spot_img
Tuesday, February 11, 2025

Cone Health sale won’t spur big gain for foundation

When the dominant hospitals in Wilmington and Asheville sold to Novant Health and HCA Healthcare in 2021 and 2019, respectively, foundations with more than $1 billion were created to benefit the local communities.

When Atrium Health took over Winston-Salem-based Wake Forest Baptist Health in 2020, no money changed hands, but the Charlotte-based hospital company pledged hundreds of millions of dollars in capital investments.

Now, Greensboro’s major hospital system is merging into Risant Health, and the result is going to look more like the Wake Forest Baptist transaction.

Details won’t be released for an extended period as regulators consider the transaction. But merging into the Risant operation is not involving a major cash infusion reflecting the market valuation of the Greensboro system.

Rather, Cone Health CEO Mary Jo Cagle and other hospital officials emphasize Risant and its owner, Oakland, California-based Kaiser Permanente, are committing to investments to improve Cone and expand its “value-based model” focusing on prevention, access and cost containment.

“Cone Health has been looking for a while to increase what we do, and value-based care is really important to us,”  says spokesman Doug Allred. The Risant deal calls for continued use of the Cone brand and management because the newly-formed Kaiser affiliate doesn’t operate hospitals aside from the Geisinger group in Pennsylvania that was acquired earlier this year.

Cone officials said they talked with undisclosed other entities about potential partnerships, but chose Risant. Greensboro is an attractive market given Cone’s dominance in Guilford County, but it faces  increased competition from Novant Health and Advocate Health, which dominate the western Triad region, and UNC Health and Duke Health, which have big market shares in Durham, Orange and Wake counties.

In the Geisinger transaction, Risant agreed to make at least $2 billion available to the Pennsylvania system through the end of 2028 to “support necessary hospital, ambulatory facility, technology and other strategic and routine capital,” according to financial filings that were cited by the Fierce Healthcare website. Risant also committed to hundreds of millions of spending on Geisinger’s health plan, care delivery services and research.

Cone is about a third the size of Danville, Pennsylvania-based Geisinger, which reported $6.9 billion in revenue, a $239 million operating loss and a $842 million net loss in 2022, Fierce Healthcare notes.

Kaiser is one of the nation’s largest healthcare enterprises, with $95 billion in annual operating revenue. It had 24 medical offices, 39 hospitals and 43 retail and employee clinics as of March 31. It counted a total of 12.7 million members as of March 31. By comparison, Charlotte-based Advocate has about $30 billion in annual revenue, while Novant Health is in the $10 billion range.

Cone reported a net profit of $198 million in 2023, with revenue of $2.5 billion. Overall, Kaiser has pledged $5 billion for Risant to establish a network of hospital systems.

The affiliated Cone Health Foundation had assets of $100 million in its 2022 fiscal year, according to its most recent public tax filing.

David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.

Related Articles

TRENDING NOW

Newsletters