The dominant hospital in Asheville was sold to HCA Healthcare in 2019, followed by Wake Forest Baptist Health’s combination with Atrium Health (now Advocate Health) in 2020 and New Hanover Regional Medical Center’s sale to Novant Health in 2021.
The Asheville and Wilmington sales led to community-based foundations with more than $1 billion. Advocate has pledged hundreds of millions of dollars in capital investments at Wake Forest Baptist sites, and is adding a medical school campus in Charlotte.
But Cone is merging into Risant Health, a unit of Oakland, California-based healthcare giant Kaiser Permanente, largely because of the promise to expand its “value-based model” focusing on prevention, access and cost containment, officials say.
“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.
“Risant Health has put a stake in the ground that care focused on evidence, equity, population health and improved outcomes must be the future of healthcare,” Kaiser CEO Greg Adams said in a statement. “Models like that of Kaiser Permanente, Cone Health and Geisinger will help make that possible.” Most healthcare compensation is now based on a fee-for-service model that critics say leads to unnecessary tests and procedures.
Transaction details weren’t immediately released and regulators must approve the transaction. But merging into the Risant operation is not involving a major cash infusion reflecting the market valuation of the Greensboro system.
Cone officials said they talked with undisclosed other entities before choosing to align with Risant. Greensboro is an attractive market given Cone’s dominance in Guilford County and because the system receives less than a fifth of its revenue from the government’s Medicaid insurance program for low-income citizens, according to Fitch Ratings.
Still, Cone faces increased competition from larger rivals Novant and Advocate, 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 Danville, Pennsylvania-based system through the end of 2028 to “support necessary hospital, ambulatory facility, technology and other strategic and routine capital,” according to 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 Geisinger, which reported $6.9 billion in revenue and a $239 million operating loss in 2023.
Kaiser is one of the nation’s largest healthcare enterprises, with $95 billion in annual operating revenue. It had 39 hospitals and 12.7 million insured 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 with plans to operate about five hospital systems within five years. ■