Risant Health, launched by California health-care giant Kaiser, has completed its acquisition of Geisinger

Risant Health, a company launched by the nation’s largest nonprofit health system, has completed its acquisition of Pennsylvania’s Geisinger Health, the first of as many as six deals designed to create a health-care behemoth focused on providing better and less-expensive care.

The next move by the nonprofit Risant, which California’s Kaiser Foundation Hospitals announced 11 months ago, is expected to make a splash in the industry. But Risant’s incoming CEO, Jaewon Ryu, offered only general criteria for the next acquisitions in an interview Monday.

Potential acquisitions will be community-oriented nonprofits that are not interested primarily in the volume of services they provide to their patient populations, but rather on ways to keep people healthy, said Ryu, who has been Geisinger’s CEO since 2019. He said he hasn’t been part of conversations with potential partners.

He described Risant’s approach as versatile.

“Instead of treating someone in the hospital or the emergency room, are there ways that you can have-care programs that get to things sooner, whether it’s in the home or in the clinic or in other environments?” he said. “If you’re a hospital-facility-centric model that kind of plays solely in that space, I don’t know if the model works well for you.”

Unlike in traditional health-care consolidation, Risant’s strategy is not expansion into nearby markets because Risant’s point is not to build joint clinical programs in ways that increase revenue and reduce overhead expenses.

Instead, Risant’s goal is to develop ways, typically through software, for doctors to more easily keep track of patients, identify high-risk individuals, and intervene early to prevent them from getting sicker — and requiring more costly care. Those and other changes could take years, but eventually patients “will be able to access their care in ways that are much less clunky and hopefully pretty darn elegant,” Ryu said.

It is expensive to develop those back-office mechanisms for physicians to easily get information and patients to interact with their providers. That’s where Kaiser, which had $100 billion in revenue last year, comes in. It has promised up to $5 billion to build Risant’s technological backbone and make other investments.

Kaiser and Geisinger both own hospitals, physician practices, and health insurers. But each operates with different models. Oakland, Calif-based Kaiser owns 40 hospitals in eight states and Washington, D.C. It has a closed system, meaning that all of its patients have its insurance. Danville-based Geisinger sells insurance, but its hospitals and clinics also accept patients that have competitors’ insurance.

Risant will take the Geisinger approach.

Historically, health systems that wanted to be proactive in preventing illness found it necessary to operate a health plan, Ryu said. Providing health insurance coverage enables a broader view of factors that affect health — including food and transportation — than performing procedures to fix discrete problems.

“You don’t bill and collect for getting someone’s diet right,” said Ryu, who trained as an emergency medicine physician and spent six years working for Kaiser earlier in his career.

Geisinger’s roots in health insurance date to 1972, a time when there was little opportunity for Pennsylvania providers to get involved in managing the health in their communities.

Now a health system can have partnerships with private insurers or Medicare to better manage its patient population, Ryu said, without having to run its own health plan.

Under the merger agreement, Geisinger can count on at least $2 billion over five years for capital projects, including Geisinger’s own money. Geisinger will have access to at least $100 million over five years for the expansion of health-care services and insurance in neighboring communities.

Kaiser has already approved Geisinger’s plan to open 19 primary-care clinics, 13 senior-care clinics, and 8 ConvenientCare walk-in clinics. This builds on Geisinger’s 130 primary and specialty clinics as of late last year. That included 30 ConvenientCare walk-in clinics and 11 senior-focused primary-care sites.

Geisinger agreed to join Risant after being financially weakened by a decade of expansion during which it acquired seven community hospitals, opened two joint-venture hospitals, and added a medical school. Meanwhile competitors encroached from all sides.

One of the competitors, Wellspan Health, recently announced an agreement to acquire Evangelical Community Hospital in Lewisburg, Pa. Geisinger had a minority investment in Evangelical, which will be bought out for $20.3 million as part of the deal, according to the Daily Item, a newspaper in Sunbury, Pa.

From Ryu’s perspective, the Wellspan-Evangelical deal is an example of the ever-evolving landscape in health care. He said the industry can’t afford to stand still because it’s too costly, representing 18%-19% of the nation’s economy.

“It’s not sustainable the way it is today,” he said.