Kaiser Permanente’s Risant Health Plans $1.7 Bn Investment in Cone Health

This plan, revealed in Kaiser’s recently filed mid-year financial statements, highlights Risant Health's strategic moves to integrate Cone Health into its value-based care platform.

Kaiser Permanente’s subsidiary, Risant Health, has outlined a substantial $1.7 billion investment plan for North Carolina’s Cone Health as part of an ongoing acquisition. 

This plan, revealed in Kaiser’s recently filed mid-year financial statements, highlights Risant Health's strategic moves to integrate Cone Health into its value-based care platform.

As per the acquisition agreement, Risant Health has committed a minimum of $1 billion in capital, including Cone Health’s internally generated funds and Risant Health’s contributions. 

This funding will be allocated over five years following the finalization of the acquisition. The investments are set to focus on Cone Health’s facilities, health equity initiatives, and other capital projects essential for the system's growth.

In addition to facility improvements, this investment aims to bolster Cone Health’s efforts to enhance health equity within its service areas. The capital injection is expected to strengthen the health system’s infrastructure and support long-term sustainability.

Investment Strategy

Risant Health has also earmarked up to $400 million during a specified capital commitment period to facilitate Cone Health’s transition and integration into Risant’s value-based care model. 

This integration will involve the initial implementation of Risant’s technology-backed value-based platform, designed to optimize patient care and streamline operations across the newly acquired health systems.

This investment phase is critical for ensuring that Cone Health aligns with Risant’s broader objectives of improving care outcomes and reducing costs through a collaborative, technology-driven approach. 

The integration process will likely include substantial changes in Cone Health’s operational strategies to align with the value-based care model.

Beyond the initial capital investments, Risant Health has pledged up to $300 million over a decade to support Cone Health’s growth. This long-term commitment aims to ensure that Cone Health can expand its services and capabilities to meet the evolving demands of the healthcare industry.

The growth support will allow Cone Health to explore new opportunities, expand its reach within the community, and develop innovative healthcare solutions that meet the needs of its patients.

Reasoning Behind This Move

The investment represents Risant Health’s second major move, following its acquisition of Geisinger Health earlier this year. Geisinger, a 10-hospital system, added assets valued at $4.8 billion to Kaiser Permanente, with commitments of over $2 billion in support.

Kaiser Permanente, the largest nonprofit health system in the United States by revenue, has set an ambitious goal for Risant Health, pledging $5 billion over several years. 

This strategy includes acquiring four to five more health systems within the next five years, positioning Risant Health as a key player in the national healthcare landscape.

Greg Adams, chair and CEO of Kaiser Foundation Health Plan and Hospitals and Risant’s board chair, emphasized the importance of this approach, stating, “Risant Health has staked a stake in the ground that care focused on evidence, equity, population health, and improved outcomes must be the future of health care. Models like that of Kaiser Permanente, Cone Health, and Geisinger will help make that possible.”

Kaiser Permanente’s second-quarter financial filing reported an operating income of $908 million (3.1% operating margin) and a net income of $2.1 billion. 

For the first half of 2024, the nonprofit health system has accumulated over $1.8 billion in operating income and a $9.5 billion bottom line, significantly boosted by a $4.6 billion gain from the Geisinger acquisition.