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June 25, 2024

Summa Health Agrees to Be Acquired by For-Profit VC Firm’s Health System

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Jan 17, 2024

Summa Health, the largest healthcare provider in Northeast Ohio, has agreed to be acquired by Health Assurance Transformation Company (HATCo), a new for-profit health system created by venture capital firm General Catalyst. The surprise $2 billion deal marks a major shift for the Akron-based nonprofit health system.

Key Details of the Acquisition

  • Summa Health will be acquired by HATCo for approximately $2 billion
  • The deal is expected to close in early 2025, pending regulatory approval
  • Summa Health will transition from a nonprofit to a for-profit health system
  • Summa Health will maintain local leadership and all facilities are expected to remain open
  • HATCo plans to invest in expanding access and services at Summa Health

Summa Health president and CEO Marc Harrison called the deal “a pivotal moment for Summa Health” that will allow the system to “transform healthcare not just for our community, but potentially for the nation.”

HATCo founder and General Catalyst managing partner Hemant Taneja said the venture capital firm launched HATCo in 2023 with the goal of “revolutionizing healthcare in America.” Taneja said the acquisition of Summa Health will help HATCo “prove our thesis that it is possible to reduce costs for consumers while improving quality, access and equity.”

Background on Summa Health

Founded in 1891 as City Hospital in Akron, Summa Health operates a network of hospitals, outpatient centers and clinics across Northeast Ohio. With over 300 sites of care and more than 7,000 employees, Summa Health is the largest healthcare provider in the region.

Key facilities include:

  • Summa Akron City Hospital – a 532-bed teaching hospital in downtown Akron
  • Summa Barberton Hospital – a 241-bed community hospital in Barberton
  • St. Thomas Hospital – a 247-bed hospital in Akron focused on surgery and cancer care

As a nonprofit health system, Summa Health has a social mission focused on improving community health. Over the past decade, Summa Health has invested over $300 million in community benefit initiatives.

What is Known About HATCo and General Catalyst

Much less is publicly known about Health Assurance Transformation Company (HATCo) and its owner, venture capital firm General Catalyst. Here are the key details:

  • HATCo was launched in 2023 by General Catalyst to operate a nationwide for-profit health system
  • General Catalyst is a VC firm with over $5 billion under management, focused on technology investments
  • This is General Catalyst’s first major move into healthcare services
  • General Catalyst partner Hemant Taneja is leading the HATCo initiative
  • Taneja has said HATCo aims to “fix our broken healthcare system in America”

HATCo and General Catalyst have provided few details about their plans for Summa Health and have not indicated if other acquisitions are being pursued. Taneja said they plan to operate Summa Health “as a fully integrated healthcare delivery system” while investing to expand access.

What Could Change for Summa Health

The acquisition of Summa Health by a venture capital-backed for-profit operator raises many questions about what could change for the health system:

  • Mission and priorities – Will HATCo maintain Summa’s nonprofit mission and community benefit initiatives? As a for-profit system, margin may take priority over mission.
  • Services and offerings – Will HATCo invest to expand and enhance services at Summa Health facilities? Or will services be cut to improve profitability?
  • Access and affordability – As a large safety net provider, Summa Health cares for many uninsured and underinsured patients. Will HATCo reduce uncompensated care for financial reasons?
  • Jobs and leadership – Summa Health currently provides over 7,000 jobs. Will HATCo bring in new executive leadership? How will Summa’s workforce be impacted?
  • Competition – As a for-profit operator, HATCo may take a more competitive approach towards other health systems in the region.

Summa Health president Marc Harrison said HATCo execs convinced him they are “philosophically aligned” with Summa’s goals around community health. But the ultimate outcomes for patients, staff and the Northeast Ohio community from this deal remain uncertain.

What Comes Next: Approval and Transition

The Summa Health – HATCo deal is expected to close within the next 12-18 months, pending necessary regulatory approvals. Key next steps include:

  • Ohio Attorney General review – As a nonprofit asset, Summa Health’s sale requires review and approval from Attorney General Dave Yost. Yost said his office will “closely scrutinize” the deal.
  • Federal approval – The acquisition must also be cleared by federal regulators, including antitrust review by the FTC.
  • Other buyers? – Reports indicate Cincinnati-based Bon Secours Mercy Health was also in talks to acquire Summa. With the HATCo deal announced, it’s unclear if other suitors might still make bids.
  • Community input – Summa leaders have pledged to seek public input as the system transitions from nonprofit to for-profit status under HATCo and General Catalyst ownership.

If approved, the deal would close sometime in early 2025. HATCo and Summa Health execs have stated that after closing, all facilities, services lines, and the Summa name would be maintained during an interim period as the venture firm gradually implements changes.

Unanswered Questions

The surprise $2 billion agreement to sell Summa Health to HATCo, an unknown entity created by VC firm General Catalyst, raises far more questions than it answers. Unclear issues include:

  • What is General Catalyst’s overall strategic plan for HATCo? Is Summa Health just the first step in building a larger for-profit nationwide health system?
  • Why did General Catalyst want to acquire a health system? What financial returns or other goals does the VC firm expect from entering healthcare services?
  • Might General Catalyst sell off pieces of Summa Health’s operations or real estate assets to generate returns from the deal rather than maintaining and operating all facilities?
  • Did Summa Health get adequate value in the transaction compared to remaining independent or merging with a larger nonprofit system? Were competitive bids thoroughly reviewed?

Until more information is known about General Catalyst’s vision for transforming Summa Health and profitable operating model, uncertainty around the deal will likely remain. But both parties expressed confidence this surprise agreement can change healthcare for the better in Akron and far beyond.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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