Kaiser Permanente, the California integrated delivery system with one of the largest U.S. health plans, is taking another step toward becoming a national player with plans to acquire the Seattle-based Group Health Cooperative.
“We want to demonstrate to everyone in this country that our model is more relevant today than ever before,” Kaiser CEO Bernard Tyson said after the deal was unveiled Friday.
It's among a fast-growing list of huge healthcare deals made this year by companies moving aggressively to enter new markets and gain scale. They have transformed regional competitors into merged giants and pushed regional giants onto the national stage.
“The entire healthcare environment is expanding from local geographies to regional geographies and then … national geographies,” said Kit Kamholz, managing director at Kaufman Hall and an expert in healthcare transactions.
Acquiring Group Health will allow 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.
Group Health and Kaiser have previously worked together on national contracts and clinical initiatives and the organizations have similar business models. “The mission is very similar, if not identical,” Tyson said. “And our approaches to healthcare and coverage are very similar, if not identical. The strategic fit is there.”