Cone Health has completed its multi-year pursuit of becoming part of a larger healthcare system with the closing of its acquisition by Risant Health Inc. in a transaction valued at $1.7 billion.
The groups said Tuesday that final state and federal regulatory approvals had been received by Sunday.
As part of the transaction, the Washington, D.C.-based nonprofit charitable group becomes the sole corporate member of Cone.
Founded in 1953, Cone is a Greensboro-based nonprofit health care network serving more than 500,000 people, mostly in the Triad, with more than 13,000 employees, more than 700 physicians and about 1,800 partner physicians.
Cone and Risant confirmed a pledge made in June 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."
"Today marks a new chapter not only for Cone Health, but for health care in the North Carolina Piedmont and beyond," said Dr. Mary Jo Cagle, Cone's president and chief executive.
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."
Risant is affiliated with California-based Kaiser Permanente, which is attempting to form a national network that combines insurance and health care.
However, Kaiser Permanente disclosed in a second-quarter regulatory report that Risant would spend a minimum $1 billion to "support investments in facilities, health equity and other capital projects" involving Cone by Dec. 1, 2029.
In addition, Risant has pledged to provide $400 million toward Cone's transition and integration costs addressing Risant's value-based healthcare platform, as well as an additional $300 million over 10 years toward Cone's growth initiatives.
Cagle said in a June interview with the News & Record that she feels the need to explain what value-based care means to Cone "since the term gets tossed around a lot."
"It means high-quality care at lower costs, going away from the fee-for-service model where you pay for every little thing you get," Cagle said. "You pay one global fee, and we keep you healthy through preventive care and a focus on wellness than sick care.
"That has been our vision all along on transforming health care, and this gives us the opportunity to work with Kaiser Permanente, who has 80 years of expertise doing this and the tools, technologies and platforms it is bringing to Cone patients and clinicians."
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."
"Cone Health has been a leader in value-based care for more than a decade," Cagle said. "Becoming part of Risant Health accelerates our mission to deliver on the promise of better care at lower costs for all."
What Risant brings
Risant is run separately from Kaiser, which had about $101 billion in revenue in 2023.
"We are pleased to officially welcome Cone Health into Risant Health with the close of this transaction," Risant chief executive Jaewon Ryu said. "We are proud to be building a strong group of health systems committed to value-based care in their communities."
Risant's first acquisition involved 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.
Risant said its goal is to expand and accelerate the adoption of value-based care in multi-payer, multi-provider, community-based health system environments.
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," Adams said.
"Models like that of Kaiser Permanente, Cone Health and Geisinger will help make that possible."
How it came together
The completion of the Risant acquisition of Cone comes about 3½ years after 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."'
A major difference between the Sentara and Risant negotiations included the involvement of a Cone group of 14 physicians "from multiple specialties all across our footprint," Cagle said. Those physicians were not involved in a significant way in the Sentara negotiations.
The June announcement from Risant and Cone seemed to come out of the blue.
However, Cagle and Cone's board of trustees said in June that the transaction represents the culmination of nearly a year's worth of due diligence.
It also recognizes that Cone had reached a pivotal "tipping point" in its mission of improving the quality and equity of care within its market.
The board and Cagle stressed that Cone has been in a position of wanting to -- rather than needing to -- find a healthcare partner.
They cited confidence in Cone's financial stability and strategic vision was displayed foremost in April in the unveiling of an ambitious $150 million community wellness initiative "to improve health and increase life expectancy in underserved areas" through real-estate purchases and opening new clinics.
Although the focus of the community wellness initiative would be primarily on east Greensboro, ripple effects were planned throughout its market.
Yet, Cagle said she and the board had a nagging concern that the planned five-year rollout of the initiative may not be timely enough.
"How long would take it us to reach our strategic goals on our own vs. with a healthcare partner?" Cagle said she and board members were asking.
"We determined it was just going to take us much longer on our own, and we are committed to doing the right thing for this community.
"People could die while we're trying to reach our goals, whose lives we might be able to save by accelerating this work," she said. "That was the tipping point."
During due diligence, Cagle said the board, management and clinical staff became convinced that partnering with Risant would enable Cone to accelerate its shift to value-based care and promoting health equity.
"Of course, the finance piece was important to everyone," Cagle said. "Let's just say there is a significant enough (financial commitment) that our board was willing to vote yes to this deal.
"But we also looked at would this help us advance our strategy, and do it in a way that would be faster and less expensively than we could do it on our own."
Cagle stressed that Cone's management and board didn't believe joining another healthcare group was inevitable in the aftermath of the Sentara plan collapsing.
"We worked with national consultants to determine whether we could do what we're envisioning (with Risant) on our own," she said. "Because we are so stable financially, we were told Cone has the ability to stay independent."
Atrium expansion into Greensboro
Cagle has stressed that Atrium Health Wake Forest Baptist's major expansion push into Greensboro played "no role whatsoever" in Cone entering into the Risant partnership.
Atrium Health, through its merger with Advocate Aurora to form Advocate Health, is part of the nation's third-largest not-for-profit healthcare system.
Atrium has made no secret of wanting to establish a major presence in all three urban Triad cities, with High Point Regional Medical Center under the Baptist umbrella.
Baptist has more than 30 primary, specialty and urgent-care practices in Greensboro, including 14 urgent-care clinics.
The first construction phase for the Baptist medical campus in northwest Greensboro was launched in October with a $163 million medical office building that is scheduled to open in 2026.
The 134,000-square-foot, five-story building will feature specialty clinics in cardiology, gastroenterology, general surgery and orthopaedics. The facility will also offer imaging, pharmacy, physical therapy and other services.
Meanwhile, Baptist has set a projected Jan. 1, 2029, debut for the $262.8 million, 36-bed hospital on the campus. From a regulatory standpoint, those 36 beds are part of High Point Medical Center's network
Baptist has upped the capital investment for the planned Greensboro Medical Center campus to more than $423 million.
Passing scrutiny
Under North Carolina law, the attorney general reviews any transaction in which a charitable corporation -- like Cone -- sells a majority of its assets.
Attorney General Josh Stein could not be immediately reached for comment on his approval of the Cone-Risant transaction. Stein, a Democrat, will become North Carolina's next governor on Jan. 3.
Stein's approval wasn't a given since he has said when reviewing hospital transactions that "bigger doesn't always mean better. In fact, it often means worse and more expensive."
"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," Stein said.
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 was shelved for the remainder of the 2023-24 sessions.
State Treasurer Dale Folwell., whose second term ends Jan. 2, 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 "hope they are in favor of transparent prices and putting patients over profits."
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