The Health Strategist
institute for
continuous health transformation
and digital health
Joaquim Cardoso MSc
Chief Research and Strategy Officer (CRSO)
May 12, 2023
ONE PAGE SUMMARY:
The proposed acquisition of Geisinger Health by Kaiser Permanente presents an opportunity to advance value-based care and foster shared learning within the healthcare industry.
- The acquisition is part of Kaiser Permanente’s initiative to expand value-based care through health system acquisitions, and Geisinger would be the first health system to join the newly created nonprofit organization, Risant Health.
- The commitment of both organizations to fee-for-value care rather than fee-for-service care is expected to alleviate regulatory barriers and gain support from regulators.
While Kaiser Permanente and Geisinger operate in different geographies and have different care models, they share a common mission to promote value-based care.
The acquisition offers the potential for other healthcare systems to follow a similar path and overcome the challenges of transitioning to value-based care.
- Patient outcomes are expected to benefit from the acquisition, …
- … with a focus on ensuring appropriate hospitalization and leveraging Geisinger’s expertise in remote patient monitoring and addressing social determinants of health.
As the acquisition undergoes federal and state review, the potential impact on healthcare stakeholders and unforeseen consequences will be carefully evaluated.
- Given the geographical separation of the two organizations, the acquisition poses little risk to competition, …
- … and larger health systems like Kaiser Permanente are well-positioned to drive the transition to value-based care in an industry still dominated by fee-for-service models.
DEEP DIVE
What Kaiser’s Acquisition of Geisinger Means for Value-Based Care
The proposed acquisition between the two organizations could help encourage other health systems to pursue value-based care.
Rev Cycle Intelligence
Victoria Bailey
May 9, 2023
Kaiser Permanente’s plans to acquire Geisinger Health have opened the door to new value-based opportunities. Specifically, the proposed acquisition has the potential to create an accelerated path to value-based care and lead to significant shared learning, according to Linda Finkel, chief executive officer of AVIA, a two-sided healthcare innovation network.
Last month, California-based Kaiser Permanente announced a definitive agreement to add Pennsylvania-based Geisinger Health to its new nonprofit organization, Risant Health. Geisinger would be the first health system to join Risant Health, which Kaiser Permanente created to expand value-based care through health system acquisitions.
Risant Health will be headquartered in Washington, DC, and Geisinger Health will maintain its name.
While large health system transactions have generated concerns from stakeholders and antitrust agencies in the past due to market overlap and potential adverse impacts on competition, this deal may not face the same hurdles.
“I think that the fact that both organizations are committed to fee-for-value care rather than fee-for-service care will help ensure that they do not face regulatory barriers,” Finkel told RevCycleIntelligence. “I believe that regulators will see this as I do, which is an opportunity to jumpstart the move toward value-based care and will be supportive of the opportunity.”
Kaiser Permanente and Geisinger operate in different geographies with different care models but are united in their mission to further value-based care. Through these different backgrounds, the two organizations will benefit from shared learning, Finkel said.
“In the creation of Risant Health, I believe they’re creating a platform that creates potential for other systems who are looking to move down the path to value and who understand what high-value care looks like in the country but cannot navigate the path to it,” she explained.
On the other hand, the two organizations will likely experience typical acquisition hurdles.
“The challenges are those that are faced by any two organizations that are coming together that have their own history and their own success,” Finkel noted. “I don’t doubt for a moment there will be complexity, I just believe it’s complexity that will be overcome.”
Geisinger was an early adopter of remote patient monitoring to help patients manage chronic conditions. In addition, the health system has played an active role in addressing patients’ social determinants of health, with a focus on food insecurity, according to Finkel.
“In those areas where they have been leaders would be those where they would look to share learning with Kaiser, and I suspect that there are areas that they would share in reverse.”
Hospital mergers and acquisitions have had mixed effects on patient care.
Data from Harvard Medical School found that hospital acquisitions were associated with
- decreased performance on the patient experience measure of the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey and …
- … no changes in 30-day readmission of 30-day mortality rates.
- On the other hand, patient outcomes improved at rural hospitals that underwent mergers, one study found.
Finkel expects that the deal between Kaiser and Geisinger will positively impact patients.
“I believe that the focus of both will be to ensure that patients who are in the hospital are those who should be in the hospital,” she said.
“Geisinger operates in a pretty challenging setting with a challenging payer mix and yet has navigated complicated times. I’d expect that this merger would give them some additional flexibility to take their proven model and extend it. That all works in service of patients.”
The American Hospital Association (AHA) has asserted that mergers and acquisitions lower hospital costs.
However, transactions that reduce market competition could lead to increased healthcare prices.
Being on opposite sides of the country, the acquisition of Geisinger by Kaiser Permanente poses little risk of hurting competition.
Additionally, in an industry where fee-for-service is still the dominant care model, larger health systems can take on more financial risk and may be better suited to lead the way to value-based care.
Although the two organizations seem to have good intentions for the deal, proposed acquisitions always have the potential to change or lead to unforeseen impacts on healthcare stakeholders. The acquisition awaits federal and state review before it can be finalized.
Originally published at https://revcycleintelligence.com
Names mentioned
- Linda Finkel: Chief Executive Officer of AVIA, a two-sided healthcare innovation network.
- Kaiser Permanente: California-based healthcare organization and the acquirer in the proposed acquisition.
- Geisinger Health: Pennsylvania-based health system and the target of the proposed acquisition.
- Risant Health: Newly created nonprofit organization by Kaiser Permanente to expand value-based care through health system acquisitions.
- American Hospital Association (AHA): An organization that has asserted that mergers and acquisitions lower hospital costs.
- Harvard Medical School: The source of data on hospital acquisitions and their effects on patient care.
- Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS): A survey measure used to assess the patient experience in hospitals.
- Washington, DC: The location where Risant Health, the new nonprofit organization, will be headquartered. Note: No specific names or affiliations were mentioned for individuals within Kaiser Permanente or Geisinger Health.
