Risant Health completed its acquisition of Cone Health, bringing the nonprofit health system under its umbrella following the acquisition of Geisinger back in March.
Oakland, California-based Kaiser Permanente announced the formation of subsidiary Risant Health and its broader strategy to acquire health systems in April 2023. Kaiser said the deal to buy 10-hospital Geisinger Health was the first step on its ambitious plan to form a multisystem, multiregional value-based care organization.
Risant Health's goal is to expand and accelerate the adoption of value-based care in multipayer, multiprovider, community-based health system environments and improve the health of millions of people in communities across the country, executives said.
Risant operates separately from the system’s core model of a closed integrated care network and instead aims to bring together a small handful of regional health systems to collaborate on a tech-backed care platform it says will improve outcomes and cut costs. Though the member systems would keep their operations separate, experts have suggested their combined scale would bolster negotiations with larger commercial payers.
Cone Health is smaller than Geisinger but still fairly substantial within North Carolina’s Piedmont Triad metro area and the surrounding counties. The nonprofit operates four acute care hospitals, a behavioral health facility, a health plan and an accountable care organization, the latter of which works with nearly 200,000 patients.
The health system, formed in 1952, has more than 13,000 employees and more than 700 physicians, along with 1,800 partner physicians. For its 2023 fiscal year ended Sept. 30, it reported more than $2.8 billion in total operating revenue.
Through this transaction between two nonprofits, Risant Health becomes the sole corporate member of Cone Health. There is no purchase price or exchange of cash, the companies said in a press release.
Cone Health will maintain its name, brand and mission. It will also maintain its board, CEO, enterprise leadership team and medical staff.
Kaiser Permanente, the country’s largest nonprofit health system, has pledged commitments of up to $5 billion in Risant Health over several years.
According to a midyear financial filing, the acquisition agreement has Risant providing a minimum of $1 billion in capital—inclusive of Cone Health internally generated and Risant Health funds—to the system up to five years after the deal’s closing date. These funds will support investments in Cone Health’s facilities, health equity and other capital projects.
Additionally, Risant Health will put up as much as $400 million during a capital commitment period to help Cone Health’s transition and integration, which will include initial implementation of the subsidiary’s value-based platform.
Finally, Risant Health will assure up to $300 million to support Cone Health’s growth over a decade following the deal’s close, which is still pending regulatory clearances.
Over time, Risant Health's investments to advance value-based care will enable Cone Health to offer patients easier access to the health system's high-quality, innovative clinical programs and more robust health management technology, tools and programs, Risant executives said. Cone Health will contribute its experience advancing value-based care in a model that includes various payers and a broad network of providers, while serving some of the most vulnerable and marginalized communities.
Cone Health will also gain access to the value-based platform, which combines capabilities and services from Kaiser Permanente, Risant Health, Geisinger and Cone Health. Geisinger received the first release of the value-based platform during the fourth quarter of 2024.
"We are pleased to officially welcome Cone Health into Risant Health with the close of this transaction," said Risant Health CEO Jaewon Ryu, M.D., in a statement. "We are proud to be building a strong group of health systems committed to value-based care in their communities. I am eager for Cone Health to bring ideas and expertise to the table to continue to scale access to value-based care and improve the health of millions."
"Today marks a new chapter not only for Cone Health, but for health care in the North Carolina Piedmont and beyond," said Cone Health President and CEO Mary Jo Cagle, M.D. "Cone Health has been a leader in value-based care for more than a decade. Becoming part of Risant Health accelerates our mission to deliver on the promise of better care at lower costs for all."
Risant Health plans to acquire "five to six" health systems over the next several years, Greg A. Adams, Kaiser Permanente chair and CEO, said during the HLTH 2024 conference in October. The company is talking to new acquisition targets, Adams said, without providing any more details.
With Risant Health, Kaiser Permanente aims to expand and accelerate the adoption of value-based care at scale.
Risant Health’s goal is to achieve total revenue of between $30 billion and $35 billion, according to company officials. The company aims to bring together regional health systems that will continue to operate independently while collaborating on a tech-backed value-based care platform.
"What we're doing is bringing to that system the resources and tools to help it be successful, to help it to scale," Adams said during the HLTH conference in Las Vegas. "The work that we've done, as we've looked at health systems, shows that we're able to improve their cost structure by 2% to 3%. I think that's conservative. Part of it is what the value-based platform does. We're estimating that to be about 60% of the cost reduction. The other 40% is really related to our enterprise and what we're able to do in terms of shared services."