Venture capital firm General Catalyst announced its recently formed business venture Health Assurance Transformation Corporation (HATCo) intends to purchase Ohio-based Summa Health, a nonprofit healthcare system with over 30 locations throughout the Akron and Canton areas.
Summa Health, founded in 1989, is an integrated delivery system that has been operating for over 130 years. It was formed from a merger between Akron City and St. Thomas Hospitals.
It includes community-based health centers, hospitals, a multi-specialty group practice, an entrepreneurial entity, multiple foundations, research and medical education, and a health plan dubbed SummaCare.
Summa posted financial results for 2023, reporting an operating loss for the first nine months of $37 million, about $16 million less than was reported the year prior. Total revenue for the first nine months was $1.39 billion, a 4.4% increase year-over-year, with a 6% increase in expenses from the prior year at $1.42 billion.
“HATCo and Summa Health leadership have a clear understanding of Summa Health’s future path to growth, vitality, service and continued success. We believe HATCo’s investment into Summa Health will drive not only near-term benefit to the organization and the patients it serves but also sustainable, long-term transformation through a true shift to value-based care and access to new revenue streams, resources, innovations, and technologies,” General Catalyst wrote in a statement.
The venture firm highlighted that the news is not simply another ‘private equity’ deal but will focus on implementing innovation. It intends to build tech-enabled healthcare delivery platforms at scale that can be implemented across various points of care, and its commitment is long-term, not a “quick flip.”
“This is not an isolated transaction but part of a broader engagement strategy with our wider healthcare ecosystem – innovators and system partners who will collaborate and share best practices… and in which Summa Health’s progress can be an innovation beacon for the rest of the industry,” the firm wrote.
The deal is subject to regulatory approval, and if approved, the nonprofit healthcare system will become a for-profit subsidiary of HATCo.
THE LARGER TREND
In October, General Catalyst announced its intent to transform healthcare delivery, with HATCo’s CEO telling an audience at HLTH 2023 that the firm needed “a proof of concept of this wild, radical transformation of what healthcare should look like in the United States and beyond, and the only way we can do it is to have our own system.”
General Catalyst’s managing director, Holly Maloney, recently sat down with MobiHealthNews and discussed the VC firm’s intent to buy a healthcare system.
“The commitment to transformation was really noteworthy from 2023. Often, when the perception is that times are getting tough in an industry because budgets are challenged and the funding environment is unknown, making the commitment to long-term transformation is critical so that people know that the funding is here to support innovation over the long term,” Maloney said.
“We’re really excited about what we’ll learn, and the potential around HATCo, and having Marc Harrison’s tremendous leadership and the team underneath him. I think 2024 is going to be a really exciting year.”