Ohio’s attorney general has conditionally approved venture capital firm General Catalyst’s acquisition of Summa Health, according to a press release Wednesday.
General Catalyst’s Health Assurance Transformation subsidiary, or HATCo, and the Akron, Ohio-based health system must meet 10 conditions to allow the deal to move forward, including increasing the purchase price by $15 million in cash and an additional $15 million in equity to the surviving nonprofit foundation, according to a letter sent by Attorney General Dave Yost’s office. The equity interest can’t be sold for three years.
HATCo will also have to file a yearly report with the attorney general to show it’s complying with post-closing obligations, as well as provide notice of new deals that could trigger antitrust concerns.
General Catalyst, a large venture capital firm that’s invested in a number of healthcare companies, said it wanted to buy a health system in 2023 to serve as a testing ground for technology that could improve hospital operations or patient care.
Early last year, the firm named Summa, one of the largest integrated systems in Ohio with more than 870 inpatient beds and thousands of employees, as its acquisition target.
Months later, HATCo announced it had signed a definitive agreement to buy the health system for $485 million, and pledged to invest hundreds of millions of dollars in Summa in the years following the deal’s close.
The purchase would transition Summa to a for-profit operation, and the funds used to purchase the health system would go toward paying off its debt. Remaining funds would be controlled by a charitable foundation that would work independently from the for-profit operation, according to the letter sent by the Ohio attorney general’s office Wednesday.
Additionally, HATCo agreed that three members of the new, for-profit system board will be local community members, and one member would sit on the HATCo parent board.
It also said it would maintain Summa’s charity care policies, essential services like behavioral health and obstetrics, and its medical education and clinical research programs. Those policies couldn’t be changed without a supermajority approval of the board, according to the letter.
The Ohio attorney general also set new conditions for the deal. For example, HATCo must agree that the attorney general has jurisdiction to oversee that the firm completes its obligations set out in the purchase agreement, as well as to cooperate with any future investigations.
Additionally, most board members of the charitable foundation must have no affiliation with Summa, and they have to complete the attorney general’s charitable university training.
“We’re confident that the agreement includes enforceable commitments that will secure Summa’s nonprofit mission, protect patient care, and ensure continued investment in the greater Akron community,” Yost said in a statement. “With proper safeguards in place, this has the potential to strengthen health care in northeastern Ohio for years to come.”
The conditional approval from the attorney general is a “significant milestone,” Michael Bernstein, system director for corporate communications at Summa said in a statement. The deal was also greenlit by the Ohio Department of Insurance on June 2, a Summa spokesperson told Healthcare Dive.
The acquisition has faced some pushback from a coalition of community groups called Summa Is Not for Sale, who argue private ownership could worsen care and increase costs. However, coalition member Jeff Barge said in a statement to Healthcare Dive the conditions set by the Ohio attorney general made “a number of innovative changes” to the purchase. Still, the group thinks Summa is being sold for about half its market value.
This article highlights the recent conditional approval of General Catalyst’s acquisition of Summa Health by Ohio’s attorney general. The deal comes with several conditions to ensure the protection of Summa’s nonprofit mission and continued investment in the Akron community. With proper safeguards in place, this acquisition has the potential to strengthen healthcare in northeastern Ohio for years to come.
