Dive Brief:
- Kaiser Permanente-owned Risant Health has signed a definitive agreement to acquire Greensboro, North Carolina-based Cone Health for an undisclosed sum.
- Cone said it would continue to operate its five-hospital health system and insurance arm independently should the deal close.
- The acquisition is the second of at least five planned buys for Risant, the fledgling nonprofit formed last year by Kaiser to acquire and operate nonprofit health systems. Risant completed its first system buy, of Pennsylvania-based Geisinger, in April.
Dive Insight:
Kaiser announced it would create Risant in April 2023 in a bid to increase access to value-based care in the U.S. The venture is also poised to significantly increase Kaiser’s access to hospital markets nationwide, swelling the regional giant beyond California.
When Risant was announced, Kaiser pledged to invest $5 billion into the nonprofit over the next five years and predicted the system would generate between $30 to 35 billion in total revenue during that time.
Already, Risant has contributed to Kaiser’s financial success — last quarter, the completed Geisinger buy contributed to a $4.6 billion one-time gain for the system.
Risant will allow Kaiser to expand its reach at a time when the health system already stands out in the nonprofit sector for its size and financial performance. The 40-hospital health system, which posted income of $4.1 billion in its last fiscal year, operates in a “peer group of one,” said Mark Pascaris, senior director and analytic lead of nonprofit healthcare at Fitch Ratings.
Now, Kaiser has set its sights on Cone Health. The system was an attractive target for Risant due to its “longstanding success,” Jaewon Ryu, Risant’s CEO, said in a statement on Friday. Cone reported $2.8 billion in operating revenue during its 2023 fiscal year.
Risant’s acquisitions have also broadened Kaiser’s geographic reach in the eastern U.S. Just as Geisinger introduced Kaiser to Pennsylvania, the Cone acquisition offers Kaiser a door into a new market — North Carolina.
Currently, Kaiser derives approximately 70% of its revenue from California, according to Pascaris.
In addition, both Geisinger and Cone Health operate health plans, which make them good fits for Kaiser, Pascaris said.
“Kaiser is definitely looking to add organizations that have a deep history of population health management,” Pascaris said. “I do think that there's a heavy focus on those those health systems that have a long history of health plan delivery.”
