Kaiser to buy East Coast hospital chain as portal into more 'value-based care'

Incentives in the US healthcare system are misaligned, leading to poor and inequitable care. "Value-based care" is a proposed solution.

Kaiser to buy East Coast hospital chain as portal into more 'value-based care'

Kaiser Permanente has purchased a Pennsylvania hospital chain of 10 hospitals to lead a new initiative in value-based healthcare, where providers are paid on the basis of quality rather than traditional fee-for service.

Risant Health, a value-based organization that will be launched by Geisinger Health and Kaiser Foundation Hospitals of Danville in Pennsylvania with 25,000 employees, was announced Wednesday by Oakland-based Kaiser. Risant will purchase other "likeminded nonprofit value-oriented community-based healthcare systems."

These acquired health systems will continue to operate as independent regional or community health systems, but they can tap into value-based resources through Risant, a company based in Washington, D.C.

The financial terms of the agreement and when Kaiser hopes for regulatory approval have not been disclosed. The New York Times reported that Kaiser officials said they hoped to invest $5 billion in the next five-years and bolster Risant by adding a half dozen health systems.

Value-based care is a system that ties the amount paid to health care providers for their services directly to the outcomes they achieve for patients. Financial incentives are used to hold providers accountable for the health of their patients. Value-based care advocates say that the misaligned incentives in the fee-for service payment model have led to poor outcomes, including a high infant mortality rate and inequitable treatment, especially along income and race lines.

Risant's operating model would differ from Kaiser Permanente, which has a value-based approach to care. Kaiser Permanente is a 39-hospital chain with 13 million members in eight states. Risant is a distinct entity from Kaiser Permanente. It will still be an affiliate of Kaiser Foundation Hospitals, but it will have a different operating model.

Greg Adams, the CEO and Chair of Kaiser Permanente, said that the primary reason for the new structure was because Kaiser's original model wasn't viable in every community.

Adams stated in an announcement that "our mission calls for us to find innovative ways to promote high quality, affordable and evidence based care with improved health outcomes and equitable outcomes." Risant Health will provide its value-based-care expertise, technology, and services to community-based healthcare systems like Gesinger to help them improve their ability to deliver value-based models that focus on high quality and equitable outcomes.