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Venture capital firm reaches $485M deal to buy Ohio hospital system
General Catalyst’s subsidiary, HATCo, has struck a definitive agreement to acquire Summa Health. The firm is also committing hundreds of millions in improvements.
General Catalyst, the venture capital giant, has reached a definitive agreement to buy Summa Health in Ohio in a $485 million transaction.
General Catalyst has reached an agreement to buy Summa Health in Ohio in a $485 million transaction.
A subsidiary of General Catalyst, Health Assurance Transformation LLC, dubbed HATCo, and Summa Health announced the agreement Thursday. General Catalyst said late last year it was looking to buy a hospital system and first disclosed it was exploring the acquisition of Summa Health in January.
Summa Health said the $485 million purchase price, coupled with the system’s existing cash, will allow the organization to get rid of $850 million in debt.
Summa operates acute care hospital campuses in Akron and Barberton, along with a rehabilitation hospital and community medical centers. The system includes a health plan and an accountable care organization.
Cliff Deveny, MD, president and CEO of Summa Health, said the deal will help ensure the long-term viability of the organization and enable the system to provide more services.
“As part of HATCo, Summa Health will be better positioned to build upon our existing strengths and capabilities while also benefiting from new opportunities and technology. Our goals are to expand access to care and improve the experience for our patients, providers and staff,” Deveny said in a statement. “This is only the beginning of our long-term journey together.”
Under the agreement, Summa Health would transition to a for-profit organization. The system said it would maintain its charity care policy and continue to provide essential services, while also expanding healthcare opportunities in the region.
Summa and HATCO say they have been working on the transformation plan and are looking to maximize resources and improve the experience of patients and staff. The organizations said it would maintain and expand Summa Health’s workforce.
HATCo also says it will invest hundreds of millions of dollars in improvements for the system.
The company has pledged $350 million in the first five years to invest in technologies. And HATCo has also said it will pour an additional $200 million in strategic investments over the first seven years.
Marc Harrison, MD., co-founder and CEO of HATCo., said the intent is to help Summa Health thrive.
“Our focus is on creating new and expanded opportunities for Summa Health, the communities it serves, and its talented workforce,” Harrison said in a statement. “I am proud of the strong collaboration our teams have demonstrated over the past several months, and we look forward to continuing to work together to develop a plan that optimizes operational stability, while positioning Summa Health to drive meaningful transformation in the years ahead."
The deal still requires regulatory approval. Summa Health and HATCo say they’ve submitted applications to the Federal Trade Commission and various state agencies in Ohio.
Fitch Ratings gave Summa Health a stable outlook in a June 2024 report. Fitch highlighted Summa’s “comparatively favorable market position, adequate balance sheet, and the health system's operational improvement plans.”
Summa Health holds 55% of the market in its primary service area, although it faces competition from other providers in northeast Ohio, Fitch says. The organization's health plan has 60,000 covered lives.
Hemant Taneja, CEO of General Catalyst, and founder and executive chairman of HATCo., said the venture capital firm is making a long-term investment. He also said the goal is “to create a blueprint for the future of healthcare delivery.”
“We couldn’t be more excited for the opportunity to execute on that transformative vision together with Summa Health and our innovation ecosystem to make healthcare a more proactive, affordable, and equitable system of care,” Taneja said in a statement.
