General Catalyst finalizes deal to scoop up Ohio nonprofit health system

Venture capital (VC) giant General Catalyst has signed a definitive agreement to acquire Akron, Ohio-based health system Summa Health, the firm announced on November 7.

General Catalyst, via its healthcare company formed in October 2023 called the Health Assurance Transformation Corporation (HATCo), first announced intent to purchase the Ohio nonprofit system in January 2024. The goal was to use it as a testing ground for health tech products developed by the firm’s portfolio companies. Some of General Catalyst’s healthcare portfolio companies include Maven Clinic, a women’s health virtual care platform, and healthcare provider chain Cityblock Health.

At the time, executives said they planned to finalize the agreement within a few months.

By the numbers. The VC firm plans to spend $485 million to buy Summa, which has roughly 8,500 employees and comprises three hospitals, 14 medical centers, the SummaCare health plan, a multispecialty group practice, a research and medical education program, multiple foundations, and an entrepreneurial entity.

That $485 million figure is far less than the $1 billion to $3 billion HATCo CEO Marc Harrison told Forbes in October 2023 the company planned to spend to purchase the health system.

The money will allow Summa to pay off its $850 million in debt, according to a news release.

Summa reported roughly $1.86 billion in total revenues across all subsidiaries in 2023 and $1.9 billion in expenses, according to financial documents. The company also reported a $43.5 million operating loss in 2023, compared to roughly $39 million in 2022.

HATCo agreed to pay the health system $350 million within the deal’s first five years “to ensure necessary resources are available for routine purposes, and investment in technologies that support growth,” per the release. Additionally, it would pay $200 million within the first seven years “intended for strategic and transformative investments and to drive innovation.”

The health system’s remaining cash will be used to create an independently governed community foundation that will invest in the Akron region, according to the release.

The deal makes Summa a for-profit system, but HATCo execs said in January that it intends to continue providing financial assistance for vulnerable patients.

The deal is still subject to regulatory approval from state and federal regulators, including the Federal Trade Commission.

Not everyone is convinced a VC-owned health system is a good plan. Christopher Robertson, a professor of health law, policy, and management at Boston University, told Healthcare Brew in November 2023 that the business model comes with “conflicts of interest.”

“I would worry that a venture capital firm could pull a healthcare system so hard trying to eke out so much profit that it really does undermine patient care,” Robertson said at the time.

Healthcare Brew reached out to both Summa Health and General Catalyst for comment but did not receive responses.