EDITORIAL: Merger should put consumers first
May 1—Even amid a wave of consolidation in the health care industry, Kaiser Permanente's impending acquisition of the Geisinger Health System is a stunning development.
Kaiser, based in Oakland, California, owns 39 hospitals in eight states and Washington, D.C., and employs more than 300,000 people. Its revenue in 2022 was about $95.4 billion.
Danville-based Geisinger operates 10 hospitals and has about 25,000 employees. Its 2022 revenue was about $7 billion.
Geisinger has become a huge force in health care and the economy in Northeast Pennsylvania, operating hospitals, primary and specialty care offices and clinics in Schuylkill and surrounding counties, including Geisinger St. Luke's Hospital near Orwigsburg and the Geisinger Commonwealth School of Medicine in Scranton.
Despite their size difference, Kaiser and Geisinger have similar nonprofit "integrated health" models that, under newly formed nonprofit Risant Health, they plan to spread through additional acquisitions.
Kaiser's system serves only those with Kaiser insurance, whereas Geisinger accepts other insurance.
Both parties say the merger will help restructure the health care business toward "value-based care" that emphasizes healthy outcomes, rather than traditional fees for service.
In terms of the local impact, Geisinger President and CEO Dr. Jaewon Ryu said that patients will not experience any operational differences.
The merger also will not have any effect on Geisinger's insurance or medical school operations. It will not adversely affect major projects such as impending construction of a cancer center in Dickson City, the planned major expansion of Geisinger CMC in Scranton or the construction of a new mental health hospital in Moosic.
"This is technically an acquisition but not your typical acquisition," Ryu said.
That will be true, especially, if it does not increase consumer costs.
The health care consolidation wave has been under way for about two decades, with the number of U.S. hospitals declining from about 8,000 to just more than 6,000 between 1999 and 2021.
Multiple studies across that period have shown that the mergers rarely produce the lower prices and improved care that the parties claim beforehand.
Some of that decline is due to private equity entrepreneurs acquiring and bleeding hospitals for profit.
That is clearly not the case with the Kaiser-Geisinger acquisition.
But when it comes time for regulators to examine the acquisition, they should produce clear information on what it will mean for consumers.
