General Catalyst has recently announced the details of its acquisition of Summa Health, a health system based in Akron, Ohio. The venture capital firm’s Health Assurance Transformation business, HATCo, has signed a definitive agreement to purchase Summa for $485 million. This deal, combined with Summa’s existing cash reserves, will allow the health system to eliminate $850 million in debt, essentially wiping out all of its current debt.
As part of the agreement, HATCo has committed to investing $350 million over the first five years of ownership to support day-to-day operations and technology upgrades. Additionally, another $200 million will be allocated over seven years for strategic initiatives aimed at transforming the health system.
General Catalyst first announced its intention to acquire a health system at the HLTH conference last year, positioning Summa as a testing ground for new technologies. HATCo plans to leverage General Catalyst’s network of 20 health systems to pilot technology developed by its portfolio companies and shift towards value-based payment models.
The acquisition will see Summa transition from a nonprofit to a for-profit provider, subject to regulatory approvals from the Ohio Attorney General, the Ohio Department of Insurance, and the Federal Trade Commission. With increased antitrust scrutiny under the Biden administration, the deal may face challenges, although experts suggest that future changes under the upcoming Trump administration could impact these regulations.
General Catalyst is not the only venture capital firm forging partnerships with health systems. Aegis Ventures recently launched its Digital Consortium, a collaboration of nine health systems focused on developing and deploying technology solutions. Similarly, Andreessen Horowitz has teamed up with New York’s Bassett Healthcare Network to implement products from its portfolio companies.
As the healthcare industry continues to evolve, these partnerships between venture capital firms and health systems are poised to drive innovation and transformation. Summa Health’s acquisition by General Catalyst’s HATCo represents a significant step towards reshaping the delivery of healthcare services and embracing new technologies.
