Cone Health plans to be acquired by nonprofit Risant Health. What does it mean for your doctor?

For the second time in four years, Cone Health has announced plans to be acquired, this time by Washington, D.C.-based nonprofit charitable group Risant Health.

Risant is affiliated with California-based Kaiser Permanente, which is pursuing a national network that combines insurance and health care. Kaiser had about $101 billion in revenue in 2023. Risant is run separately from Kaiser.

Cone and Risant said in a joint news release that Cone will “maintain its brand, name and mission, and maintain its own board, chief executive and leadership team. It will continue to work with health plans, provider organizations and independent physicians.”

Cone chief executive Dr. Mary Jo Cagle said patients “will see the same doctors, the same nurses and the same staff in the same locations they do today. We do not anticipate changes in the types of care we provide as a result of becoming part of Risant Health.”

Cone announced in June 2021 it had ended its pursuit of being acquired by a Virginia health-care system following nearly 10 months of negotiations. Cone and Sentara Healthcare, based in Norfolk, Va., said they “have mutually decided not to move forward.”

Cone serves about 500,000 patient, foremost in the Triad. It has more than 13,000 employees, more than 700 physicians and 1,800 partner physicians. Its network features four acute care hospitals, a behavioral health facility, an accountable care organization and a health plan.

The groups did not disclose a transaction amount. They project the transaction to close by year’s end.

According to a Wall Street Journal article on the proposed deal, Risant is expected to make a capital investment into Cone.

Risant completed its first-ever acquisition, of Pennsylvania-based Geisinger Health System, earlier this year. Risant told the Wall Street Journal it plans to acquire another four or five health systems in the next five years.

Cagle was not immediately available for additional comment.

She told the Wall Street Journal that the technology and strategies available through Risant, which a group of Cone physicians reviewed during due diligence, were one reason Cone agreed to the deal.

“They said, ‘These would be a game changer,’ ” she said.

Risant and Kaiser said their goal is to “bring together like-minded organizations, increase access to value-based care and coverage, and raise the bar for approaches that bring the best health outcomes.”

Risant chief executive Jaewon Ryu said that “Cone Health’s impressive work for decades in moving value-based care forward aligns so well with Risant Health’s vision for the future of health care.”

Cagle said joining Risant “presents a unique opportunity to shape the future of health care in the Triad, the state and across the nation. The people across the Triad will be among the first to benefit.”

Risant chairman Greg Adams said that “Risant Health refuses to accept that fragmented, episodic, fee-for-service care should define the future of health care.” Adams also serves as chairman and chief executive of Kaiser Foundation Health Plan and Hospitals.

“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 health care. Models like that of Kaiser Permanente, Cone Health and Geisinger will help make that possible.”

Merger review

Under North Carolina law, the attorney general reviews any transaction in which a charitable corporation — like Cone — sells a majority of its assets.

The potential Cone acquisition by Risant will require federal and state regulatory approvals, including from the N.C. Attorney General’s Office.

Cagle said she had reached out to Attorney General Josh Stein and Gov. Roy Cooper about Cone being acquired. Approval from Stein is not required, but the office can sue to intervene in this type of acquisition.

Stein could not be immediately reached for comment on the Cone-Risant announcement.

There were at least 40 responses to the public-comment request for Cone and Sentara, some critical of combining the two systems from financial and cultural perspectives.

Stein released a statement in June 2021 after the Cone-Sentara joint statement ending their deal in which he mentioned having “real concerns” about “a wave of hospital consolidations.”

He noted the HCA acquisition of Mission in Asheville, Novant Health Inc.’s $5.3 billion purchase of New Hanover Regional Medical Center and the Atrium Health acquisition of Wake Forest Baptist Medical Center.

“Bigger doesn’t always mean better. In fact, it often means worse and more expensive,” Stein said.

“My office takes its role in scrutinizing proposed combinations seriously, and we were in the midst of conducting a thorough review of the Cone/Sentara affiliation.

“I encourage all hospital directors to be certain that consolidation is actually in the interest of the patients and communities they serve before pursuing it.”

State Treasurer Dale Folwell has criticized most of the major not-for-profit hospital acquisitions affecting North Carolina. He has accused the major healthcare systems as being “cartels.”

When asked about the Risant acquisition of Cone, Folwell said “never heard of them. Hope they are in favor of transparent prices and putting patients over profits.”

NC hospital merger bill

A bipartisan state Senate bill was filed in January 2023 that would require health-care systems to submit acquisition and merger proposals for state attorney general review before reaching any agreement.

Senate Bill 16, titled “Preserving Competition and Health Care,” has as primary sponsors Republican Sens. Jim Burgin of Lee County and Kevin Corbin of Haywood County, and Democratic Sen. Julie Mayfield of Buncombe County.

The bill was sent to gate-keeper Senate Rules and Operations committee where it has been shelved.

Mark Hall, a professor of Law and Public Health at Wake Forest University, said SB16 “aims to give the attorney general more authority to block changes in hospital ownership or control that are contrary to the public’s interest, and more authority to monitor ownership changes for any negative effects on health care costs, quality or accessibility.”

“The bill addresses the concern that, currently and historically, legal authority has been lacking for oversight of these matters.”

Stein said his authority over health-care system transactions “is inconsistent depending on what type of entities (not-for-profit or for-profit) are involved, the ownership entity, and how the transaction is structured — a merger, a sale of assets, a joint venture or a lease.”

“There is no obligation on a health-care system that’s considering a transaction to engage the public, their own community, about ‘what do you think about this transaction?’ That’s a requirement in this bill.

“We have one of the most consolidated health-care systems in the country, with 18 rural hospital mergers between 2005 and 2016.” Stein said.

“As a result, our health-care costs are among the highest in the country.”

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