General Catalyst formed a new business, Health Assurance Transformation Corporation, and now it’s planning to buy Summa Health. Here’s a look at a deal gaining wide attention.
At the HLTH Conference in October, General Catalyst unveiled a new business called the Health Assurance Transformation Corporation, and announced that was a first step.
In the announcement, the venture capital firm said that HATCo, as it is dubbed, would look to acquire a health system to develop a blueprint for the transformation of the industry.
Now, General Catalyst has found its health system. This week, HATCo announced it has reached a letter of intent to acquire Summa Health in Ohio. Based in Akron, the nonprofit system operates two acute care hospitals, a rehabilitation hospital, several medical centers and a multi-specialty group practice with more than 100 locations.
Under the deal, Summa Health would become a for-profit system and serve as a model for innovation, General Catalyst says. The organizations are now entering a period of due diligence to evaluate the relationship, but they say they expect to reach a definitive agreement in several months. Regulators must still approve the deal.
General Catalyst has already developed partnerships with more than 20 other health systems to develop technologies, and is working with those systems on transforming their business. But if the deal is approved, this would be the first time the venture capital firm, through its HATCo subsidiary, takes ownership of a health system.
'A long-term commitment'
In a blog post Wednesday, Hemant Taneja, General Catalyst CEO, and Marc Harrison, CEO of HATCo, said they hope the letter of intent “is only the beginning of HATCo and Summa Health’s long-term journey together to reshape and improve the future of healthcare delivery.”
They also sought to differentiate the move from other private equity firms acquiring hospitals, which have gained growing scrutiny. The Senate Budget Committee said last month it is investigating the impact of private equity ownership of hospitals.
“We understand that this may be mischaracterized as another ‘private equity’ deal. But it’s important to realize that this is a fundamentally different kind of partnership and approach in several ways,” they wrote.
But Taneja and Harrison wrote in the post that they are looking to invest in Summa Health, rather than finding ways to cut costs and services. They said they are committed to making healthcare more affordable and accessible for patients, and said they have a “people first/patient first” mantra.
“We are operating over longer time horizons – this is not a quick flip but a long-term commitment to transformation that benefits the community,” they wrote.
They also said the acquisition is part of a larger plan to share best practices with other healthcare providers, with the hope that “Summa Health’s progress can be an innovation beacon for the rest of the industry.”
Cliff Deveny, president and CEO of Summa Health, said HATCo’s acquisition of the system makes sense financially and for patient care.
“With HATCo, Summa Health will be able to increase local investment and introduce new resources that allow us to expand access to affordable, quality, coordinated care,” Deveny said in a statement.
“We’re excited about new opportunities to enhance the patient and provider experience, strengthen our recruitment pipeline, build upon our commitment to medical education and training, and expand the growth of SummaCare to advance health equity and population health across the communities we serve,” he added.
George Strickler, chair of Summa Health’s board of directors, said in a statement that the deal offers “comprehensive opportunities to grow our organization in ways we can’t achieve alone.”
In their blog post, Taneja and Harrison offered praise for Deveny’s leadership and Summa’s performance.
“Under the leadership of CEO Dr. Cliff Deveny, Summa Health has navigated several seismic industry shifts (both pre- and post-Covid) and the business is on an impressive upward trajectory – resulting in both sound financial performance AND enhanced access to quality care for their communities,” they wrote.
Harrison is well acquainted with the challenges of running a health system. Harrison is the former CEO of Intermountain Health, and he led the system to its merger with SCL Health in Colorado. Intermountain, based in Utah, now operates 33 hospitals. He left Intermountain in late 2022 to run General Catalyst’s healthcare platform business. Intermountain announced a strategic collaboration with General Catalyst in 2022, and is working with tech companies in General Catalyst’s portfolio.
In a statement about the partnership with Summa Health, Harrison said, “The current national healthcare system is fragmented and creates barriers to care and wellness. In partnership with Summa, we intend to prove that a model that’s better for patients can also be good for business and create a blueprint for other systems and communities.”
Akron Mayor Shammas Malik issued a statement saying he looks forward to working with HATCo "on the future of healthcare in Akron.”
"My hope and belief is today’s announcement will ensure Akron families can continue to rely on Summa for excellent care for decades to come," Malik said.