Dive Brief:
- Nonprofit giant Kaiser Permanente is expanding into Nevada next year through a partnership with academic health system Renown Health.
- Kaiser and Renown have signed a definitive agreement to jointly own and operate a health plan and ambulatory health system in northern Nevada, the companies announced Wednesday. The joint venture will be called Kaiser Permanente Nevada.
- As part of the agreement, Kaiser plans to purchase a majority stake in Renown Health’s insurance arm, Hometown Health, which currently serves more than 73,000 members. Kaiser and Renown did not respond to questions about the financial terms of the deal, but a Renown spokesperson said that proceeds would be reinvested back into the joint venture.
Dive Insight:
Kaiser’s push to expand its market size comes as other systems have scaled back capital spending and merger activity amid larger jitters about the economic climate.
But Kaiser is on firmer financial footing than most, helped by its health insurance division, recent acquisitions of other nonprofits and general benefits of scale. Kaiser is one of the largest nonprofit systems in the U.S., with more than 50 hospitals and $116 billion in annual operating revenue.
Kaiser’s Nevada partner, Renown Health, is small in comparison. Renown operates an integrated care network that includes two acute care hospitals, a children’s hospital, a trauma center and other clinics in Nevada and California. The company brought in approximately $2 billion in revenue last year.
Kaiser said there will be no immediate changes to Renown’s Hometown Health or Senior Care Plus plans under the joint venture, and Renown will continue to operate as an independent health system.
Still, bringing Kaiser’s expertise to Nevada should benefit Hometown Health members, according to Dr. Brian Erling, president and CEO of Renown Health.
“This collaboration strengthens our ability to keep care local, while bringing the scale, expertise and innovation of a national leader,” Erling said in a statement on Wednesday. “Together, we can improve the overall health of the communities we serve and create additional capacity to care for more people.”
Kaiser is expected to provide technology expertise to Hometown Health, as well as improve the insurer’s purchasing power for items like drugs, according to a Renown spokesperson. Kaiser’s power to negotiate with the pharmaceutical industry will likely be a significant benefit, as drug costs have become increasingly burdensome for both providers and payers in recent quarters.
Along with Kaiser’s national heft, the system is also an appealing partner because it’s well known in the region, the Renown spokesperson added.
“Forty percent of new residents in Nevada have moved from California, many of whom are former Kaiser members,” they told Healthcare Dive via email. “Kaiser Permanente has solid brand recognition, along with established employer relationships with nearly 100 national, multistate, and large public employers in Reno and the surrounding area.”
Renown says it will also expand access to multispecialty care, diagnostic, pharmacy and ancillary services through the joint venture, including opening additional ambulatory clinics.
Kaiser hopes to receive full regulatory approval for the deal by early 2026 and begin health plan enrollment for employers and northern Nevadans that year.
The announcement comes on the heels of Kaiser’s second-quarter earnings results in which CEO Greg Adams warned that the massive health system may have to tighten discretionary spending in preparation for mounting financial headwinds.
Kaiser said it would prioritize value-based care and access as it navigates the evolving healthcare landscape — a strategy that aligns with the system’s new joint venture, which will open new and affordable ambulatory clinics.
Helping to oversee that strategy will be newcomer Dr. Craig Albanese, who Kaiser snagged from Duke University Health System this week. The executive was CEO for the North Carolina-based health system and previously held multiple leadership positions with NewYork-Presbyterian.
Albanese will join Kaiser at the end of this month and oversee day-to-day operations as president of integrated care and coverage.
