This past December, Novant Health bought nearly 54 acres in a rapidly developing area of northwestern Greensboro. Just weeks earlier, Atrium Health Wake Forest Baptist broke ground about a mile away on a $163 million multi-specialty medical center.
The one-two punch illustrates how the state’s two biggest healthcare systems are taking a swing at Cone Health, long the dominant healthcare force in North Carolina’s
third-largest city.
Cone now has five Triad-area hospitals, including two in Greensboro. The sprawling downtown hospital opened in 1953, thanks to a bequest from Bertha Cone, the widow of textile magnate Moses Cone. It has evolved into the city’s primary provider of indigent care. Over the decades, its earliest mission has shaped leadership’s embrace of
community care.
Three months ago, Cone gave up its independence in a merger with Oakland, California-based Risant Health. Instead of seeking the highest bidder, Cone agreed to a cashless transaction with Risant, which pledged to invest as much as $1.7 billion and provide expertise in value-based care. After decades of modest growth, Triad economic activity is quickening, sparked by the giant Randolph County complex that Toyota Battery Manufacturing North Carolina is opening later this year. Along with other corporate expansions, growth is bringing more families — and competition — to Cone’s home turf.
The area’s attractiveness is obvious in northwestern Greensboro, where Cone operates a LeBauer Healthcare clinic and a medical center that opened in 2022. A showcase for Cone’s services, the 160,000-square-foot center co mbines fitness and wellness programs with care for emergencies, cancer and other ailments. A kitchen offers healthy cooking classes.
Before breaking ground on its five-story building, Atrium operated a physical therapy clinic and a pediatric care practice in the area. It will offer outpatient surgery, cancer care and services in cardiology, gastroenterology and other conditions.
Cone failed to convince state regulators to block the project after arguing that Atrium’s plans for “an affluent part of Greensboro isn’t about competition” but about “syphoning off people with premium health insurance.”
Atrium says it will keep investing in Greensboro, where it operates more than 35 primary, specialty and urgent care practices. Novant officials declined to discuss their pending project, which would add to the system’s more than 30 clinics in Guilford County.
Cone CEO Mary Jo Cagle doesn’t blame the competitors for plucking prime locations with lots of neighbors who have private health insurance. However, she says their approach lacks a commitment to serving other areas that lack care, unlike Cone.
“I’m not criticizing people for competing or increasing their margin,” says Cagle, a physician who joined Cone in 2011 and became CEO in 2021. “But I don’t see them equally going to serve the underserved part of the community. You’re not going to see us backing away from our mission of serving in the community.”
Combining with Risant will help Cone accelerate that mission, she says.
A DIFFERENT PATH
“If we fulfill our vision of really becoming a true value-based organization at the level that we are aspiring to, that is going to be a differentiator for us in the market,” says Dr. Angelo Sinopoli, Cone’s executive vice president of value-based care. “It’s going to differentiate us to patients because of their experience and affordability of care and access. It’s going to be a differentiator for doctors because a lot of what we’re talking about makes physician practices much more efficient and more enjoyable.”
Embraced by the federal government to slow spiraling medical costs, value-based care represents an alternative to the predominant fee-for-service model. For decades, traditional Medicare has allowed health insurance companies to reimburse providers for individual procedures. Such unbundling of services can lead to a lack of coordination among
providers and a lack of communication with patients, resulting in higher costs and disappointing outcomes.
Value-based care fits Cone’s commitment to community healthcare. Motivated by federal incentives, it created Triad HealthCare Network 15 years ago and two years later became one of the Centers for Medicare and Medicaid Services’ first “accountable care organizations” in the nation.
The network manages care for nearly 200,000 patients in Guilford, Alamance, Randolph, Rockingham and Forsyth counties. Its success in lowering costs while exceeding quality targets for Medicare patients led to savings of $6.5 million in 2023. Those savings are going to physicians, nurse practitioners and others performing team-based care to reduce hospital admissions, reduce unnecessary readmissions and other costs.
Value-based care is gaining ground nationally, led by providers such as Oakland, California-based Kaiser Permanente, a not-for-profit system that launched Risant in April 2023 as a subsidiary to operate hospitals. A year later it acquired Geisinger Health System, which has more than double the annual revenue of Cone through its central Pennsylvania hospitals and clinics.
News of the Risant-Geisinger deal caught the eye of CEO Cagle and others at Cone. And as it plotted future expansion, Kaiser Permanente set its sights on Cone.
Cone showed its desire to bulk up in August 2020, when it agreed to a merger with larger Sentara Healthcare of Norfolk, Virginia. But Cone called off the deal 10 months later, and has rebuffed other suitors since then, Cagle says.
The mutual interest led Cagle and her chief strategy officer, Chris Cornue, to Atlanta for a May 2023 meeting with Kaiser CEO Gregory Adams and his strategists. After learning about each other’s organizations, Cagle says she and Cornue agreed “this is what we’ve been looking for.” They decided to make their case for a combination with
Cone’s board.
At the outset of their deliberations, Cone board chair Dr. Yun Boylston says she and other trustees “really felt like we connected with our
counterparts at Kaiser.”
In the same way that Bertha Cone’s bequeath led to the Greensboro hospital focused on serving Tar Heel textile workers, West Coast industrialist Henry Kaiser teamed with a doctor in the late 1930s to provide healthcare for builders of the Grand Coulee Dam in
Washington state.
That operation morphed into a healthcare plan for 190,000 Kaiser shipyard workers during World War II, and eventually, an industry powerhouse. Kaiser Permanente reported $4.1 billion in net income and $116 billion in revenue last year. By comparison, Cone posts about $3 billion in annual revenue.
“From the beginning, even though our two entities are far apart geographically, that sense of commitment to the community felt incredibly similar,” says Boylston, a pediatrician in Burlington who has been on Cone’s board since 2018 and chair since January.
The two organizations’ sense of community obligation motivated Cone trustees to pursue the transaction without setting a purchase price or teaming with an in-state partner. That was contrary to the more conventional approach, such as New Hanover County’s decision to auction its Wilmington hospital in a public bidding process. The February sale created a $1.3 billion community endowment, plus acquirer Novant Health’s pledge to spend more than $3 billion over the next decade. Industry experts say each of North Carolina’s largest hospital systems would have loved adding Cone Health because of its strong market share in an attractive market.
Risant’s commitment to “doing right by the community enabled us to act on the partnership because they were able to offer something for the future of our community,” Boylston says. “That just was not present in any other deal that we envisioned. It’s just a very different model from folks who are in business thinking strictly in terms of the financial value of
the merger.”
Risant also agreed to leave Cone’s management and board in place, which rarely happens in traditional M&As.
Early on, Boylston and other doctors are using technology Risant shared with Cone, which Cagle saw firsthand as a patient. During her annual physical, the CEO says her doctor relied upon an AI-powered device to record their conversation.
“What we’re hearing from our family doctors is that it’s saving them two to three hours a day” in turning the information into patient notes, Cagle says.
Cone is bolstering employee training to spread the gospel of value-based care beyond the Triad Healthcare Network, according to Sinopoli. A former senior executive of South Carolina’s largest hospital operator Prisma Health, he joined the hospital system a year ago to lead the effort.
“Kaiser and Geisinger have already been doing this for decades,” Sinopoli says. “They bring to the table the expertise, experience and technologies that will allow us to accomplish things in the next six or seven years that would have taken 15 years to do on our own.”
Risant has committed a minimum of $1.4 billion in capital to Cone over the next five years and as much as $300 million more over 10 years. That includes a $1 billion “backstop” to fund Cone’s capital projects “if we have another pandemic or the markets crash,” Cagle says. “If everything goes smoothly, they won’t have to give us anything.”
Another $400 million will pay for technology and tools to equip doctors, nurses and business staff for Cone’s transition into value-based care.
REACHING OUT
In historically Black eastern Greensboro, Cagle says Cone plans to spend $50 million on facilities offering urgent and primary care, preventive health, wellness and other services. Efforts were underway before Cone’s union with Risant to address a persistent problem in Greensboro and elsewhere. Research shows that lack of convenient medical care contributes to shorter lives for area residents.
In a collaboration with the city of Greensboro, Cone pledged $5 million for construction of the Windsor Chavis Nocho Community Complex, which will replace a vacant neighborhood recreation center. The $77 million project will encompass a 65,000-square-foot building, including medical and wellness services from Cone, a gymnasium, swimming pool and other fitness facilities run by the city, and public health, cooperative extension and social services from Guilford County.
Across town in front of Moses Cone Hospital, another marker recalls a 1963 landmark civil rights suit by black doctors and patients accusing the institution of discrimination. The U.S. Supreme Court refused to hear the hospital’s appeal of the U.S. Fourth Circuit Court of Appeals’ ruling that favored the plaintiffs.
In 2016, Cone formally apologized for the segregation that led to the suit. As diversity, equity and inclusion initiatives come under cricitism in the government and corporate America, Cagle says Cone is continuing to advance its commitment to “health equity” with the projects in eastern Greensboro and elsewhere.
“We have inequities in care in rural Randolph and Rockingham counties, and it’s got nothing to do with race,” she says. “It’s about poor folks in rural America not having the same access as people in suburban northwest Guilford County.
“We’ve not put enough doctor’s offices and places for people to get care there,” she says. “For us, it’s about meeting people where they are.”
Councilwoman Sharon Hightower, a 40-year city resident, represents District 1 in eastern Greensboro. She feels confident that Cone’s commitment to the underserved won’t unravel with the Risant combination.
“I’ve seen their mindset change over the years,” Hightower says. “They’ve recognized how important it is to have a medical presence here in a community which has seen many health disparities. I’m very hopeful that they would not partner with anyone who would look to want to change the path that we’re currently on.”
Greensboro Mayor Nancy Vaughan is taking Cone and Risant at their word about the commitment to community betterment.
“I have been very pleased that Cone has made a commitment to increase the lifespan of those living in east Greensboro,” she says. “They are being very aggressive to address those needs.”
Vaughan isn’t seeking reelection in November’s election. However, her tenure as mayor since 2013 roughly overlaps Cagle’s years at Cone. The CEO also serves as a director of the Piedmont Triad Partnership, connecting her to a variety of leaders on the economic development group’s board.
“I think she is in a perfect position right now,” Vaughan says. “She brings medical knowledge and business knowledge to the table.”
For Cagle, the combination translates into helping recruit new businesses to the Triad. Once they’re committed, she and her team pursue them as prospective Cone customers. “It absolutely informs our strategic planning,” she says.
Cagle says her conversations with Sean Suggs, president of Toyota Battery Manufacturing in Liberty, have helped Cone plot its expansion southeast of Greensboro to serve families connected to the automaker and its suppliers.
“We’re looking at projections about where the population is going over time,” Cagle says. “You can’t throw up a medical
building overnight.” ■
