Risant's second acquisition will receive a healthy investment, should the deal pass regulatory review.
Kaiser Permanente-backed Risant Health has revealed how much it will invest into its second acquisition, Cone Health.
The nonprofit is committing at least $1 billion to the North Carolina-based health system for facility improvements and health equity initiatives up to five years after the deal is completed, according to financial documents filed by Kaiser.
Risant will also fund up to $400 million for Cone’s transition and integration into its network and up to $300 million over a decade to support growth opportunities at Cone, the documents stated.
The definitive agreement to purchase Cone was announced in June and still requires regulatory approval.
Cone represents the second acquisition by Risant in its aim to build a value-based care network, following the completed deal for Geisinger Health. After adding its initial health system, Risant said it planned to bring four to five other systems into the fold in the next half-decade.
Risant’s commitment to Cone isn’t as sizeable as the investment it promised to allocate for Geisinger, which was more than $2 billion.
While Cone is profitable and brought in $197.6 million in net income for fiscal year 2023, Geisinger is larger in size and reported $367 million in net income last year.
The acquisition of Geisinger afforded Kaiser a one-time net asset gain of $4.6 billion in the first quarter and likely contributed to the giant reporting a $2.1 billion net gain in the second quarter.
If the acquisition of Cone is approved, Risant said the system would operate independently and maintain its brand, name, and mission, as well as its own board, CEO, and leadership team.
The health systems agreed to certain conditions put forward by the states to receive approval for their union.
Northwell Health and Nuvance Health have the blessing of their states to join and create a 28-hospital health system.
Attorneys general for Connecticut and New York agreed with the hospital operators to several conditions over the next five years, allowing Northwell and Nuvance to clear a significant hurdle in their pursuit of a merger.
The systems, which announced their move in February, still need approval from the Connecticut Office of Health Strategy and the New York State Department of Health to complete the deal.
The conditions Northwell and Nuvance agreed to are:
Strengthening and investing in labor and delivery services at Sharon Hospital for five years after the merger is completed.
Preserving services and staffing at Putnam Hospital for one year after merging and providing notice to New York’s attorney general office of any changes to services for a period of five years.
Investing to improve Nuvance’s IT infrastructure, data security, and electronic medical records system within three years, expected to cost over $200 million.
Negotiate rates for reimbursement with payers independently for the New York and Connecticut facilities.
“Miles and minutes matter when it comes to labor and delivery, and I am pleased that Northwell has committed to preserving affordable, lifesaving care—especially maternity care—for Western Connecticut,” William Tong, attorney general for Connecticut, said in a statement. “This is a strong, enforceable agreement for healthcare access in Connecticut.”
When Northwell and Nuvance agreed to merge, they billed the move as mutually beneficial. It extends Northwell’s presence to Connecticut and gives financially troubled Nuvance much-needed capital to keep its hospitals open.
For fiscal year ending September 30, 2023, Nuvance reported an operating loss of $164.2 million and a net loss of $121.5 million.
The attorneys general stated that any anticompetitive effect of the merger would be minimal and outweighed by benefits such as maintaining access to healthcare.
“Nuvance is in a precarious financial situation,” the attorneys general wrote. “Closure or further reduction in care at Nuvance hospitals could substantially harm patient access to quality local healthcare in western Connecticut and the Hudson Valley of New York.”
The industry continues to face financial headwinds though, putting organizations on unstable footing.
One year after reaching a five-year high, healthcare bankruptcies are in decline, according to a report by healthcare restructuring advisory firm Gibbins Advisors.
While bankruptcies in the industry have slowed in the past three quarters, the report highlighted that organizations continue to deal with financial challenges and restructuring cases could be taking place outside of courts.
Bankruptcies spiked in 2023, which featured 79 filings, compared to 51 cases reported in 2019. This year in on track to see 58 cases, based on the 29 bankruptcies filed through June 30.
Last year also had 12 hospitals and health systems file for bankruptcy, compared to 11 cases from the previous three years combined. So far in 2024, only one hospital operator, Steward Health Care, has filed for bankruptcy, with 31 hospitals under its control.
The drop in bankruptcy volume is largely due to fewer cases involving middle-market companies with liabilities ranging from $10 million to $100 million. Meanwhile, bankruptcies involving very large companies with liabilities over $500 million remain at the high levels of 2023.
“The very large bankruptcy cases with liabilities over $500 million include sizeable healthcare enterprises, so when you see six such cases filed year to date, that represents a much bigger number of healthcare facilities,” Ronald Winters, principal at Gibbins Advisors, said in a statement. “We are seeing elevated financial distress in nursing homes, senior living, pharmacy, physician practices and rural and standalone hospitals…strained by legacy debts, cash shortages and profitability challenges.”
The decline in bankruptcies doesn’t mean hospitals and other healthcare organizations aren’t financially distressed.
Several factors are putting pressure on companies, according to Gibbins, including high interest rates and increased scrutiny by the FTC and other regulators.
Workforce shortages are also contributing to increased expenses, while payers are not ceding ground in rate negotiations and increasing coverage denials.
Though operating margins for hospitals continue to stabilize, the divide between higher- and lower-performing facilities is widening, especially in rural regions.
The ripple effects of Steward's financial collapse continue to be felt across the country.
More hospital closures are on the way for Steward Health Care as the troubled company searches for financial footing.
Steward is shutting down Trumbull Regional Medical Center and Hillside Rehabilitation Hospital both in Warren, Ohio, as well as Northside Regional Medical Center in Youngstown, Ohio, resulting in 944 workers being laid off, according to Worker Adjustment and Retraining Notification letters.
The layoffs will affect 765 employees at Trumbull Regional Medical Center, 170 at Hillside Rehabilitation Hospital, and nine at Northside Regional Medical Center.
Steward said it plans to close the facilities on September 20 after it failed to find a buyer. The health system put all of 31 of its U.S. hospitals up for sale when it filed for Chapter 11 bankruptcy in May.
"However, despite every effort made to attract qualified buyers, there have been no actionable offers received for Trumbull Regional or Hillside," Steward said in a statement.
"Therefore, due to our significant cash constraints we are now in the regrettable but unavoidable situation where the process of closing the facilities must begin. We remain hopeful we can find an alternative solution that would keep the hospitals open and preserve the jobs of our dedicated team members."
Rick Lucas, president and executive director of the Ohio Nurses Association, criticized Steward's decision to shutter Hillside.
"The closure of Hillside is a tragic result of greed-driven hospital executives, backed by private equity, who prioritize their yachts and private jets over patient care," Lucas said in a statement. "This decision leaves our community without crucial rehabilitation services and forces our dedicated team of nurses and health professionals into unemployment due to Steward's unchecked greed."
Another Steward hospital in Pennsylvania, Sharon Regional Medical Center, is also in jeopardy of closing.
Steward asked the state for $1.5 million to keep Sharon's doors open, but Judge Christopher Lopez ordered the hospital operator to hold off on closing the location until the end of August. Meadville Medical Center has been selected as a potential buyer for Sharon.
In Massachusetts, Steward announced that it has entered into definitive agreements to sell four hospitals after Governor Maura Healey recently revealed the state had reached deals in principle.
Lifespan will purchase Morton Hospital and St. Anne's Hospital for $175 million, while Lawrence General Hospital will take control of Holy Family Hospital's Methuen and Haverhill campuses for $28 million.
"This agreement accomplishes our goal of maintaining and protecting access to care and jobs in Southeastern Massachusetts and the Merrimack Valley, while removing Steward Health Care from Massachusetts once and for all," Healey said in a statement.
Employers rejoiced after a court ruled in their favor, though an appeal appears likely.
Just 15 days before going into effect, the Federal Trade Commission’s ban on noncompete agreements was struck down by a Texas federal judge, handing hospitals a win over physicians in employment contracts.
Employer groups like the American Hospital Association (AHA) and Federation of American Hospitals (FAH) praised the decision, which they argue prevents hospitals and health systems from being at a disadvantage in recruiting and retaining physicians, nurses, and other clinical workers.
U.S. District Judge Ada Brown ruledthat the FTC’s ban is “unreasonably overbroad without a reasonable explanation” and that the federal agency lacks the authority to implement it.
Last month, Brown approved a preliminary injunction against the ban for plaintiffs Ryan LLC and the U.S. Chamber of Commerce while the court considered the FTC’s application of the rule more broadly.
Despite Brown’s decision, the noncompete ban may continue to be litigated, with FTC spokesperson Victoria Graham saying that the agency is “seriously considering” an appeal.
Meanwhile, FAH president and CEO Chip Kahn praised the ruling and reiterated the consequences of a noncompete ban for hospitals.
"We have been clear from the start that this rule would threaten patient access to care by making it more difficult for hospitals to recruit and retain physicians and invest in training and technology," Kahn said in a statement. "In addition, this rule would create an unlevel playing field for tax-paying hospitals, an outcome completely at odds with FTC's mission to promote competition. Especially at a time of workforce shortages and other challenges, this was the right decision."
AHA general counsel and secretary Chad Golder echoed the sentiment that the court made the right decision.
“The rule was a breathtaking assertion of regulatory power by three unelected commissioners, made worse by the fact that the commissioners did not attempt to understand the disruptive impact it would have on hospitals, health systems and the patients they serve,” Golder said in a statement. “We are pleased that Judge Brown vindicated what the AHA predicted when this unlawful regulation was first released—the ‘only saving grace is that this rule will likely be short-lived, with courts almost certain to stop it before it can do damage to hospitals’ ability to care for their patients and communities.’”
On the opposite end, physician groups expressed disappointment in the ruling, claiming noncompete agreements damage patients along with physicians.
"Noncompetes harm family physicians and their patients by jeopardizing long-term patient-physician relationships and creating an uneven playing field for physicians," American Academy of Family Physicians president Steven Furr said in a statement. "The AAFP will continue to support the FTC's mission to eliminate noncompetes in healthcare that prioritize the interests of organizations over those of patients and their physicians."
While the decision to block the ban limits employees’ freedom of movement, it relieves additional pressure that would have fallen on hospitals and health systems during a time when organizations are struggling with workforce challenges.
However, hospitals may find more success in recruiting and retaining physicians by offering contracts without noncompete agreements and getting creative with compensation and benefits.
As the healthcare workforce population changes over time, organizations must adjust their recruitment and retention strategies.
If you’re a leader in healthcare, chances are high that you’re constantly thinking about ways to improve your workforce.
The pandemic may be in the rearview mirror, but its impact on workforce challenges continues to be felt.
“We’re in the greatest healthcare workforce shortage in the history of the world,” Crouse Health CEO Seth Kronenberg said on the HealthLeaders Podcast.
Kronenberg, who is a HealthLeaders Exchange member, will be joined by other senior-level leaders from hospitals, health systems, and medical groups at the Workforce Decision Makers Exchange in Washington D.C., from November 7-8.
Attendees will discuss solutions to the biggest questions surrounding the workforce, including how to develop a sustainable workforce for the future that can meet the demands of younger generations of workers.
For Kronenberg, that involves keeping opportunities in-house so workers don’t feel like they have to go elsewhere to transfer into different disciplines or change their workplace lifestyle.
“Healthcare in general, we all were caught a little flat-footed with, certainly with COVID, all of the opportunities people had to work remote,” he said. “There were many more opportunities in other industries, other than the hospital environment. So now we want to make sure we can meet the demands of the workforce as we go forward.”
Check out this week’s episode to hear more from Kronenberg, who touches on many of the topics that will be discussed at the upcoming Exchange.
Are you a CEO or executive leader interested in attending an upcoming event? To inquire about attending the HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at the LinkedIn page.
Peter Slavin shares his biggest areas of focus when taking the helm at the Los Angeles-based health system.
Cedars-Sinai is set to have a new leader for the first time in three decades, but for incoming CEO Peter Slavin, the priority remains solving for healthcare’s number one pain point.
When Slavin becomes the next president and CEO of Cedars-Sinai Medical Center and Cedars-Sinai Health System on October 1, he has his sights set on improving the workplace for clinical staff through technology solutions and a people-first approach.
“Clearly the workforce was traumatized during the pandemic and is slowly recovering,” Slavin told HealthLeaders. “How do you make the work environment as positive and joyful as possible? That really is an important focus of mine, as well as the basic economics of the organization.”
Slavin will replace longtime leader Thomas Priselac, who is retiring after 45 years with Cedars-Sinai, including 30 as president and CEO. Most recently, Slavin served as an advisor and board member for multiple healthcare companies, but before that he was president of Massachusetts General Hospital from 2003 to 2021.
During his time in Boston, Slavin “successfully led major growth in the hospital’s clinical care mission, research funding, scientific impact, workforce development and fundraising,” according to the news release announcing his appointment.
He also witnessed firsthand the effect the pandemic had on the physicians, nurses, and other staff, exacerbating workforce challenges that hospitals and health systems continue to contend with.
Pictured: Peter Slavin, next president and CEO, Cedars-Sinai Medical Center and Cedars-Sinai Health System.
Relieving the administrative burden placed on workers is vital, Slavin said, especially with younger generations placing greater value on work-life balance. Addressing that requires a multi-pronged approach that utilizes technology and is attentive to solutions like flexible and virtual work.
“One of the sources of trauma that the healthcare workforce is facing is just the trauma caused by spending too much time in front of computers and not enough time in front of patients,” Slavin said. “Generative AI and other aspects of artificial intelligence, there's incredible opportunity to shift that balance between time in front of computers and patients and make it much more favorable from clinician standpoint.
“But I would emphasize that I don't think technology is the only answer to the issue. I think it's a variety of other things. It's just management paying close attention to the needs, the voices of the workforce and making sure that we're as attentive as ever to how to make the work environment as positive as possible.”
Strengthening the workforce can also help hospitals build back trust with the public, Slavin acknowledged. New research published in JAMA Network Open revealed that trust in physicians and hospitals from 71.5% in April 2020 to 40.1% in January 2024.
“It is disheartening that we've gone from heroes to goats in such a short order,” Slavin said.
A worn-out and overburdened workforce had its hands full with capacity constraints during the pandemic, making the public wary about providers’ effectiveness.
Alleviating staffing shortages isn’t the only way to win back patients though, according to Slavin. As demand for a retail experience continues to build, traditional providers must make the experience of receiving care as user-friendly as possible.
He said: “Using digital technology, using customer service training, I just think it's incumbent on healthcare organizations to make the user experience as positive as possible and as good as it is when people go to restaurants or hotels or other activities in their lives.”
The payer is teaming up with private equity firm Clayton, Dubilier & Rice on the joint venture.
Elevance Health is following its competitors into the primary care arena with its own model.
The insurer and its private equity partner Clayton, Dubilier & Rice introduced Mosaic Health months after announcing plans in April, allowing Elevance to expand its reach with a primary care network in a similar vein as its peers.
The joint venture will combine the capabilities of CD&R’s portfolio companies, apree health and Millennium Physician Group, with the advanced primary care solution of Elevance’s Carelon Health added into the mix once it receives regulatory approval.
Through Mosaic, Elevance will be able to deliver a community-based care model supported by unique digital patient engagement, care coordination, and navigation capabilities, according to the announcement.
"Mosaic Health will innovate on existing risk-based care delivery models, and I am excited to work closely with its operating companies and Elevance Health to foster collaboration and help Mosaic Health's operating companies better serve our providers and deliver exceptional care and services to more patients and communities," CD&R operating partner Clay Richards, who will serve as Mosaic Health executive chairman, said in the news release.
"Mosaic Health demonstrates CD&R's continued commitment to investing in and growing innovative healthcare companies that increase access to high-quality and affordable healthcare, and we are excited for this new chapter of innovation, expanded access and growth."
The primary care space is littered with retailers and disruptors trying their hand but running into difficulties scaling.
Yet payers like CVS Health continue to double down on primary care expansion due to confidence in their ability to leverage their health plans. Insurers can guide patients to their primary care network and reap more profit by taking a comprehensive, whole-health approach.
Mosaic will allow Elevance to offer its health plans alongside Medicare, Medicaid, and commercial plans, serving nearly one million patients across 19 states through apree and Millennium, according to the news release.
If Carelon’s assets are approved to enter the venture, Elevance will be able to utilize the clinics of its care delivery business to push Mosaic.
Governor Maura Healey's office will facilitate the transition of the hospitals to new ownership to ensure they remain open.
As Steward Health Care continues to navigate bankruptcy, the embattled health system's presence in Massachusetts finally appears at an end.
Governor Maura Healey announced that the state has reached deals in principle for four Steward hospitals and is wrestling away control of another to transfer the facilities to new owners, allowing them to stay open.
If the transactions are completed, Holy Family Hospitals in Haverhill and Methuen will be operated by Lawrence General Hospital, while Morton Hospital and Saint Anne's will go to Lifespan, and Good Samaritan Medical Center will go to Boston Medical Center.
After the state seizes control of Saint Elizabeth's through eminent domain, the hospital will eventually be operated by Boston Medical Center as well.
"Today, we are taking steps to save and keep operating the five remaining Steward Hospitals, protecting access to care in those communities and preserving the jobs of the hard-working women and men who work at those hospitals," Healey said in a statement. "Our team under Secretary Kate Walsh worked day in and day out to secure new, responsible, qualified operators who will protect and improve care for their communities. We're grateful for the close collaboration of the Legislature to develop a fiscally responsible financing plan to support these transitions."
In announcing the decision to seize control of Saint Elizabeth's, Healey accused Steward landlord Macquarie Investment Partners and lender Apollo Global Management of putting their own interests above those of the people of Massachusetts.
"Enough is enough," Healey said.
The state's deals, however, will not affect Carney or Nashoba Valley hospitals, which are on track to close after not receiving qualified bids. In the meantime, the administration said it has committed $30 million to keep the hospitals open through the end of the month and is "focused on supporting workers and connecting them to new jobs while also safely transitioning care."
Steward's problems in Massachusetts may be resolved soon, but the company still has divestures to see through elsewhere.
In May, Steward filed for bankruptcy before putting all 31 of its hospitals up for sale as it faced $9 billion in total liabilities.
Much of the focus has been on the sale of Steward's physician group, Stewardship Health, which was initially being scooped up by UnitedHealth Group's Optum until the deal fell apart. Earlier this month, Stewardship was bought for $245 million by a private equity firm.
Steward has struggled to nail down buyers and lock in deals due to the interests of its landlords and lenders.
This week, the health system filed a lawsuit against Medical Properties Trust for interfering in its sales by working with potential buyers without Steward's consent.
Hundreds of rural facilities across the country are facing serious financial problems, a new report reveals.
A growing number of rural hospitals in the U.S. are hitting a breaking point.
Due to severe financial challenges, more than 700 facilities—over 30% of rural hospitals in the country—are facing closure, including 360 being at immediate risk, according to analysis by the Center for Healthcare Quality and Payment Reform.
More than 100 rural hospitals have already closed in the past decade, while over two dozen facilities have eliminated inpatient services in 2023 and 2024 to qualify for federal grants that are only available for rural emergency hospitals, the report stated.
The authors posited that the primary factor putting so many rural hospitals at risk of closure is low reimbursement from payers. While these hospitals are also losing money on uninsured and Medicaid patients, the biggest losses come from patients with private insurance. With about half of the services at the average rural hospital delivered to patients with private insurance, lack of adequate reimbursement from private payers is putting facilities in an unsustainable position.
Rural hospitals also serve a smaller number of patients as compared to large hospitals, which results in less revenue for rural facilities. To combat this problem, the report argued that both private and public payers should be required to increase payments to prevent closures, which the authors said would cost $5 billion per year, or an increase of 1% in total national healthcare spending.
Another way to support rural hospitals is to create standby capacity payments from private and public payers to support the fixed costs of essential services, according to the report.
Even making telehealth flexibilities permanent instead of allowing them to expire on December 31 would go a long way to supporting rural health, Grande Ronde Hospital CEO and HealthLeaders Exchange member Jeremy Davis recently told HealthLeaders.
Davis testified in front of the Senate Finance Committee on rural healthcare in May and advocated for Congress to take action to keep hospitals from closing their doors.
“One of the things that I said in my testimony is, as a rural hospital administrator, we're looking for a help up, we’re not looking for a handout,” he said. “We want to be good stewards of the resources. We recognize funding is complex but trust us, enable us. There's a lot of really good people that are working in rural that are used to doing some great things with limited resources.”
Are you a CEO or executive leader interested in attending an upcoming event? To inquire about attending the HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at the LinkedIn page.
