Many hospitals, physician groups and health plans seek to expand and diversify to help manage their growing financial risk from new reimbursement contracts that penalize poor quality and high costs.
“The entire healthcare environment is expanding from local geographies to regional geographies and then … national geographies,” Kit Kamholz, managing director at Kaufman Hall and an expert in healthcare transactions, told Modern Healthcare. Kaiser is moving “from being more of a regional player to more of a national player.”
The publication reported that “Acquiring Group Health would let Oakland, Calif.-based Kaiser to expand into an eighth market and absorb Group Health’s more than 590,000 members. Nearly four dozen primary-care and behavioral health clinics, four specialty medical centers and one hospital in Washington and northern Idaho would also be added to Kaiser Permanente’s $56.4 billion operations.”
Kaiser CEO Bernard Tyson said of the Group Health move:
“As part of our ongoing operational improvement work and our efforts to improve the quality of healthcare, we regularly evaluate opportunities to engage with other healthcare organizations. This work can range from informal collaboration around a narrow scope to more broad, structured and cooperative affiliations. Our overall long-term goal is to make our integrated model of high-quality, affordable care and coverage even better, and available to more people, as part of our mission to improve the health of our communities.”