Dive Brief:
General Catalyst released new details on its planned acquisition of Akron, Ohio-based Summa Health on Thursday, roughly one year after the venture capital firm said it was looking to buy a health system.
General Catalyst’s Health Assurance Transformation business, or HATCo, has signed a definitive agreement to purchase Summa for $485 million. The deal, alongside the health system’s current cash on hand, allows Summa to eliminate $850 million in debt — nearly all the debt the health system currently holds, according to Summa’s most recent financial results.
HATCo is also pledging to spend $350 million over the first five years of its ownership to support routine operations and technology investments, plus another $200 million over seven years for “strategic and transformative” initiatives.
Dive Insight:
General Catalyst, a major venture capital firm with some big-name healthcare investments, revealed its plans to buy a health system that could serve as a testing ground for new technology at the HLTH conference last year.
HATCo aims to work closely with General Catalyst’s network of 20 health systems to trial technology developed by its portfolio companies and shift more care to value-based payment arrangements.
The health systems could serve as a proof of concept for new products, without the risk aversion and cash shortfalls common among providers, Marc Harrison, co-founder and CEO of HATCo, said at the time.
The acquisition would transition Summa — which operates two hospital campuses, a rehabilitation hospital, more than a dozen health centers and an insurance arm — from a nonprofit to a for-profit provider. The deal is subject to regulatory review, and HATCo and Summa are currently submitting applications to the Ohio Attorney General, the Ohio Department of Insurance and the Federal Trade Commission, according to a press release.
Antitrust scrutiny has increased under the Biden administration, including through stricter merger guidelines that are expected to chill healthcare M&A.
However, those new guidelines could go away under the upcoming Trump administration, experts say.
General Catalyst isn’t the only venture capital firm that has inked partnerships with health systems. This spring, Aegis Ventures launched its Digital Consortium, a group of nine health systems that jointly develop, invest in and deploy technology tools. Andreessen Horowitz has also partnered with New York’s Bassett Healthcare Network to use products from the firm’s portfolio companies.
