Industry Reacts to Kaiser/Geisinger Combination via Risant Health

April 28, 2023
In the days following the announcement that Kaiser Foundation Hospitals had created the Risant Health superstructure to acquire Geisinger Health, a range of views on the business combination

As Healthcare Innovation reported on Wednesday, April 26, “In a bold move, executives at the Oakland, California-based Kaiser Foundation Hospitals and the Danville, Pennsylvania-based Geisinger Health on Wednesday, April 26, announced the creation of a superstructure organization that will allow Kaiser and Geisinger patient care organizations to work together under that corporate umbrella. The announcement, as posted to the Kaiser Permanente website, began thus: “In an innovative move designed to improve the health of communities, achieve better health care outcomes, and improve health care affordability, Kaiser Foundation Hospitals and Geisinger Health are announcing the launch of Risant Health and a definitive agreement to make Geisinger the first health system to join Risant Health to expand access to value-based care in more communities across the country. Upon regulatory approval, Geisinger becomes part of the new organization through acquisition.”

Further, Wednesday’s announcement stated, “Risant Health is a new nonprofit organization, created by Kaiser Foundation Hospitals, to expand and accelerate the adoption of value-based care in diverse, multi-payer, multi-provider, community-based health system environments. Risant Health’s vision is to improve the health of millions of people by increasing access to value-based care and coverage and raising the bar for value-based approaches that prioritize patient quality outcomes. In addition to Geisinger, Risant Health will grow its impact by acquiring and connecting a portfolio of like-minded, nonprofit, value-oriented community-based health systems anchored in their respective communities.”

So how has the industry reacted to the business announcement? Not too many proactive public statements have been made; industry leaders have been relatively quiet, perhaps taking a wait-and-see attitude towards the news. But Healthcare Innovation did reach out to a few leading consultants to find out their perspectives on the news development. And Cindy Lee, chief strategy officer at the Chicago-based Chartis consulting firm, and leader of the firm’s strategy practice, noted that “Kaiser and Geisinger have been on different value-based care journeys for quite some time, and coming together to franchise capabilities could make a lot of sense. Many health systems are taking another look at value-based care strategies given shifting demographics, continued increased Medicare Advantage penetration, and companies with deeper pockets seeking to gain access to these lives,” she added. “Shifting to a value-based care model of care can require significant investments in capabilities where scale does matter so partnering makes sense.”

Meanwhile, Linda Finkel, CEO of the Chicago-based strategic consulting and networking firm AVIA, said, when asked her first reaction to the deal, that “I was thrilled. From our perspective at AVIA, the impact of two like-minded, culturally similar organizations like Kaiser and Geisinger, both long committed to value-based care, in our view, has the potential to be incredibly positive for the care in the country.”

As for integrating the distinct cultures of the two different organizations, Finkel said that “Integrating the learning across two organizations is never an easy lift. So I don’t doubt that they will face numerous obstacles on their path. But,” she said,  each has demonstrated an abiding commitment to providing high-value care in important and different ways. I’ve worked with the Steele Institute at Geisinger and have worked with no organization more committed to care outside the hospital, accessible, affordable care provided innovatively. Innovative models that can scale across diverse areas.”

As for the broader significance of the size of this business combination, Chartis’s Lee said that, “Prior to this announcement, other large deals have been announced this year so I don’t think this one is necessarily a harbinger of more deals to come but rather a reflection of how challenging healthcare economics is today given demographic changes, continued supply chain and workforce challenges, and capital market challenges.”

And, per that, AVIA’s Finkel, when asked whether this business deal presages massive new additional deals, said that “I believe that there will be meaningful consolidation, but I don’t believe that there will be eight to ten super organizations, or that the country would be well-served by that. To me, this is an example of two organizations, both of which have proven performance in VBC, in radically different markets, metropolitan and rural, and in a community model in the case of Geisinger, that have the potential for a shared opportunity to drive change, that I think is special and unique.

Reactions were logged on Twitter as well. Rasu Shrestha, M.D., chief innovation and commercialization officer at the Charlotte-based Advocate Health, tweeted that “What’s perhaps even more interesting is that Risant Health plans to acquire 4-5 more health systems and get to a total revenue of $30-35B over the next 5 years!”

And Adrianna McIntyre, assistant professor of health policy and politics in the Harvard T.H. Chan School of Public Health at Harvard University, tweeted, “But I also can’t get over how ‘Risant Health’ (this new merged entity) and ‘Elevance Health’ (nee Anthem) have the ~exact~ same energy from a naming perspective,” referring to the name change of Anthem to Elevance Health last month.

Meanwhile, Ryan Howells, a principal at the Leavitt Partners consulting firm in Washington, D.C., tweeted on Wednesday that “The only reason I can think of why this make sense is they want to create an Optum-like entity for community health systems (likely because Geisinger lost $842M in 2022). Even so, the different cultural dynamics & incentives here are OFF the charts.”

Later that same day, Howells tweeted that “Key here is: ‘Risant Health will operate separately and distinctly from Kaiser Permanente’s core integrated care and coverage model.’ This is not an acquisition in the traditional sense,” he wrote in that tweet. And, he added, “I think it’s also a way to scale risk and back end services for community based hospitals.”

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