Sentara-Cone Health Merger Called Off Amid Consolidation Concerns

June 03, 2021 - Sentara Healthcare and Cone Health have called off a planned healthcare merger after dozens of public comments poured in raising concerns about hospital consolidation and its impact on prices.

The health systems announced in a mutual statement yesterday that they would no longer move forward with the merger proposed in August of last year. The systems had been “working in earnest” to combine the organizations since early 2021.

The merger would have created a 17-hospital system with over $11 billion in assets.

“We appreciate the efforts of Sentara to work with Cone Health to determine whether an affiliation of our two high-performing organizations is in the best interest of those we serve,” Terry Akin, CEO of Cone Health, said in the statement. “Recently, in the final analysis, we mutually decided that we can best serve our communities by remaining independent organizations.”

“We have developed a high regard for the excellent services and outcomes Sentara delivers, and we expect both our organizations to continue to advance our common goals of providing outstanding care for our respective communities,” continued Akin.

The healthcare merger deal between Greensboro, North Carolina-based Cone Health and Sentara, which is headquartered in Virginia but serves communities in North Carolina, has been a hot button issue in North Carolina. Over 50 people submitted comments to the state’s attorney general’s office earlier this year, with some opposing the proposed merger over worries about higher costs and less access to care.

“Please do not approve this merger. Cone Health is too big already and needs to be broken down, not merged bigger, or more powerful,” stated one commenter who is a registered nurse. Another healthcare provider also opposed the merger, arguing that a Virginia-based health system will not serve North Carolina communities appropriately.

The mutual statement from Cone Health and Sentara did not attribute the deterioration of the merger plans to criticisms about potentially higher prices and reduced competition in the Greensboro area.

But shortly after Sentara and Cone Health announced the end of the merger deal, North Carolina Attorney General Josh Stein released his own statement warning about the cost implications of hospital consolidation.

“Bigger doesn’t always mean better. In fact, it often means worse and more expensive,” Stein stated. “My office takes its role in scrutinizing proposed combinations seriously, and we were in the midst of conducting a thorough review of the Cone/Sentara affiliation. I encourage all hospital directors to be certain that consolidation is actually in the interest of the patients and communities they serve before pursuing it.”

North Carolina has experienced a “wave of hospital consolidations,” Stein added referring to recent merger and acquisition deals between HCA Healthcare and Mission Health, Novant Health and New Hanover Regional Medical Center, and Wake Forest Baptist Health and Atrium Health.

Hospital consolidations “drive up already inordinate [healthcare] costs,” Stein said.

Just last year, the Medicare Payment Advisory Commission (MedPAC) reviewed research on hospital consolidation and concluded that the “preponderance of evidence suggests that hospital consolidation leads to higher prices.”

The data continues to point to findings from a landmark 2015 study of data from employer-sponsored health plans. The study found that hospitals without competitors within a 15-mile radius have prices that were 12 percent higher versus hospitals in markets with four or more competitors.

More recently, an analysis published in NEJM also found that consolidation is also not associated with better quality of care, underscoring a major problem with rising hospital prices.