plan, according to the release.
Kaiser Foundation Hospitals (KFH), the entity that created Risant Health last year, refers to the acquisition as a member substitution, through which Risant Health becomes the sole corporate member of Geisinger and assumes Geisinger’s balance sheet. Typically, such deals do not involve an exchange of cash.
However, the definitive agreement between KFH, Geisinger, and Risant Health stated that Risant would make available a minimum of $2 billion, inclusive of Geisinger internally generated and Risant Health funds, as needed through the end of 2028 to support Geisinger’s facilities and technology, along with additional funding to expand Geisinger’s health plan and fund Geisinger’s research and education efforts.
Risant Health’s board of directors consists of four representatives from Kaiser, including CEO Greg Adams, who serves as chair, two Geisinger appointees, and an independent director, Healthcare Dive reported.
Our Take: When we wrote about this proposed deal nearly a year ago, we weren’t entirely sure that state and federal regulators would give it the go-ahead. There’s no geographic overlap between Kaiser Permanente and Geisinger, so we knew there wouldn’t be any objections on those grounds. But with a transaction of this heft, there’s always scrutiny over what effect it might have on the local market of the acquiree.
Evidently, Kaiser Permanente and Geisinger were able to quell any concerns that may have arisen. We didn’t hear of any major complaints or challenges to the acquisition, other than some apprehension expressed by unionized health care workers.
We’re eager to see how the acquisition will unfold. We still see Risant Health as Kaiser Permanente’s plan for competing with larger health systems that have more of a national footprint, like HCA and CommonSpirit.
We also still believe there could be some culture clashes between Kaiser Permanente and Geisinger because the two health systems are vastly different in so many ways. Those clashes could easily intensify and compound as additional health systems become part of Risant Health.
But if Kaiser truly wants to put its resources to work helping community-based health systems deliver superior health outcomes while lowering the total cost of care — as it says Risant Health aims to do — and if Kaiser will let the health systems that join Risant Health maintain their own identities, operations, and cultures, then maybe the arrangement can eventually have some positive and substantial impact on the nation’s health care system.
Health Care Rounds #165: Revolutionizing Pharmacy Care with Alison K. Lum
Ever wonder why prescription drugs cost so much? In this episode of Health Care Rounds, Alison Lum (VP of Pharmacy Services, Blue Shield of California) joins John to peel back the layers of the complex world of pharmaceutical pricing and sheds light on the misleading list prices, opaque rebates, and tangled web of stakeholders that contribute to skyrocketing medication costs. Listen here or wherever you get your podcasts.
What else you need to know
Saltzer Health, an Idaho physician group that Salt Lake City-based Intermountain Health acquired in 2020, closed on March 29. The medical group had 10 locations, four of which have been sold since the closing was announced. Saint Alphonsus Health System bought two urgent care centers, which will undergo IT updates and reopen in May, as well as an ambulatory surgery center, according to a press release. Intermountain Medical Imaging bought an imaging center at Saltzer Health’s Ten Mile Clinic in Meridian, Idaho, and plans to reopen it later this month. Some providers will continue to serve the state’s Treasure Valley region either by working with other medical groups or starting their own practice. Saltzer Health revealed plans in January to close its services in late March unless it could find a buyer, citing ongoing financial and economic pressures, along with other challenges, that led to “the loss of several millions of dollars each month.”
Providence spun out a new digital health company called Praia Health last week. The technology platform was developed within the Renton, Wash.-based health system’s incubation model, Digital Innovation Group, and has been in use at Providence since January 2022, offering consumer-facing solutions such as “digital self-serve and navigation capabilities, care options including on-demand virtual care, and individualized program, service, and resource recommendations.” Justin Dearborn, who has served as executive-in-residence at Digital Innovation Group since last fall, is Praia Health’s CEO. Community Health Network, a health system based in Indiana, is the first external customer to license the new platform, Providence noted in a news release.
Walmart is holding off on previously announced plans to open new Walmart Health centers in certain regions. After launching the first one in Georgia in 2019, the retailer gradually expanded Walmart Health into Arkansas, Florida, Illinois, and Texas. As of late 2023, there were 48 centers within or adjacent to Walmart Supercenter stores. The intent a year ago was to have more than 75 centers up and running by the end of 2024, including locations in Arizona, Missouri, and Oklahoma. Although Walmart is on track to open 18 centers in the Houston and Dallas-Fort Worth metro areas and four in the Kansas City area this year, the company is postponing six openings in Phoenix until early next year, citing “significant pressure on construction resources,” as well as four openings in Oklahoma City, Healthcare Dive reported. The centers offer an array of services such as primary and urgent care, dental, optical, hearing, and behavioral health services, counseling, X-rays and diagnostic services, and lab testing.
Dr. Michael Good, CEO of University of Utah Health and University of Utah senior vice president of health sciences, will be stepping down from his administrative roles later this year. A national search will be conducted for his successor, according to the announcement. Following a sabbatical, Dr. Good plans to return to the medical school faculty. He has been CEO of the health system since 2018.
Jason Gorevic is no longer CEO of Teladoc Health as of Friday. The company did not provide a reason for his sudden departure in the announcement but said Mala Murthy, who has been Teladoc’s CFO since 2019, will serve as both CFO and interim CEO while a search for Gorevic’s successor is conducted. Gorevic had been Teladoc’s CEO since 2009 and was a member of the board.
What we’re reading
The CMS Innovation Center’s Strategy To Support Person-Centered, Value-Based Specialty Care: 2024 Update. Health Affairs, 5.2.24
What I Do Not Tell the Medical Student. NEJM, 3.16.24
The Subjective Interpretation of the Medical Evidence. JAMA, 3.29.24
