Kaiser Permanente to Acquire Geisinger and Form New Company to Operate Nonprofit Systems

Geisinger Health and Kaiser Permanente A Comparison

Kaiser Permanente is set to acquire Geisinger in a bid to form a new company that will operate nonprofit community health systems. The acquisition will help Kaiser expand its reach nationwide through targeted acquisitions, while smaller hospitals continue to struggle in a difficult operating environment.

Kaiser Permanente to Acquire Geisinger

Kaiser Permanente is set to acquire Geisinger, a Pennsylvania-based health system with 10 hospital campuses and a health plan covering more than 500,000 members. The acquisition will enable Kaiser to form a new company, Risant, which will operate nonprofit community health systems. Kaiser currently operates in eight states and Washington, D.C., but the acquisition will allow it to expand its reach nationwide through targeted acquisitions.

According to reports, Kaiser plans to spend $5 billion on Risant over the next five years and aims to add five or six health systems to the company during that period. The move comes as smaller hospitals continue to struggle in a difficult operating environment, with around half of all U.S. hospitals finishing last year with negative margins, according to consultancy Kaufman Hall.

Both Geisinger and Kaiser reported operating losses last year, with Kaiser posting a net loss of $4.5 billion in 2022 compared to a prior-year gain of $8.1 billion. Kaufman Hall recently predicted a “new wave of transaction activity” and a growing number of cross-regional partnerships, indicating that this acquisition is part of a larger trend in the healthcare industry.

However, the deal is subject to approval from federal and state regulators, and the financial terms of the acquisition have not been disclosed. Given that regulators are becoming more aggressive in scrutinizing hospital mergers, it is likely that the deal will face a high bar for approval.

Kaiser Permanente is set to acquire Geisinger in a bid to form a new company that will operate nonprofit community health systems. The acquisition will help Kaiser expand its reach nationwide through targeted acquisitions, while smaller hospitals continue to struggle in a difficult operating environment.