by Jordan Roberts
Director of Government Affairs, John Locke Foundation
Greensboro-based Cone Health and Norfolk, VA-based Sentara Healthcare on Wednesday announced plans to merge the two hospital systems. Tara Bannow from Modern Healthcare reported,
The CEOs of both not-for-profit health systems shot down the notion that the proposed deal is happening in response to pressures caused by the COVID-19 pandemic. Instead, they said they believe it will help patients by expanding access to care and adding new insurance options and caregivers by adding stability. Norfolk, Virginia-based Sentara and Greensboro, N.C.-based Cone have signed a letter of intent and hope to close the deal in early to mid-2021.
Sentara CEO Howard Kern would become CEO of the new organization, while Cone’s Akin would stay in Greensboro as president of the Cone Health division. The resulting system’s corporate headquarters would be in Norfolk. In an interview, Kern stressed the deal would be a straight merging of assets, not an acquisition, with no money changing hands.
Kern and Akin agreed the biggest draw to the deal was their aligned views on the importance of value-based payment arrangements and the need to deliver higher-quality care in a way that’s more cost effective.
This is a massive merger between two health care giants in the southeast. Mergers of this size typically result in higher prices and sometimes lower-quality care than what patients received before. The health care sector has a major consolidation problem in that providers and insurers combine at an alarming rate. In earlier research pieces, I hypothesized mergers and acquisitions of this size would increase following the financial hardships of COVID-19 related decreases in services. The CEOs balk at the notion that COVID-19 was the driving force, but it likely played some role in the decision.
On top of that, both hospitals have a self-professed dedication to value-based care, which goes hand-in-hand with hospital mergers. The results are still fairly mixed on the effectiveness of value-based care. Regardless of the reason for the decision, this will impact North Carolinians living in the Triad area for better or worse.
I have written a few pieces on the literature behind hospital mergers. See:
This merger will likely face anti-trust scrutiny from the federal and state governments. As always, these types of mergers could produce benefits for patients. Yet, as we’ve seen, and what the literature tells us, it is unlikely to make patients better off in the long run.