Cone Health’s Acquisition By The “HMO King”

We had a Friday afternoon news dump a few days ago. Cone Health is being acquired by Risant Health– a division of Kaiser Permanente.

There are a few things to know about Kaiser.

First, its home base is Oakland, California– a left wing cesspool.

Second, its operations for many years had been centered on the HMO model. Yes, it operated hospitals and employed physicians. But it was most widely known for developing and marketing a “pre-paid” HMO-style health plan that it marketed to regional employers. This was, in fact, Kaiser Permanente’s “thing”.

Among all the medical organizations in the country, Kaiser was the HMO King.

Third, and lesser known, it had fired health care professionals who had refused to take the Covid vaccine, and is now begging them to return, according to Citizen Wells.

It is interesting the Cone Health is choosing to crawl in bed with Kaiser Permanente because HMO’s years ago were very unpopular in North Carolina. In fact, when John Edwards first ran for US Senate a quarter century ago, he made opposition to HMO’s a central part of his campaign.

What was wrong with HMO’s? The most politically unpopular aspects were the necessity to see only certain physicians, and to obtain all referrals through the designated primary care physician. But there were also decisions to refrain from covering certain types of care or testing that raised major concerns.

What is the worst aspect of HMO’s? Providers– hospitals, primary care physicians, etc.– are paid a “capitated” amount per patient per year. That means they lose money if more needs to be done for the patient– a truly awful incentive for care givers. Yet, this was Kaiser Permanente’s “distinctive” that they eagerly embraced.

Now, the discussion is about “value-based care”, and the strengths Kaiser will have in this area. Why? This type of insurance feature will push physicians and hospital systems to follow certain protocols to reduce cost and “increase quality”. The physician is penalized if he doesn’t follow the cookbook. This is what Cone Health is hotly pursuing.

What unites HMO’s and “value based care”? Central planning. Those who embrace these vehicles are big believers in central planning in health care.

Cone’s CEO mouths all the usual platitudes about maintaining local control. Of course, this will ultimately prove to be completely untrue. Once you are acquired, the larger organization gains control. It is just a matter of time.

This decision reflects the ugly reality that hospital systems perceive they will need to consolidate into much larger systems in order to survive and thrive. But Cone Health probably chose the most lefty partner it possibly could have sought.