- Sentara Healthcare and Cone Health signed a letter of intent to merge the two regional, integrated health systems, according to an announcement Wednesday. Pending state and federal regulatory review, the deal is expected to close in the middle of next year, creating a 17-hospital, $11.5 billion system.
- Norfolk, Virginia-based Sentara is a nonprofit system with 12 hospitals in Virginia and North Carolina, employing more than 30,000 people. Its two health plans serve 858,000 members in Virginia, North Carolina and Ohio. Greensboro, North Carolina-based Cone Health has five hospitals in the state and around 15,000 employees. Its two health plans serve 15,000 members.
- Corporate headquarters will remain in Norfolk, and Sentara's current CEO, Howard Kern, will oversee the combined organization. Cone Health CEO Terry Akin will serve as president for the Cone Health Division, with regional headquarters in Greensboro.
The providers contend the new system will focus on expanding value-based care models and increasing the companies' health insurance options, according to a news release. Executives also hope to increase access points, including virtual ones, and make care more accessible in the surrounding communities.
After the deal closes, it's expected to take up to two additional years for the two companies to fully integrate.
Sentara ended 2019 with $6.8 billion in revenue. Cone Health has about $2 billion in annual revenue.
Cone Health had planned to become the successor organization of Randolph Health when the 145-bed hospital in Asheboro, North Carolina, emerged from bankruptcy, but nixed the plan in March, citing uncertainty from the novel coronavirus.
It's unclear how the COVID-19 pandemic has affected hospital M&A activity. Activity in the second quarter was not stalled as much as some analysts had expected, according to consultancy Kaufman Hall. Throughout the entire health services sector, however, M&A in the first half of the year was the lowest it's been since 2015, PwC said recently.
Life Span and Care New England said in early June the coronavirus crisis reignited their merger talks. Heavyweight nonprofits Advocate Aurora Health and Beaumont Health announced they had signed a letter of intent to merge the same month, well into the pandemic.
Beaumont, however, cited COVID-19 as derailing its merger plans with Summa Health in May.
While the deal with Sentara and Cone Health are between two not-for-profit systems, a recent Health Affairs study found for-profits and church run health systems dominated M&A activity, at least from 2016 to 2018.