Kaiser Permanente  on Wednesday announced it is acquiring Geisinger Health, and Geisinger will operate independently under a new subsidiary of Kaiser called  Risant Health.

Deal details

The combination of the two companies will need to be reviewed by federal and state agencies, but if approved, the two companies will have more than $100 billion in combined annual revenue.

Geisinger will operate independently as part of Risant Health, which will be headquartered in Washington, D.C. and will be led by Geisinger president and CEO Jaewon Ryu. The health systems said they intend to acquire four or five more hospital systems to fold into Risant in an effort to reach $30 billion to $35 billion in total revenue over the next five years.

In an interview, Ryu and Kaiser chair and CEO Greg Adams said Risant will specifically target hospital systems already working to move into value-based care.

According to Adams, Risant Health "is a way to really ensure that not-for-profit, value-based community health is not only alive but is thriving in this country."

"If we can take much of what is in our value-based care platform and extend that to these leading community health systems, then we extend our mission," Adams said. "We reach more people, we drive greater affordability for health care in this country." (Mathews, Wall Street Journal, 4/26; Abelson, New York Times, 4/26; Herman, STAT+ [subscription required], 4/26; Hudson, Modern Healthcare, 4/26)

Why we're 'cautiously optimistic' about this acquisition 

By Vidal Seegobin 

Just when you thought healthcare couldn't get more interesting, Kaiser and Geisinger announce their union through newly established Risant Health. At first pass, it is hard to see a downside with this deal — and that's something that raises my "spidey-senses."

Kaiser and Geisinger are coming together through a vehicle that could allow them to clear an increasingly skeptical  Federal Trade Commission. It affords two health systems — both in comparatively weaker financial positions than before the pandemic — the ability to get bigger through the merger. Its pitch is decidedly hospital- (and in the future provider) led, with Geisinger retaining its brand and elevating its CEO to the head of Risant. It also gives Geisinger and future partners the latitude to pursue their own payer relationships.

In addition, it is ostensibly a play to increase providers' control over the nature and pace of value-based care (VBC) adoption. In its press release, Kaiser acknowledges that its closed network model of care management hasn't scaled well to other markets. And Geisinger, with its own health plan and a track-record of developing its own VBC incentives, is no neophyte and brings a clear wealth of expertise.

Without a doubt, the offer to future partners is compelling: "Come for the size and stay for the value-based care." But like all things in life, it's all in the details. And that's where my "spidey-sense" kicks in.

Partnership and affiliation models alone do not make the hard work of VBC easier. While this emerging group could become a valuable, provider-led clearing house for VBC concepts, applying them in communities remains a stubborn challenge that requires individual work and leadership.

The true test of the concept will come when the first new partner joins. How they decide to participate and whether the model has the right mix of scale and flexibility is what I'll be watching closely. The overall objective and success measure of this endeavor remains somewhat opaque, but I would say that the concept has real legs here. Right now, I'm leaning toward "cautiously optimistic."