By Mark Tosczak
Cone Health and Randolph Health announced Thursday they were ending talks to merge the two systems after 15 months of discussion.
About a month ago it became apparent that Cone would probably not agree to acquire the Asheboro-based system, which is anchored by a 145-bed hospital, said Randolph Health CEO Steve Eblin. The system then started contacting other potential merger partners.
Eblin declined to put any kind of a timeline on further talks and didn’t say who those potential partners might be, but said Randolph is committed to finding a larger partner.
“We want to move at a fast pace,” he said. “It’s just the right thing to do for the community and the organization.”
Cone, which still has a management agreement with Randolph, had to choose between expending capital and time on a merger with Randolph, or on other strategic priorities — especially an ongoing effort to provide health care based on the overall health of the population, rather than the traditional fee-for-service approach.
“We’re on kind of a pioneering path, which is not an easy path,” Cone Health CEO Terry Akin said. “It means that we don’t have a lot of discretionary headroom when it comes to resources. And we have to be very careful and selective about how we use those finite resources.”
Small, rural hospitals across the country are finding their margins squeezed by several trends. Perhaps the biggest factor is the growing portion of patients covered by Medicaid or Medicare, which doesn’t pay as well as private insurance, or who don’t have insurance at all.
A shift toward more outpatient procedures has also strained hospitals, as those services typically don’t pay as much as those involving patients who stay overnight.
“This model doesn’t work in health care anymore,” Eblin said. “We’re committed to finding a larger partner.”
He maintained Randolph Health is in no imminent financial danger. For the fiscal year that ended September 2016, the most recent for which a federal tax return is available, the hospital recorded a $4.2 million loss on total revenues of $113.7 million, down from a $2.6 million profit on revenues of $123.1 million the year before. Returns from last year aren’t yet available.