A breakdown of Kaiser's Q1, and recent strategic decisions:
Note that this piece was originally published on May 16, 2024. Anything included in italics has been updated through today 6/24.
Here's a quick breakdown of most things happening strategically with Kaiser Permanente, most notably focused on Risant Health as its next avenue of growth:
Of course Kaiser's Risant decides to drop the news of its acquisition of Cone Health while I'm out on vacation! Stay tuned - I'm working with Michael Stratton at Health Data Atlas to break down why certain health systems, including Geisinger, Summa Health, and now Cone - are being acquired by the likes of HATCo and Risant Health. Finally - something big in healthcare happened!!
Notably, and most recently, Kaiser is rumored to be selling up to $3.5B of private equity related holdings on the secondaries market to free up some cash. The WSJ cited cash constraints as the reason, but a spokesperson told Beckers liquidity concerns were not an issue. So that leads me to believe there's something more planned? Maybe…another acquisition or two under Risant? Expect to see more announcements coming down the pipeline now that Geisinger is under its belt.
Kaiser also closed the Geisinger acquisition under its Risant Health subsidiary. Also, under that linked press release, we got a bit more insight into what Risant is expected to actually do for Geisinger and other health systems that join:
- "In the future, Risant Health's investments to advance value-based care will accelerate Geisinger's journey to make better health easier by offering Geisinger members enhanced health insurance options and offering patients easier access to Geisinger's high-quality, innovative clinical programs and more robust health management technology, tools and programs."
- "Risant Health expects to acquire 4 to 5 additional leading community-based health systems over the next 4 to 5 years" = average of one per year assuming my stellar math is correct
- "Initial platform solutions will aid Risant Health organizations in delivering evidence based care everywhere — the "best-of" knowledge to provide high-value, effective care at the right time. Additionally, Risant Health will help health systems and their patients know how to easily understand, access and navigate to the right care at the right time and place." Sounds glamorous and buzzy, but I'm interpreting most of this so far as care navigation / risk stratification services. Maybe a peek at Kaiser's venture portfolio would give us some insight into planned future vendor choices for population health and other initiatives.
Launching a PACE program alongside Town Hall Ventures, called Habitat Health, with $30M in funding. More context from Town Hall Ventures on the investment rationale. PACE is an interesting space (pun intended!)
Launching a Food Is Medicine Center of Excellence.
Nixing a $500M outpatient MOB construction
Partnering with Inovaccer to deploy an AI-enabled platform to support value-based care (note: Risant?) initiatives.
Partnering the Permanente Group with ambient documentation player Nabla
Takeaway: Kaiser is seeking growth outside of its traditional markets, and it thinks Risant is the great unlock for the future of its growth strategy. Confidentially, I have heard rumblings around Risant and Cone Health.
Others in the community have speculated around Marshfield Clinic Health System. But for potential suitors you should look to health systems with population health / risk chassis, outpatient footprints and physician alignment, but are also not positioned in the best markets demographically (perhaps more competition, geographical constraints, etc.) and are themselves looking for the next phase of growth to support operations.
So far, every health system acquired has been 'boxed in' - Geisinger (in PA), Summa Health (in Akron).
Kaiser's Q1 earnings report and annual income statements visualized
Kaiser saw some margin improvement in Q1 2024. Note that the net income statement number below is noisy given a $4.6B gain from Kaiser's acquisition of Geisinger. Some comparative, year-over-year stats:
- Revenues totaled $27.4B in Q1 and grew 8.6% over 2023, driven by an 11.5% increase in member dues.
- Operating expenses totaled $25.2B in Q1 and grew 5.9% over 2023, driven by lower growth in its hospital services (3.8%) and medical services (6.0%) segments
- Net income profitability almost completely originated from other income, including the $4.6B Geisinger one-time bump, $1.4B in investment income, and $368M in net interest income given the higher interest rate environment.
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