Kaiser Foundation Hospitals and Geisinger Health are launching a nonprofit to acquire health systems and create a national network for value-based care.
The entity, named Resanent Health, which is headquartered in Washington, DC, will become an affiliate of Oakland, California-based Kaiser, but will operate as a separate organization from Kaiser’s core integrated operations.
Resant plans to acquire Danville, Pennsylvania-based Geisinger As its first system, contingent on receiving state and federal regulatory approval. A Caesars spokesperson said there are no acquisition costs. Kaiser, a $95 billion system that operates 39 hospitals and more than 700 medical offices in eight states and Washington DC, has pledged to invest up to $5 billion over five years in technology, equipment and services.
The plan is a different approach to deal with the headwinds that have hit the industry in recent years and led to consolidation. Caesar’s Total financial loss was $4.5 billion in 2022, and Geisinger reported a net loss of $842.1 million that same year. hospital mergers and acquisitions Slowing down during pandemic but rebound expected To some extent in 2023, especially in a challenging economic environment. The hospital system also faces a host of new competitors, ranging from Amazon to Walgreens and Dollar General. Forging ahead in healthcare and grabbing market share from more traditional providers.
Kevin Halloran, senior director at Fitch Ratings, said he sees RESENT as a “repository of knowledge” that has the potential for its member health systems to work toward a common goal of lower costs and better access to care. .
Halloran said he expects to see more out-of-market mergers. Advocate Health and Atrium Health closed a merger in December, creating a footprint spanning the Southeast and Midwest. Presbyterian Healthcare Services in Albuquerque, New Mexico, and also UnityPoint Health in Des Moines, Iowa signed a definitive agreement to merge earlier this month.
Kaiser Permanente CEO Greg Adams said Tuesday that he sees the strategy as an opportunity to stay innovative and relevant in the industry.
“I see [Risant] Adams said, “as a countermeasure to some of the disruptions.” “As you look at where healthcare is in this country, [as] You see the dynamics that’s going on, there are new entrants. We have technologies that are going to transform healthcare. We have retail. I mean, healthcare is definitely going through the most significant change in my career.”
Adams said that over the next five years, Resent plans to acquire five to six health systems to become a $30 billion to $35 billion conglomerate. Executives did not share when they anticipate the Geisinger acquisition to close or if they are in talks with other systems.
Geisinger, which reported nearly $7 billion in 2022 revenue, will retain its name following the transaction and help develop Risant’s operational strategy. Geisinger operates a health plan with 10 hospital complexes and more than 500,000 members.
Health systems joining RESENT will continue to receive support from the larger organization as community-based providers. The executive said that through Resent, Ginger will have access to capital and other resources to expand its existing clinical services, value-based contracting and rural care delivery methods.
If the acquisition of Geisinger is approved by regulators, Dr. Jevon Ryu, President and CEO of Geisinger, will become CEO of Resant. Geisinger has not named a successor to oversee its operations.
“It’s not like your typical acquisition,” Ryu said. “It’s really about turbo-boosting some of these capabilities that we know are needed on this journey towards deepening our chops in value-based care. We’ve always been an organization that are on a journey and have a long way to go on that journey, but we also know that Caesars continues to define the gold standard in a way it represents throughout the industry.”
The spokesperson added that Ryu will report to Adams and the Resent board of directors. The seven-member board will include Adams and three other Kaiser representatives, plus two Geisinger directors and one independent director.