North Carolina AG Investigation Quashes Sentara/Cone Health Merger

by James C. Sherlock

In the big merger equivalent of “spend more time with our families,” Cone and Sentara issued a joint statement on June 2 that they “have jointly decided not to move forward” with their planned merger.

“As this work progressed, we realized that each of our communities and key stakeholders require support and commitments from our respective organizations that are better served by remaining independent.

“The decision was a difficult one, but both organizations remain committed to advancing our common goal of providing outstanding care for our respective communities.”

There was that.

But then we discovered that North Carolina Attorney General Josh Stein — unlike Virginia, North Carolina actually has an AG — clearly threatened to sue to stop it.

Neither Sentara nor Cone had any comment on Stein’s investigation. Many citizens, me included, provided information to that investigation that documented the risks that North Carolina would assume if the Greensboro-area Cone Health was taken over by Sentara.

The prime attraction of the merger to Sentara was bringing its Optima health insurance arm to Greensboro to combine it with Cone’s provider assets to create the same vertically integrated Goliath in North Carolina that provides Sentara its enormous profits in Hampton Roads.

The threat to competition was clear.

Attorney General Stein, for his part, released the following letter on June 2, the same day that Sentara and Cone announced that Virginia and North Carolina  “are better served by (Sentara and Cone) remaining independent.”

Here is Stein’s letter to hospital administrators:

For Immediate Release:  Wednesday, June 2, 2021

(RALEIGH) Attorney General Josh Stein today released the following statement after Cone and Sentara announced that they will not move forward with their affiliation:

“Recently in North Carolina, there has been a wave of hospital consolidations – HCA and Mission, Novant and New Hanover, Wake Forest and Atrium – and I have real concerns about this trend. Bigger doesn’t always mean better. In fact, it often means worse and more expensive. 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.

“Hospital system pricing is closely related to this issue, as consolidations drive up already inordinate health care costs. Today, I am asking every hospital system administrator about the transparency of their prices and their compliance with federal pricing transparency regulations. As the letter says, patients have been forced to navigate the health care system with little, if any, information about the actual price of services they are told are necessary. That’s not only unacceptable, it’s against the law.”

So much for Sentara and Cone’s “better served by remaining independent” comment.

Yesterday I honestly was prepared to give Sentara a fresh start.

Yesterday Sentara also announced a $40 million contribution intended to increase access to primary care and behavioral health services in Sentara communities with health disparities.

The health disparities are more than coincidental.

Sentara’s major obligation in return for its tax exemptions is to fund better public health. It has been fiercely condemned here and elsewhere for the terrible health statistics in the poorest communities of Hampton Roads in the face of record Sentara profits.

I thought (hoped) perhaps the Sentara board had finally asserted itself both to right past wrongs and stop the merger. Maybe the $40 million was a sign. And maybe late May announcement of the hiring of Aubrey Lane, a man with an excellent reputation, was a move to right the ship.

I was almost giddy.

The true reason for the merger being called off woke me up. We’ll see how the new $40 million is spent. Layne arrives July 1, but Howard Kern will be his boss. We’ll watch closely.

Perhaps Sentara will even support the Health Enterprise Zones bill next year.

See, I am still a little giddy.

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One response to “North Carolina AG Investigation Quashes Sentara/Cone Health Merger”

  1. TWAMP Creature Avatar
    TWAMP Creature

    Interesting development. As a former VCU Health employee, I was surprised to see CFO/CAO Melinda Hancock leave VCU and move over to Sentara. Curious what the long-term implications will be for both healthcare systems.

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