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5 Questions With Sentara Healthcare CEO on Pending Merger With Cone Health

Analysis  |  By Melanie Blackman  
   August 27, 2020

Howard Kern details the strategies and shared vision of the Sentara Healthcare and Cone Health merger.

On August 12, Virginia-based Sentara Healthcare and North Carolina–based Cone Health announced that they had signed a letter of intent to combine the two health systems. Subject to state and federal review, the merger is planned to be formalized by mid-2021, with an additional two years to fully integrate.

Sentara Healthcare CEO Howard Kern spoke with HealthLeaders about the strategies behind the merger and what the integrated health system will look like once the merger between Sentara Healthcare and Cone Health is complete.

Howard Kern, Sentara Healthcare CEO (Photo courtesy of Sentara Healthcare)

This transcript has been edited for clarity and brevity.

HealthLeaders: How did the Sentara Healthcare and Cone Health merger come about?

Howard Kern: The merger came about going back as much as 18 months ago. Terry Akin, the CEO of Cone, and I have known each other for some time. I attended and spoke at one of his board retreats and in doing that, we shared a lot of ideas. It became clear that we had a lot of mutual ideas and we're aligned in our sense of vision, strategy, and direction, and began to talk about the potential for the organizations [to work] together. One thing led to another, and about a year ago [we] began formal discussions about putting together the merger.

HL: What are some of your shared visions for this merger?

Kern: A shared vision that we both are excited about is the notion of value-based care. What that means to both of us is that we're committed to enhancing the quality of care to the communities and to the patients we serve, while at the same time, enhancing the affordability and access to care for these patients and focusing on the services that we're providing. That level of population health and outcomes, access, and quality all blend into this notion of value-based care.

Both of us are in the health plan business. Sentara has been in business since the early 1980s. Cone has been in the health plan business with managed Medicare for several years, and aspires to broaden their health plan experience, which is one of their motivations for partnering and merging with Sentara. They want to take advantage of the strength of Sentara's health plan, and the health plan strength is a way to create that value-based care model on a large scale.

HL: How will this merger benefit consumers?

Kern: The benefit to consumers is going to be felt in a number of ways. Both of these organizations are starting off very healthy. Neither one of us need to do this merger because there is a weakness; both are starting the position with strengths. We're looking to strengthen our organizations. We're going to add services, and we're going to grow and broaden available access to services and enhance our offerings in the community. We should also see that both organizations will learn from each other in terms of opportunities to enhance quality.

Cone is also a high-quality health system. They have excellent care; their flagship hospital is among the best in the country. They have excellent quality in a number of areas. Sentara is interested in learning from some of their excellent care. Both of our regions and the patients served by both health systems will be experiencing better quality as a result of the merger.

Lastly, both organizations have a shared value in serving the underserved population in our communities. We both have strong foundations that invest in food banks and free clinics, and providing services to focus on health equity, and looking at ways to better serve populations that need services. We think that will be enhanced through this merger.

HL: What is the next step in the integration process?

Kern: The next steps, first and foremost, will be to move ahead with the due diligence process, which is a standard next step. And we think that will take us into the first quarter of 2021. We don't have an overlap in our markets at all, so we expect that the end of the first quarter, or maybe early in the second quarter, we should be able to complete the merger.

HL: How will you and Mr. Aiken each serve the combined health system once everything is integrated?

Kern: The way the organization is anticipated to be structured is as a traditional merger. I would be the CEO of the combined organization. Terry Akin will be the president of the Cone region, which is now in Greensboro. He will play a significant leadership role in broadening our view of how our new organization looks at North Carolina. He will be a key player in helping the new organization evaluate the access to the North Carolina market for the new organization. We'll be working together in that context.

The governing board will have representation from both organizations. The new chair, at least for the first rotation, will be Sentara's current chair. And then there will be rotations as we go through the different tenures of the board chairs.

“We're committed to enhancing the quality of care to the communities and to the patients we serve, while at the same time, enhancing the affordability and access to care for these patients and focusing on the services that we're providing.”

Melanie Blackman is the strategy editor at HealthLeaders, an HCPro brand.

Photo credit: Sentara Healthcare Norfolk General Hospital Campus. Photo courtesy of Sentara Healthcare.


KEY TAKEAWAYS

An "alignment in the sense of vision, strategy, and direction" between Sentara Healthcare and Cone Health CEOs led to the merger talks, Sentara CEO Howard Kern says.

The combined organization hopes to enhance the quality of care in their communities through a value-based system.

"Neither one of us need to do this merger because there is a weakness …" says Sentara's CEO.

The merger is expected to be completed in the second quarter of 2021.


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